AECL leaves the ice in the U.K.

A four-way competition is down to three

Atomic Energy of Canada announced that it is pulling out of the four way competition for sales of new reactors in the U.K.'s massive new build of nuclear energy power stations. According to wire service reports, the Canadian state-owned firm informed U.K. nuclear regulators it will withdraw its new CANDU Reactor, the ACR-1000, from the next steps of the design assessment process.

AECL said it is focusing its efforts on the domestic market in Canada. The company is currently competing to build new reactors in Ontario, Alberta and New Brunswick. That "focus" is probably a good idea since it will serve to remind the firm the national sport in Canada is hockey not lawn tennis. It sounds like AECL's CEO gets it.

"We believe very strongly that our best course of action to ensure the ACR-1000 is successful in the global marketplace is to focus first and foremost on establishing it here at home," AECL President Hugh McDiarmid said in a statement.

Steve Aplin , an Ottawa-based energy policy consultant, said he believed the move reflects AECL's confidence in winning at least one sale in Ontario. Alpin says AECL would have been the odd-man out in the British competition, since the other three companies offer a type of reactor design that's more familiar to Britain than the CANDU. Losing the competition in the U.K., Alpin says, could have a major negative ripple effect in Canada.

"While Ontario's mulling over what it should be (doing) if a negative decision ...comes down in the U.K. process, it doesn't look good. It would be better strategically for them to win one project, bring it in on time, than to win two projects and have both of them be late."

If Ontario passes on the CANDU reactor technology, the rest of AECL's domestic market share could fall away. AECL can't compete in the UK and defend its domestic position at home at the same time. So it is no surprise that it pulled the plug on the U.K. market.

AECL faces still competition at home from French nuclear giant Areva and the U.S. based General Electric. Bruce Power has opened up the process for competition in Ontario and Alberta. In New Brunswick a unique merchant business model is being pursued by the provincial government. What was once a sure thing, a protected domestic market, is now as uncertain as the breakup of the Arctic ice pack.

That doesn't mean it things can't get worse. Prime Minister Stephen Harper is still steamed about the Chalk River plant's isotope fiasco last Fall. So political support for the Crown Corporation is at an all time low. In Ontario thousands of AECL jobs hang in the balance. Politically speaking a market driven breakup of AECL isn't a feasible option for the government.

Still, the government wants to sell off shares of AECL to private investors, but can't do it with a key product, the ACR-1000, still in the design phase. Investors aren't going to pay for completion and regulatory approval which is why AECL got a $300 million shot in the arm from the government last month to finish the job. Once AECL has a new reactor to sell at home and abroad its fortunes may rebound. That could take years but it is better than the alternative.

Back in the U.K., regulators said "the three remaining designs will be taken forward (to the next phase of the pre-licensing process)," which will focus resources on designs which are capable of being licensed and will go operational in the UK within 2016-2022 timeframe.

The reactor designs still in the pre-licensing process include those from U.S.-based General Electric's nuclear unit, Toshiba's Westinghouse unit, and France-based Areva.