The path to commercial success is full of potholes
In the past year the Canadian nuclear industry has taken a couple of hits on the chin. These events raise the question of whether AECL is in the ditch or can a government tow truck get it back on the road? The commercial path forward is like an ice-covered road in a Canadian winter and there are plenty of back seat drivers. Here’s why.
First, the Chalk River nuclear reactor, a supplier of medical nuclear isotopes for most of North America, shut down for extensive repairs. The unplanned outage created an international uproar. Second, the AECL led refurbishment of the Point Lepreau had extensive schedule delays and went way over budget. The delays ended plans for a merchant led construction of two new reactors. Third, the Canadian government led by Prime Minister Stephen Harper, said last year it would put AECL on the auction block offering nation’s CANDU reactor vendor for cash on the barrelhead. It didn’t help matters that Ontario provincial leaders cancelled a $20 billion contract for new reactors spiking the potential for thousands of jobs for AECL.
Chalk River to load fuel
Is there any light at the end of the tunnel? Actually, there is some progress. This week the Canadian Nuclear Safety Commission authorized the restart of the reactor which had been shut down since May 2009. It reportedly cost just under $100 million to make the repairs.
“Following a public hearing held on July 5, 2010, in Ottawa, Ontario, the Canadian Nuclear Safety Commission (CNSC) announced its decision to authorize AECL to reload fuel in the NRU reactor and to the restart the reactor at Chalk River, Ontario.”
AECL officials told the Canadian news media the reactor will be producing medical isotopes by the end of the month. The shutdown had generated a crisis across Canada and the U.S. curtailing the supply of medical isotopes used for diagnostic and treatment procedures.
Dr. Christopher O’Brien, president of the Ontario Association of Nuclear Medicine, told CBC News July 7 he regards the reactor as an “albatross",” but that he’s grateful it is back in operation.
AECL still on the auction block
For more than a year Canadian government officials have been trying to find a buyer for Atomic Energy Canada Ltd (AECL). Every few months the current Natural Resources Minister rolls out a statement to the news media that the government is in negotiations with interested buyers. Apparently, whatever terms and conditions the government has been offering hasn’t work as no deals were booked by buyers. Now the Canadian parliament is reportedly considering a measure to loosen the requirements for a sale.
Some critics are calling it a “fire sale,” and say the government is planning a “give away” to foreign powers of the CANDU technology. Bear in mind AECL hasn’t sold a new reactor to anyone, even its own provincial government, in the past 10 years.
Those criticisms haven’t stopped Natural Resources Minister Christian Paradis (right) from tell a Senate finance committee he needs flexibility to negotiate with several interested parties.
The Organization of CANDU Industries, which claims to represent 164 businesses and their 30,000 employees is opposed to the legislation and the sale. Neil Alexander, the organization's President, told the Toronto Sun July 7 the legislation would give the government “free reign” to do whatever it wants with the crown corporation. He also said the he’s ok with the government seeking new investors in AECL as long as the firm remains intact and in operation in Canada.
Can AECL compete sold or not?
Natural Resources minister Paradis has other ideas. He told the Senate that AECL is “too small to compete” in the global nuclear reactor market. He called for investors to pump it up so it can go head-to-head with global giants like Toshiba and Areva.
This rationale was hooted down by critics who said it was unrealistic. John Cadham, a nuclear energy expert at Carleton University, told the Toronto Sun July 7 that “privatization is a code word.”
He said the real meaning is the Harper government, after two years of flogging AECL to potential buyers, “still hasn’t the foggiest idea” what to do with the company.
He added that, de facto, selling AECL puts a major piece of Canadian energy policy in the hands of a foreign government. He noted that only state-owned firms like French nuclear giant Areva or Russia’s Rosatom have the financial ability to buy the company.
Why buy AECL?
As a practical matter Areva is an less likely suitor for AECL given that the firm has a full plate with construction of two reactors in Europe, two more in China, and a pressing need for new capital that has the government offering 15% of the state-owned firm to outside investors. AECL, with its one-of-a-kind CANDU technology, isn’t likely to be a first choice for an acquisition by Areva which has its own 1,650 MW reactor to market to customers.
The Russians have shown interest in the past with AECL, but have had success marketing their own 1,000 MW reactors to India, Vietnam. China, and countries in eastern Europe which used to be behind the Cold War’s ‘iron curtain.’
The pony in the purchase of CANDU could be in the after market of servicing the needs of the 20 or so reactors in Canada and about another dozen worldwide. The actual number of active reactors depends on how you count them relative to producing power, under refurbishment, or slated for decommissioning. Future market share would depend on whether the new ACR1000, still in design review at the Canadian Nuclear Safety Commission, could compete in world markets.
AECL may be in much the same position as former Canadian car maker Studebaker was in after the company closed its last plant in 1965. With a small installed base of vehicles, some dating back to the post WWII era, parts and service offered by third parties insured the car lived on long after the last unit rolled off the assembly line.
Point Lepreau work delayed
Just as energy officials in New Brunswick thought they were out of the woods with the refurbishment of the CANDU reactor at Point Lepreau, a new, two-month setback resulted in a new round of delays. The trouble this time with the $1.4 billion project is that tubes that hold nuclear fuel aren’t meeting specifications once they are installed in the reactor. Getting all the tubes in airtight condition will take another two months.
According to a May 26 report by CBC News, the project is now 17 months behind schedule and has cost the utility that owns the 635 MW reactor millions in purchased power to replace its capacity while it has been down for more than two years. The reactor project has been plagued by high profile incidents like dropping two multi-million turbines into the brackish waters of St. John’s Harbor a year ago this month.
New Brunswick Power President Gaeten Thomas has been reduced to jaw boning AECL to speed things up. His utility and provincial government officials have petitioned the Federal government in Ottawa to reimburse them for excessive costs include buying replacement power. Plans for a new reactor fell through in part because of disillusionment with the progress of the current project.
That may change in the future because of demand for electricity from New England states to the South. News reports from New Brunswick indicate Areva may be interested in building a new reactor there based on the merchant model. Success would depend on construction of new transmission lines through the province, into Maine, and then connecting south to power hungry cities in Massachusetts and other New England states.
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1 comment:
We have a nice reactor at Seabrook, which was originally planned to have 2 reactors. Some of the power already goes to MA. It would make a lot more sense to simply build the second unit at Seabrook. Of course the original construction involved some incredibly stupid stuff --- like allowing a small town in MA 10 miles from the reactor to block energy production AFTER the reactor was completed for 2 years, etc.
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