What happened – A joint venture that includes Candu Energy, an AtkinsRealis subsidiary, has been awarded a contract from EnergoNuclear, to build two new CANDU reactors at the Cernavoda Nuclear Generating Station in Romania (the first in the world since 2007). Financing of the new reactors will be supported by $3B of funding from the Government of Canada, as well as additional capital from other governments. AtkinsRealis will provide design, engineering, and procurement services, as well as support to EnergoNuclear. The initial first phase of the mandate is worth $224MM.
Background on Cernavoda – The Cernavoda site houses Romania’s only nuclear power plant, which provides ~20% of the country’s power and currently consists of two CANDU 6 reactors (Units 1 and 2; site layout originally constructed for five reactors). Romania is also preparing for the life extension of Unit 1 (noting AtkinsRealis has already previously won contracts for front-end Engineering work here).
More on CANDU – Globally, there are 6 large-scale reactor technologies, of which CANDU is one (AtkinsRealis holds the exclusive license for this reactor technology; the Canadian government is the licensor of the IP). The two primary advantages of CANDU reactors when compared to other large-scale reactors are: 1) CANDU reactors do not require enriched U235 as fuel, and can instead function using naturally-occurring U238; and, 2) CANDU reactors can be refueled without the need for a shutdown (which, in typical U.S. reactors, occurs every ~2 years and takes approximately one month to complete). There are currently 27 CANDU reactors in operation around the world today, 19 of which are in Canada.
For more information on AtkinsRealis' involvement in the Nuclear space, see our 2024 Investor Day takeaways note here and our Nuclear segment deep dive here.
Our thoughts – Overall, we view this news positively as we believe it indicates that the global Nuclear renaissance is in full swing (noting AtkinsRealis also won a $2.3B Nuclear contract extension in the U.S. two days ago; see our note here). The "re-think" on Nuclear energy in recent years (driven by Net Zero targets and energy security concerns) is starting to translate into demand for new builds (large-scale plants + SMRs; we note Ontario also announced plans in 2023 to build a new Nuclear plant, which would mark Canada's first new large-scale build in 3 decades), and we believe AtkinsRealis is well positioned to win future work given the company is the exclusive licensee of the CANDU reactor technology. The initial phase of the Cernavoda announcement is worth $224MM, and EnergoNuclear has the option to issue a full notice to proceed with the services necessary to complete Units 3 and 4 in the future, which would represent substantial upside to the dollar value of this contract.