Globe & Mail After a long absence, Canada is back in the business of exporting nuclear reactors.
In November, Montreal-based AtkinsRalis Group Inc. (formerly SNC-Lavalin) announced it will participate in a four-company consortium that could resume construction of two 700-megawatt reactors at Cernavoda, Romania’s only nuclear power station. The new units, Cernavoda Units 3 and 4, would be the first Candus built anywhere since their sister, Unit 2, was completed in 2007. The deal was sealed by $3-billion in Canadian export financing, provided by the federal government and administered by Export Development Canada, a Crown corporation.
Mere weeks later, AtkinsRalis’s Pennsylvania-based competitor, Westinghouse Electric Co., announced it had a “letter of interest” from EDC for just over $2-billion in financing to build three of its AP1000 reactors at what would be Poland’s first nuclear power plant. Westinghouse is now under Canadian ownership – just over a year ago it was purchased by Brookfield Asset Management and Cameco Corp.
These announcements represent notable victories for Western nuclear interests, which otherwise have greatly receded in importance globally in recent decades. Russian dominance has been near-total: According to Mycle Schneider Consulting’s annual report on the state of the nuclear industry, Russia is constructing 20 reactors abroad, including in China, Egypt, India and Turkey. Mr. Schneider said the only other international vendor is lectricit de France SA, which is building two reactors in Britain. Canada is not even in the running because it hasn’t built a reactor in so long.
But Russia’s invasion of Ukraine, and growing concerns around its use of its energy clout to achieve geopolitical ends, has raised discomfort. This at a moment when nuclear power plants are again being considered worldwide. Suddenly, Western reactor vendors smell opportunity – and they’re scrambling to win contracts, recruit from the same limited pool of partners and suppliers, and secure the government loans that are crucial to these projects.
Home-court advantage
AtkinsRalis is a large international engineering firm; last year its nuclear division accounted for 12 per cent of its revenues. That division is growing rapidly, however, and now employs about 4,000 people, up from 3,000 in 2022. Much of its recent hiring is in preparation for anticipated new reactor sales, in Canada and abroad.
Cernavoda exemplifies the nuclear industry’s meandering fortunes. Conceived during the long reign of Communist dictator Nicolae Ceauescu, it was built in fits and starts. The earliest design and procurement contracts for the first reactor were signed in 1978; within a decade, five Candu 6 reactors were under construction. But the first wasn’t even half-complete by the time of the Romanian revolution, in December, 1989, during which Mr. Ceauescu was deposed and executed. Only two units were completed after lengthy delays. They now supply about 20 per cent of Romania’s electricity.
Units 3 and 4 are to be Enhanced Candu 6s, updated versions of the originals. During the initial phase, AtkinsRalis will provide design, engineering and procurement services, and handle relations with the country’s nuclear regulator. The company said this work will earn revenues of $224-million. The other partners include the nuclear division of Italy’s Ansaldo Energia SpA, Texas-based engineering and construction firm Fluor Corp., and Sargent & Lundy, an architect engineering firm. The customer is Nuclearelectica, Romania’s nuclear power utility, which must ultimately decide whether to proceed with the rest of the €3.2-billion ($4.7-billion) project.
Joe St. Julian, president of AtkinsRalis’s nuclear division, sees this as just the beginning.
He expects 1,000 new reactors will be built worldwide over the next 25 years, at a cost of up to US$15-billion each. As many as 100 could be Candus, he predicts. His reasoning is that 35 of the approximately 600 reactors built to date worldwide were Candus, about 5 per cent.
“In the next round, we’ll call it round two, we should be able to get more than 5 per cent, maybe as much as 10 per cent,” he said.
The Candu’s most important advantage, he contends, is that it runs on natural uranium. Most reactors require enriched uranium, which is expensive to produce, and Russia dominates international nuclear fuel supply chains. This does seem to have influenced Romania, where wariness over reliance on Russian nuclear technology dates back to Mr. Ceauescu’s time.
Another advantage might be AtkinsRalis’s relationships with the rest of the Canadian nuclear industry. This year, several other companies have joined AtkinsRalis’s Canadians for CANDU campaign, including nuclear industry giants such as BWX Technologies Inc. and Aecon Group Inc. Earlier this month, AtkinsRalis boasted that its Canadian subsidiary, Candu Energy Inc., had issued more than $1-billion in orders across its supply chain. Unifor, a large private-sector trade union that represents many workers in the nuclear industry, recently issued an open letter calling on the Ontario government to prioritize the Candu.
But there’s a problem.
Reactors have trended ever-larger since the dawn of the nuclear age, and the average output of new ones is about 1,000 megawatts. AtkinsRalis largely stayed out of the risky business of reactor development, a decision that anemic global reactor sales long seemed to vindicate. But now, as governments and utilities consider building large new reactors to meet surging power demand, AtkinsRalis lacks a modern, large model to offer them.
So, last year it proposed the Monark, which at 1,000 megawatts would be the largest-ever Candu. The company plans to spend $50-million to $70-million annually to complete the design by the end of 2026 and has 250 employees working on it.
Mr. St. Julian said the Monark’s success depends entirely on selling it in Canada first, to utilities such as Bruce Power and Ontario Power Generation, which are in the early planning stages for potential new power plants in Ontario.
“If we cannot sell a Candu Monark in Canada, there is no export strategy,” he said.
Contenders
But gone are the days when Candus enjoyed exclusivity at home. Key legacy customers have already defected: OPG, which owns more Candus than any other utility, selected an American light water reactor for its next power plant in Ontario, Darlington B. It plans to construct four BWRX-300s from America’s GE Hitachi Nuclear Energy – a model the Ontario government is actively marketing in Eastern Europe, according to Stephen Lecce, its Energy Minister.
In the large reactor market, Westinghouse aims to steal the Candu’s lunch. Westinghouse has opened an office in Kitchener, Ont., and now employs 270 people in Canada. It’s courting many suppliers that are members of AtkinsRalis’s Canadians for CANDU campaign, including BWX Technologies and Aecon, both of which entered agreements in December to work on AP1000 projects in Canada and worldwide.
“The not-so-secret secret is that we help them participate in the export markets to build up the diversification and strength in the Westinghouse technologies, and then we deliver here at home, domestically,” said John Gorman, president of Westinghouse Canada, who joined the company last month.
In Poland, Westinghouse markets itself as a “gold standard American” company. But Mr. Gorman emphasizes its Canadian ownership. “Let’s use our Canadian ownership, let’s use this very strong Canadian supply chain, to help service those export markets, to diversify our supply chain here at home,” he said.
Mr. Gorman is careful not to directly diss the Candu. (He previously served for six years as head of the Canadian Nuclear Association, the industry’s trade association.) AtkinsRalis has the “ambition” to design a new reactor, he says, “that will be modern and be up to today’s requirements” – a quest he encourages.
But the AP1000, he notes, is “not only developed, but proven and recently being built out in multiple jurisdictions.” Two AP1000s have already been licensed and constructed in the United States. (Those reactors, at the Vogtle site in Georgia, were tremendously over-budget and behind schedule, which led to Westinghouse’s bankruptcy and its acquisition by Brookfield and Cameco.) Another four AP1000s have been built in China; eight are under construction worldwide, and more are under consideration in Europe, Britain and India, according to Westinghouse.
It’s a considerable head start, albeit one purchased at great expense.
Mr. St. Julian says he isn’t worried. He said the most important purchase consideration will be the levelized cost of electricity that reactors produce.
“Can we produce a megawatt hour of electricity at a lower cost than the AP1000? We absolutely believe we can.”
Watch your wallet
But some observers think that dwelling on the prospects of various reactor vendors entirely misses the point. Mr. Schneider said renewables, already considerably cheaper to build than nuclear plants, can now offer a steadier supply of electricity thanks to maturing battery storage technologies. In major markets such as the U.S., China and India, solar combined with storage is the cheapest option.
One thing is certain: No vendor will get far without taxpayer support.
Foreign reactor sales are invariably accompanied by generous and highly opaque government subsidies. Global Affairs Canada says the loan for the Cernavoda project is still being negotiated, but terms and conditions are considered “commercially confidential” and will never be disclosed. EDC wasn’t any more forthcoming about its proposed $2-billion loan in favour of Westinghouse.
“As per our Transparency and Disclosure policy, we cannot comment on prospective transactions or anything beyond what we’ve provided already and what the company announced,” wrote spokesperson Anil Handa in an e-mailed response to questions.