Ontario Premier Doug Ford, Ontario Power CEO Nicolle Butcher and Prime Minister Mark Carney at the Darlington energy complex in Courtice, Ont., on Thursday. Both governments are pledging funding for a new reactor project at the facility.Carlos Osorio/Reuters
The federal government will provide an additional $2-billion toward construction of the first new nuclear reactor in Canada in more than three decades, Prime Minister Mark Carney announced Thursday.
The Canada Growth Fund, a $15-billion federal investment fund, will buy an equity stake in the project. Half of the $2-billion will be spent on the plant’s first reactor; the other half is earmarked for subsequent reactors planned at the site. Terms of the investment were not disclosed.
The Ontario government contributed another $1-billion through its Building Ontario Fund. It’s the first time Ontario Power Generation has invited investors to take equity stakes in one of its nuclear projects.
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OPG is in the early stages of building the first of four small modular reactors (SMRs) next to its Darlington Nuclear Generating Station in Clarington, Ont. The first reactor, which will be the first of its kind ever constructed, is budgeted to cost $7.7-billion, which includes systems it will share with the subsequent units.
The project, which is expected to cost a total of $20.9-billion, is widely regarded as crucial to the nuclear sectors of both Canada and the United States, and important globally.
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Ontario Premier Doug Ford cheered the federal investment, while vowing to expand his province’s nuclear sector further through planned construction of large reactors.
“With tariffs and economic uncertainty hammering Ontario’s workers and businesses, this is exactly the sort of investment our province needs,” he said.
Construction of Canada’s newest nuclear power plant, Darlington Station, was completed between 1981 and 1993. The SMR project was recently referred to the federal Major Projects Office, a newly established body intended to speed regulatory approvals for projects deemed to be of national importance.
Completion would also represent a coup for leading American reactor vendor GE Vernova Hitachi Nuclear Energy; it’s designing the 300-megawatt reactor, which is known as the BWRX-300.
OPG began preparing the site in late 2022. The pace quickened this year: the utility and its partners have been excavating a shaft that will house the reactor, and they have another 10 metres of drilling through bedrock to go.
Nuclear power plants have a long record of blowing budgets and taking far longer to construct than promised. First-of-a-kind reactors are often considered to be riskier still. A substantial number of nuclear plants are never completed, such as at the Virgil C. Summer Nuclear Power Station in South Carolina, where construction of two large reactors was abandoned in 2017.
“The primary direct risk is that of project failure and some sort of write-off of the investment,” Mark Winfield, a professor in York University’s environment faculty who specializes in energy issues, wrote of OPG’s SMR project.
“This is a very high-risk undertaking, with an unproven technology, so there is a real chance it won’t work as planned.”
The Darlington SMR, which was originally planned for completion in 2028, has already suffered delays because a construction licence from the Canadian Nuclear Safety Commission arrived later than OPG expected.
The Prime Minister on Thursday decried regulatory delays and said the Major Projects Office will “fast track” approvals.
“For too long, the construction of major infrastructure projects has been stalled by arduous, inefficient federal approval processes,” he said.
Prof. Winfield said the federal government’s financing in the Darlington project introduces “a potential underlying conflict” for the CNSC, to which OPG must apply for future licences.
Despite long-standing efforts, the nuclear industry has had limited success attracting private investors, and critics have long maintained that nuclear plants will remain forever reliant on taxpayer support.
Ahab Abdel-Aziz, a lawyer at Gowling WLG who specializes in nuclear power, said the government equity stakes are consistent with what’s been done in Canada previously, and also by foreign governments that have launched new nuclear programs.
“Writ large, across the world, private capital has not stepped up to shoulder nuclear power development alone in Western nations,” he said. “That’s largely because of the risk profile, but more importantly, it’s because of the time to return on investment.”
The Canada Growth Fund’s investment in the Darlington project is by far the largest by value of the 16 it has made since it was established more than two years ago. It’s administered by the Public Sector Pension Investment Board. Patrick Charbonneau, its chief investment officer, helped launch the fund and is now responsible for overseeing it.
Inside the refurbished Darlington nuclear generating station in 2023.Carlos Osorio/The Globe and Mail
Mr. Charbonneau said the Darlington SMRs falls squarely within the fund’s mandate to accelerate projects that might not proceed if backed only by private investment.
“We provide capital, we unlock a place in the cap structure where OPG was not able to go in and find capital in order to advance the project,” he said.
“This is exactly what we’re meant to be doing.”
Mr. Charbonneau said the Public Sector Pension Investment Board expects the Canada Growth Fund will sell its investment to others once the risks relating to the project’s construction, its novel technology and the way it’s regulated have abated.
“We believe – and we’ve seen this in the past – that at some point, once these risks have lapsed partly or in full, we will have a different reaction from the market.”
OPG’s chief financial officer, Aida Cipolla, said OPG believes institutional investors such as mutual funds and pension plans will be interested in buying equity once the plant is constructed.
Premier Ford said his government encourages Canadian pension funds to invest in “transformational” projects. “We need the support of the pension funds,” he said, “so hopefully they’ll listen.”
The federal government has previously funded OPG’s SMR project. In 2022, the Canada Infrastructure Bank provided OPG a low-interest, $970-million loan which was to be spent on design work and procurement of items that must be ordered well in advance of construction.
Earlier this year, the federal environment department committed $55-million for early work on the three subsequent Darlington SMRs.
This week, the government of Saskatchewan published a plan for its electricity sector. It’s planning to build two BWRX-300s, and has asked the federal government to pay for three-quarters of the cost of the first one.