With AECL at Stake, the Darlington Project Looks Like a Double Bind

By Jacob Mazer, Assistant Editor, Fuel Cycle Week

Ontario faces a difficult choice as it selects the company that will handle the expansion of its Darlington plant, a decision that forces it to weigh the merits of the project against the security of its workforce. "What we're saying when it comes to our nuclear bidders is that more than just the price is important to us here. What are you going to do for us in terms of employing our people?" said Premier Dalton McGuinty last week. "If you're bidding from outside Canada, you better have a strong proposal in place that's going to guarantee employment for our people."

The contract calls for the construction of two new reactors with a capacity between 1,100 MWe and 1,600 MWe at Darlington, carrying an estimated price of $15 billion. Three companies are in the running for the deal: AREVA, Westinghouse, and Canada's state-owned corporation Atomic Energy of Canada Ltd. Canadian Energy Minister Gerry Philips wants construction started by 2012 and electricity generated by mid-2018.

Considering the Darlington expansion as an isolated project, awarding the contract to AREVA or Westinghouse is clearly more advantageous. AECL's ACR-1000 reactor design is substantially farther behind than AREVA's EPR and Westinghouse's AP1000, still waiting on design certification from the Canadian Nuclear Safety Commission. Furthermore, the company has a consistent track record of project delays and budget overruns, propositions that look even less appealing in the current economic climate.

However, the Darlington contract is not an isolated project, but rather is tied directly to the future of AECL. Chronic project troubles and lack of interest in Candu technology has placed the company on thin ice, leading the National Bank of Canada to recommend privatizing 51% of the company in February. The Darlington contract could save the company, putting AECL in a good position to replace Ontario's 20 other reactors as they expire over the next two decades, and potentially making the ACR-1000 more palatable to the global market if it can be built on schedule and within budget (unlikely, in our humble opinion).

Conversely, losing the contract would be a kiss of death for Candu technology, and AECL would likely be split up and sold off. "If AECL doesn't sell this new design in Ontario, nobody else is going to buy it. That will mean essentially the end of the Candu design," Michael Ivanco of the Society of Professional Engineers and Associates, an AECL workers union, told the Canadian Press. This outcome would reduce AECL's suppliers to "providing parts for an aging reactor fleet of an abandoned technology. There's no future in that; it's like being a VCR repairman."

McGuinty says that foreign companies must match AECL's levels of domestic employment. This is certainly feasible with regards to the construction of the Darlington reactors; after all, building new reactors is very labor intensive, and any company taking on the project will need to hire. However, with the future of the whole firm hinging on the Darlington decision, that puts the jobs of 4,700 AECL workers plus another 30,000 working on its supply chain into question. From this perspective, the effects of an AREVA or Westinghouse win are much harder to call. It's beginning to look like a “damned if they do, damned if they don't” situation for Ontario.

A decision on the Darlington project is expected in June.


DV8 2XL said...

Ontario brought this on themselves by calling for this bid to begin with. Canada has an independent nuclear industry because in was decided years ago that we would not be dependent on others for this technology, not because it would be cheaper to go it alone.

From the beginning an open bid was an ill-conceived move that was made without considering the political ramifications, I can only say that I am amused that Queen's Park is finding that they have turned up the heat on themselves.