When Canada’s Minister of Natural Resources, Tim Hodgson, unveiled the federal government’s ambitious plan to significantly expand the nuclear energy sector, he pointed to a project in the U.K. as a blueprint. Sizewell C, situated on the Suffolk coast of England, is projected to cost 38.2 billion pounds ($72.3 billion Cdn), with private investors contributing 55 per cent of the construction expenses.
Emulating this model is crucial for Hodgson to realize the government’s target of constructing up to 10 new reactors in Canada. Notably, one of the investors in Sizewell C is La Caisse, the public pension fund of Quebec, holding a 20 per cent stake valued at $3.2 billion Cdn.
Securing such investments poses challenges, particularly for risk-averse pension funds. Western countries have seen nuclear energy projects exceed budget expectations significantly. For instance, Hinkley Point C in the U.K. initially estimated at $34 billion now exceeds $64 billion, while Olkiluoto 3 in Finland surged from $5.1 billion to $17.8 billion by its completion in 2022.
To attract private sector investors like pension funds, mitigating risks is vital, as stressed by Yrjo Koskinen, a sustainable finance professor at the University of Calgary. The regulated asset base (RAB) model, adopted by Sizewell C, ensures investors receive returns during construction and are shielded from cost overruns. If costs surpass a specified limit, the financial burden is shared among public and private investors.
Despite concerns over cost overruns and waste management, countries like the U.K., U.S., France, and Japan are ramping up nuclear power initiatives. Canada aims to follow suit, leveraging its experience in nuclear deployment. However, challenges persist, and experts caution against overlooking domestic implications in the pursuit of a global nuclear industry presence.
Ontario, heavily reliant on nuclear energy, faces similar hurdles in cost control and workforce expertise. Yet, the potential benefits of nuclear power, particularly during energy crises, underscore its importance in the global energy landscape.