The future for nuclear is bright, but we must learn from the past

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As Canada prepares to meet its growing energy needs, there is no longer debate about the central role nuclear will play. Critics have become converts in what is being called the “nuclear renaissance,” but before we break ground on the next generation of reactors, Canadian policymakers must answer one crucial question: Who bears the risk for cost overruns, and how do we prevent them in the first place? If we fail to get this right, we will struggle to expand nuclear power precisely when we need it most.

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The Independent Electricity System Operator (IESO) has projected that electricity demand in Ontario alone will rise by 75 per cent in the coming decades. This estimate only projects meeting demand forecast today, but as AI, data centres and quantum computing evolve alongside electrification, the real demand will likely be higher. To meet this challenge, we must plan to nearly double our emissions-free generation capacity. Ontario has indicated that it plans to add more large-scale nuclear generation capacity alongside the development of Small Modular Reactors (SMRs). The future for nuclear is bright, but only if we learn from lessons of the past.

Canada was the third country to achieve nuclear fission, but our history is also littered with cautionary tales of construction delays and cost overruns. I grew up in Bowmanville during the construction of the Darlington Nuclear Generating Station. Its economic benefits were undeniable, then and now, but so were the crippling budget overruns. What was planned as a $4.5 billion project ballooned to over $14 billion by completion. The resulting  stranded costs contributed to the breakup of Ontario Hydro, the restructuring of the electricity sector, and a debt-servicing charge on the electricity bill of Ontarians that they paid for sixteen years.

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Other provinces did not fare much better. Generating stations in Quebec and New Brunswick faced construction delays and cost overruns, leading Quebec to eventually abandon nuclear. In New Brunswick, the costs associated with refurbishing their plant led to rate pressures and even a Hail Mary pass in 2009 to sell New Brunswick Power to Hydro Quebec. The deal was abandoned due to public opposition to the sale, but it demonstrates the enormous challenges provinces face.

The United States had a similar history with respect to costs and delays, which is why in 2024, the Biden administration launched a working group to tackle nuclear cost overruns and construction delays. This is now a bipartisan effort in the U.S. to bring together project developers, engineers, utilities, investors, and labour leaders to identify ways to discuss project delivery and reduce overrun risk.

Canada has had great success with its CANDU fleet of reactors and a better overall track record than the Americans. Ontario was able to eliminate the burning of coal because of nuclear energy, and this still ranks as the largest greenhouse gas emission reduction achievement in Canadian history. That said, we must come up with a smarter approach to building and operating these plants. Canada needs to ask the same questions that are being explored in the United States. Governments will always have a critical role to play in planning for the electricity needs for their province and regulating the safety of operations, but better contracting models are needed.

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The restructuring of Ontario Hydro back in the 1990s shows us what is possible. Ontario Power Generation nuclear assets in Tiverton were transferred to a private consortium known as Bruce Power. Its ownership includes two operator unions, a Canadian pension fund and a Canadian energy company. This private sector operator has safely operated and refurbished reactors at the site, and works closely with other utilities to ensure that operators across the fleet of reactors in Ontario can learn from one another. Their model and other international projects show that a high level of training, accountability measures and milestone-based financing can deliver safe and effective performance without runaway costs.

Before we start writing the next chapter of nuclear energy in Canada, lets be sure we take away all the lessons from the first chapter. The private sector must play a role in both the construction and operation of the next generation of nuclear stations in Ontario and be part of the risk sharing solution.

Erin O’Toole is the President of ADIT North America and former Leader of the Conservative Party of Canada

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