President and CEO, Canadian Nuclear Association
Available Affordable Electricity from Nuclear Energy
Chairman: William G. Whittaker
President, The Empire Club of Canada
Head Table Guests
Rev. Dr. John S. Niles, Rector, St. Andrew's United Church, Markham, and First Vice-President, The Empire Club of Canada; Andre Bodo, Grade 12 Student, North Toronto Collegiate Institute; Reverend Vic Reigel, Pastoral Staff, Christ Church, Brampton; Pierre Charlebois, Chief Nuclear Officer, Ontario Power Generation; Richard E. Reimels, President, Babcock & Wilcox Canada; Kevin Routledge, President and COO, Nuclear Safety Solutions Limited; Pat Mills, Career Partners, Hazell & Associates, and Director, The Empire Club of Canada; Don MacKinnon, President, Power Workers' Union; The Hon. Barbara McDougall, Advisor, Aird & Berlis, and Former Cabinet Minister; James F. Hankinson, President and CEO, Ontario Power Generation; and David J. McFadden, QC, Partner, Gowling LaFleur Henderson LLP.
Introduction by William Whittaker
Lemeul Gulliver's adventures in Lilliput begin when he wakes up after his shipwreck to find himself bound by innumerable tiny threads and under the intense scrutiny of tiny captors who are in awe of him but fiercely protective of their kingdom. They are not afraid to use violence against Gulliver but he eventually gains their confidence and becomes a natural resource used by the Lilliputian army in their war against Blefuscu, whom the Lilliputians hate for doctrinal differences over the proper way to crack eggs. But things change when Gulliver is convicted of treason over a fire in the royal palace. However, he is pardoned and returns to England.
On a subsequent journey, Gulliver ends up in Laputa, a floating island inhabited by theoreticians and academics, who Gulliver soon discovered were an odd lot. Their thoughts were so taken up with intense speculation that they could neither speak nor hear the words of others, unless explicitly aroused. Apparently, only music and mathematics excited their unworldly concentration. But music and mathematics had their negative effects. Instead of a blissful reverie about the perfection of a circle or the infinitude of a pi, the Laputans were frightened. Their mathematical calculations taught them that the earth very narrowly escaped a brush from the tail of the last comet and that the next would probably destroy them. The Laputans lived in fear. When they met acquaintances, the first question they asked was what hopes did they have to avoid the stroke of the approaching comet.
How apt an analogy is Gulliver and his travels to the nuclear industry and its critics today. Gulliver, the giant nuclear industry, striking terror into the hearts of the little people--the Lilliputians--who respond with fear and violence, only to learn that Gulliver can be a valuable natural resource to them. And Gulliver, as the realistic nuclear industry, interested in rational debate and practical solutions, pitted against critics, unable to engage in logical debate because of their doom and gloom forecasts and fears.
Mr. Elston will address us today on why nuclear power should be part of the continuing debate concerning the future of electricity generation in Ontario and Canada.
Murray Elston became President of Canada's Research-Based Pharmaceutical Companies in November 1998. He was President of the Ontario Interlink Industrial Park from 1994 to 1998.
From 1981 to 1994, Mr. Elston was a member of the Ontario legislature and held a number of portfolios in the Peterson government including Minister of Health, Chairman of the Management Board, Minister of Financial Institutions and Chair of the Public Accounts Committee.
Mr. Elston is a graduate of the University of Western Ontario and holds bachelors' degrees in arts and in law. Prior to his election to the Ontario legislature, he practised law in Bruce County, Ontario.
My appearance here today before members of the Empire Club represents a kind of homecoming for the nuclear community.
It was 50 years ago that David Keys, then the scientific advisor to the president of Atomic Energy of Canada, spoke to the Empire Club about "The Peace-time Applications of Atomic Energy."
His thoughts about energy back in 1955 foreshadow remarkably the situation this country and this province find themselves in now. Mr. Keys talked about nuclear's role in making steam to produce electricity and power.
The fission of a pound of nuclear fuel, he told club members, releases as much heat as obtained from burning 2.7 million pounds of coal or 30 million cubic feet of natural gas. This is still true today.
He went on to say, "Ontario has already used practically all the available resources of hydro-electric developments ... Other sources will be required--hence, the interest in producing nuclear energy plants that will be competitive with coal."
Mr. Keys was speaking at the dawn of nuclear science. But he realized the importance of affordable electricity as an essential good in a society. He knew that access to reliable and low-cost electricity powers the way for a society to become prosperous and to be able to compete effectively in the world.
Mr. Keys' words were truly prophetic. Today, nuclear energy has become the energy mainstay for Ontario.
Last year, nuclear reactors supplied just over 50 per cent of electricity demands in the province. Hydraulic generation provided just under one-quarter of the power consumed and coal came in at 17.5 per cent. Natural gas plants generated 6.5 per cent of power needs in Ontario.
But the piece of the electricity pie supplied by coal will disappear as Ontario phases out its coal-fired power plants. The closure of the last coal station slated for 2009 will take about 7,500 megawatts of generation offline. That's almost 30 per cent of peak consumption levels reached this past winter and summer in Ontario.
Even before the phaseout of coal stations, Canada's most industrialized province finds itself in a dire situation. Its electricity infrastructure is increasingly taxed by demand, aging, and in need of refurbishment. Ontario must rebuild and replace 80 per cent of its power capacity over the next 15 to 20 years.
And if we are to accommodate the reshaping of Ontario's electricity system by upgrading existing generation and promoting the addition of new generating capacity, including new nuclear plants, appropriate attention needs to be given to our transmission infrastructure as well.
The electricity system deficit looms as a potential barrier to future economic growth in Ontario. Perrin Beatty, the President of Canadian Manufacturers and Exporters, warned last week that billions of dollars in industrial investment could go to other jurisdictions where power supply is more reliable.
Mr. Beatty said in a speech: "The cost and the supply of energy is quickly turning into a competitive disadvantage that threatens future prosperity and undermines Ontario's attractiveness as a location to invest, to build and to employ...." Some companies have said recently they will have to leave because high electricity costs make it difficult to compete in their markets.
The Independent Electricity System Operator (IESO) reported in its most recent 10-year outlook: "Aging generation facilities and the continued increase in demand for electricity add to the urgency of proceeding with new generating and transmission facilities over the next 10 years." The warning is clear: Ontario needs new electricity infrastructure generation capacity within the decade even if aggressive conservation targets are successful.
The province--once a net exporter of electricity--has been forced time and again to buy expensive imported power. This year, icy winter days and hothouse summer weather severely tested the electricity system in Ontario.
Yet, our large generators performed extremely well. Ontario Power Generation and Bruce Power kept the lights on and the economy moving.
As a verification of how difficult the situation was, many businesses and homes experienced repeated voltage reductions, or brownouts, as demand for more power overwhelmed the overstretched system. Consumers were told to cut down on their use of electricity. This inability to cope at peak demand times, the need for costly imports, and high fossil fuel prices have combined to paint a threatening picture of an Ontario without adequate supplies of electricity.
The IESO's report refers starkly to the potential for brownouts and, in some cases, rotating power outages as demand continues to grow.
In fact, consumption has risen by an average of 1.7 per cent annually since 1991. That increase has come despite conservation initiatives and demand-side reductions.
In Ontario, the annual growth in power demand has mirrored the increase in the size of the economy and population. Now edging close to 13 million, the population has risen more than 16 per cent in the past decade and a half.
The same need for new capacity exists in other provinces. The Canadian Electricity Association estimates it will take $150 billion over the next two decades to upgrade supply and transmission infrastructure across the country.
Merely extending the life of existing generating stations is no longer good enough.
The picture for Ontario will brighten next month when Pickering A, reactor 1, returns online, adding 515 megawatts of electricity to the grid. A further 1,500 MW will be generated when units 1 and 2 at Bruce Power A station are refurbished. These additions will help.
But refurbished nuclear power and new supply from other sources will still not meet our needs over the next 10 to 20 years.
Ontario Power Generation has announced that two reactors at the Pickering A station will not be returning to operation. OPG does not believe that refurbishing reactors 2 and 3--offline since 1997--can be economically justified. The announcement underscores the crucial need for low-cost power, produced at high-capacity factors.
Those are the key parameters as Ontario considers how it will source tomorrow's electricity supply. There are several choices. Natural gas plants are large-scale generators and can go up relatively quickly. But average natural gas prices have increased more than five times from their low of about US$2 a decade ago. Natural gas prices have risen more than 60 per cent this year alone. This volatility does not make for predictable and affordable electricity.
In North America, some gas-fired plants have been shuttered. The gas plants in Ontario are not running to capacity because the cost of natural gas exceeds the market price of electricity. EPCOR has said it will close a gas plant in Alberta for this reason.
Reliance on natural gas-fired capacity also strains the supply of available proven reserves. And natural gas, while burning cleaner than coal, creates greenhouse gas emissions that have been linked to climate changes around the world. With no local supply of natural gas, Ontario must compete with other users of gas internationally.
Ontario is looking to renewable sources, such as solar power and wind turbines, to add to overall capacity. Both options are Kyoto-friendly since they don't produce greenhouse gas emissions but are closer to the top end of the cost curve than nuclear, hydro, coal and natural gas.
Wind turbines have a performance capacity of about 20 per cent. They do not generate power consistently enough so that wind energy can compete in price with other major suppliers. Wind turbines must be backed up by so-called shadow power plants--coal or hydro or nuclear stations that are available when the wind is not blowing.
Denmark is a world leader in wind power. But even Denmark supplies only about 20 per cent of its electricity needs from renewable sources, including wind. And the Danes have found they must go offshore to improve production from wind.
This limited capacity factor means wind turbines cannot function as around-the-clock baseload generators. If you were to build a wind farm to try to match the power output of a 1,000-megawatt nuclear plant, the wind farm would cover about 150,000 acres or 34 times the footprint of Toronto's airport.
Large hydro dams, like nuclear reactors, provide affordable and emissions-free baseload power. But all the large hydro sites in Ontario have been developed. Potential multi-billion-dollar hydro projects in Manitoba and Quebec, that would provide new power to Ontario, remain well out on the horizon and would require very costly transmission corridor upgrades. The province is absolutely right to be cautious. We must look carefully before agreeing to purchase very costly small amounts of electricity from distant neighbors.
Nuclear plants in Canada and the United States have achieved very competitive operating-cost records as around-the-clock producers. Over the past several years, nuclear stations, including those in Ontario, have improved their system performance and operating efficiencies tremendously.
Reactors provide electricity at anywhere between two to six cents a kilowatt-hour, depending on a number of factors that vary with each station and operator, and with each local market situation. In the United States, for example, the price of nuclear-supplied power is as low as 2.7 cents a kilowatt-hour.
A Pollution Probe survey in 2002 rated nuclear, large hydro, and coal as the three lowest-cost power producers. The cost for nuclear energy came in at about four cents a kilowatt-hour, about even with coal. Large hydro dams were also in the same range. Smaller hydro dams and natural gas plants were closer to five cents a kilowatt-hour or higher. But that was three years ago, when gas was half the price.
I mentioned rising natural gas prices earlier. What about the price of uranium, the fuel that powers the nuclear process? The cost of uranium has also risen in the past two or three years. But unlike other energy sources, the impact of higher uranium prices on electricity generation has been modest.
The price of uranium fuel makes up a relatively small component of the cost of nuclear-produced power. Uranium is also a marvellously efficient fuel. A pellet of seven grams--the weight of two nickels--contains as much energy as three barrels of oil or 17,000 cubic feet of natural gas.
Nuclear energy is also reliable power. Since 1962, reactors have delivered more than two billion megawatt-hours of electricity to the grid in Canada--enough to supply the entire country for four years.
In the first quarter of this year, several reactors in Ontario turned in capacity performances of well over 90 per cent. Last year, Unit 4 at Darlington posted a performance factor of 95.1 per cent. In South Korea, four CANDU reactors all had 90-per-cent ratings, with one--rated as the best CANDU worldwide last year--recording 97.4 per cent. A CANDU reactor in China turned in a similar result.
Both reactors and large hydro dams are large-scale producers. Projects of this size take 10 years or more to bring online--about half of that time due to regulatory, environmental, and other phases. This lengthy period reinforces the need for the various authorities in the electricity-approvals process to move expeditiously.
Once the go-ahead is given for new reactors, the actual construction work occurs relatively quickly. Today's modular assembly techniques, pre-fabrication systems, and parallel-building activity mean that reactors can go up in five years or less. They are completed on budget and on time. Atomic Energy of Canada delivered one of its CANDU 6 reactors in China 100 days ahead of schedule.
Continuing research and design has allowed nuclear technology to improve dramatically over the past few years. The latest generation reactors are designed to be efficient for up to 60 years. This timeframe and lengthy amortization period means affordable and reliable power can be provided for several decades.
Like all major power generators, nuclear plants create waste. Over the last 40 years of operating nuclear power reactors in Canada, the volume of waste is modest compared to fossil fuel with the total volume of nuclear spent fuel filling about five hockey rinks to board level. Canada's nuclear operators will have a plan developed by the end of this year for long-term management of nuclear waste.
In its interim report, the Nuclear Waste Management Organization has recommended a staged waste-storage process, with ultimate isolation of used nuclear fuel deep underground in suitable rock formations. The NWMO will submit its final report to the federal government in November.
For now, the waste is securely stored at reactor sites. Spent fuel bundles are safely contained in wet bays and are placed later in dry storage facilities. We know where all of our waste is; it does not get deposited into the atmosphere.
That's because reactors do not emit greenhouse gases. Such heat-trapping emissions have been linked to melting glaciers and rising Arctic seas. The International Energy Agency reports that global carbon dioxide emissions resulting from human activity are growing about 1.7 per cent every year.
Nuclear reactors run a very close second to large hydro dams as the world's two major sources of emissions-free power generation. Since 1972, reactors have helped Canada avoid production of more than 1.6 billion metric tonnes of emissions that would have been issued had fossil fuel stations been used instead.
Many leading environmental scientists, such as Dr. James Lovelock, originator of the Gaia Theory that the Earth is a self-regulating biosphere, have endorsed a strong role for nuclear because it does not create emissions. Expanding Canada's nuclear capacity would go a long way in helping the country meet its Kyoto obligations to trim emissions.
Around the globe, we are seeing a nuclear renaissance as the many strengths of nuclear energy are recognized. About 439 reactors are in operation worldwide. The World Nuclear Association reported this spring that a further 133 were under construction, in the planning stages, or have been proposed.
Last month, President Bush signed the Energy Policy Act of 2005, encouraging construction of new nuclear plants as part of a diverse energy-production portfolio in the U.S. The act provides incentives for building new reactors, including loan guarantees, and authorizes funding for research and development.
China, France, Finland, the United Kingdom, Japan and other countries have also adopted nuclear energy in their public-policy positions. They see nuclear as an absolutely essential solution to future energy needs. Canada should look to the reasons these nations have endorsed new nuclear energy and take similar steps in this country.
Canada is one of the world's leading nuclear-technology nations. This country has made enormous contributions to nuclear medicine. Canada produces 75 per cent of the world's Cobalt-60 used to treat cancer, to prevent disease, and sterilize over 40 per cent of the world's single-use medical supplies. CANDU reactors are proven performers worldwide.
Despite this impressive record, it has been difficult to get governments in this country to commit to, and to promote, more nuclear-created electricity. They have been reluctant to get behind the latest nuclear technology, with its smaller yet far more efficient reactors. Other countries have realized Canada's nuclear energy benefits but we haven't.
There are signs that this may be changing, especially at the provincial level. Last month, Canada's premiers recognized the important role played by nuclear-created electricity when they discussed energy policy during their meeting in Banff.
New Brunswick is going ahead with a $1.4-billion refurbishing of its Point Lepreau reactor. Premier Bernard Lord said this summer that the decision constituted "the most prudent, most balanced, and most realistic approach to take for all New Brunswickers." The Quebec government is presently reviewing the option to refurbish its Gentilly 2 reactor unit.
In Ontario after an exhaustive canvass of all options, new generation, conservation and energy efficiency, Ontario Premier Dalton McGuinty said in a speech on September 14 that his government understands the need for new baseload supply in the province. Speaking in Niagara Falls, he said: "We are prepared to go ahead with economical, safe, new nuclear if that is recommended by the Ontario Power Authority." The premier had previously identified the four cornerstones of Ontario electricity generation policy. Generators must be safe, clean, affordable and reliable. For new baseload power, nuclear energy is Ontario's best option to meet these tests.
There is public support for nuclear's role in keeping the lights on. Recent surveys by polling firm Ipsos Reid shows that almost 60 per cent of Ontario adults support nuclear energy. Support for both refurbishing existing reactors and for building new units has risen strongly as our power system has been stretched to the limit.
Power users--whether they consume electricity in the home, the factory, or the hospital--must be assured that affordable electricity will be available, to support their quality of life, to help them to compete internationally and to propel Ontario confidently forward into the 21st century. Your Canadian nuclear industry is here to provide that assurance.
The appreciation of the meeting was expressed by Pat Mills, Career Partners, Hazell & Associates, and Director, The Empire Club of Canada.