Canada’s P3 market has a long history in the nuclear industry.
Mike Rencheck, president & chief executive of Bruce Power, is often keen to tout his organization as the country’s first and pre-eminent P3 in the country. Established in 2001, Bruce Power is Canada’s only private sector nuclear generator and is a partnership comprising TC Energy, Ontario Municipal Employees Retirement Systems (OMERS), the Power Workers’ Union and The Society of United Professionals.
As the energy transition becomes ever more important, there will be increasing need for more investment in nuclear power, but finding the money to deliver them will be a challenge.
“We know we need a lot of [clean energy],” Pat Dalzell, executive director of corporate affairs at Bruce Power, told the Canadian Council for PPPs conference in November. “That can’t all be on the taxpayer.”
With a reluctance to saddle the public purse with the huge sums that are required to fund the development of a major new nuclear plant, it means that ways to bring in private investment are being thought through - and will lead to new ways of approaching the P3 model. In the UK, for example, efforts to attract billions of pounds of private finance into the next nuclear power station to be built - Sizewell C - has resulted in the use of the regulated asset base (RAB) model, and the government pledging to take a 20% stake in the scheme.
In Canada, too, new approaches are necessary. “We have to be smarter,” said Andrew Elnazir, vice president for business development & strategy within the nuclear division at AtkinsRéalis (formerly SNC Lavalin). “The lump sum, turnkey approach doesn’t work for us or our suppliers.”
The answer? Closer working relationships and a willingness from all sides to share in the risks and rewards.
“We have taken a much more collaborative approach,” Elnazir continued. “We share in the risk and reward.”
Such a collaborative approach will be critical for the future delivery of both major nuclear projects, like Sizewell C in the UK, but it will also come into play in the emerging small modular reactor (SMR) sector
Elnazir pointed to North America’s first grid-scale SMR, the Darlington New Nuclear Project (DNNP) in Clarington, Ontario. That project is being developed in a partnership between public organization, Ontario Power Generation, and a consortium of private partners comprising Aecon, GE Hitachi and AtkinsRéalis.
“There are four of us each equally taking risk and reward in that project,” he explained.
This will require some adjustments, both in working practices and in the way contracts are structured. “The behavioural component needs to be ingrained in the contract,” Elnazir continued, referring to the need to be able to have “honest conversations and a ‘no blame’ culture”.
Dalzell suggested that another important component in the development of nuclear power in Canada has been his company’s ability to attract finance through a green bond. “We were the first company to issue green bonds for a nuclear project,” he said. “This will pave the way for future nuclear projects.”
As the energy transition gets underway and the demand for nuclear power as a clean source of energy to underpin renewable power, the range of options and efforts to increase collaboration to bring investment into the sector will continue to increase.