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C.   Cost and Benefits
[A. CANDU Technology] [B. The Industry] [C. Cost/Benefit] [D. Safety/Liability] [E. Waste] [F. Security/Non-Proliferation] [G. Uranium] [H. Research Reactors] [I. Other R&D] [J. Further Info]

INDEX to Section C

C.1 How do the economic benefits of nuclear power compare to other sources in Canada?
C.2 How do the economic benefits of nuclear power compare to the people's investment?
C.3 What are the environmental benefits of nuclear power in Canada?
C.4 Why are CANDU units favourable for developing economies?
C.5 How are CANDU reactors well-suited to a hydrogen-fuel economy?
C.6 How are CANDU reactors well-suited to oil extraction from the "oil sands" of western Canada?
C.7 Why was the cost of Ontario's Darlington plant so high?
C.8 Who said that nuclear electricity would be "too cheap to meter"?
C.9 How many recent CANDU plants have been built on time and budget?

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C.1     How do the economic benefits of nuclear power compare to other sources in Canada?
[A. CANDU Technology] [B. The Industry] [C. Cost/Benefit] [D. Safety/Liability] [E. Waste] [F. Security/Non-Proliferation] [G. Uranium] [H. Research Reactors] [I. Other R&D] [J. Further Info]

According to the 1994 Annual Report of Ontario Hydro (now known as Ontario Power Generation Inc.), nuclear power in Ontario currently had a 35% cost advantage over fossil power (average energy costs of CDN$0.05/kWh for nuclear vs. CDN$0.07/kWh for fossil). This cost advantage had increased quite sharply from a 9% advantage in 1990.

In 2002 this cost advantage is still evident: a statement by Ontario Power Generation in January 2002 claimed that electricity from the refurbished Pickering A plant (see related FAQ) would cost CDN$0.03/kWh, compared with CDN$0.045/kWh for a new gas-fired cogeneration plant (i.e. one that generates industrial process steam as well as electricity), and CDN$0.05/kWh for a new combined-cycle gas turbine. Price volatility is another concern: these gas prices are based on an average long-term cost of US$3/million BTU, but the spot price reached three times this average at one point in 2001. [Source: Speech by OPG CEO and President Ron Osborne to Ajax-Pickering Board of Trade, Pickering, Ont., 2002 January 23]

The relative cost advantage of nuclear power is dependent upon the amount of time that a given plant is operated, measured by its "capacity factor" (percentage of time that a plant operates at design rating). Since nuclear plants are much cheaper to fuel than fossil plants, they are usually operated in "baseload" mode; that is, they contribute to the bulk electricity supply that does not vary as the load changes (e.g. throughout a typical day). More expensive fossil plants, such as natural gas turbines, would be operated at much lower capacity factors and used to meet peaking demands only. (In Ontario, as of December 1999, baseload demand was about 15,000 MW and the highest peaking demand was 25,000 MW. Installed capacity was 31,000 MW -- the extra capacity being a "reserve margin" required for system reliability.)

A useful measure of energy cost is the LUEC, or "Levalized Unit Energy Cost". The LUEC represents the entire life-cycle cost of a given technology, divided by the energy generated by the technology over its lifetime. The result, expressed in "cents/kWh", can be used to compare vastly differing technologies, with differing pay-back schedules, on a common scale. This is a useful comparison because the LUEC's life-cycle cost includes everything from initial design and construction, to operation, maintenance, fuelling, administrative overhead, and final plant decommissioning and fuel disposal. The LUEC also accounts for the cost of inflation over the time it takes to build and operate a given plant, expressing the result in constant dollars for a given year.

The figure below is taken from a 1989 Demand/Supply Report from Ontario Hydro (now Ontario Power Generation). It compares the LUEC (in 1989 dollars) of three state-of-the-art technologies then being considered for future supply needs in the province of Ontario.

Notice the variation with capacity factor: CANDU nuclear plants incur a relatively high capital cost, and therefore their LUEC is the lowest of the options when operated at capacity factors greater than about 60% (i.e., taking advantage of nuclear power's relatively low fuelling costs). Combustion-turbine gas plants, on the other hand, incur relatively low capital costs but high fuelling costs, and thus become cost-effective only at capacity factors less than about 25%.

To illustrate this difference further, compare the cost of a day's worth of baseload operation for each of the three "new supply" options in the above figure, using the technology-dependent LUECs given for 80% capacity factor (gas 6.6 cents/kWh, coal 4.1 cents/kWh, CANDU 3.2 cents/kWh). The cost of operating a new 1000 MWe generating plant over a 24-hour period in Ontario would therefore be $1,584,000 if natural gas were used, or $984,000 using coal, or $768,000 using uranium (1989 dollars).

Based on this analysis one would not recommend using natural gas technology for baseload supply, nor would one recommend using nuclear power for short-term peaking supply. This demonstrates the need for diversity of technology in an efficient electrical supply system.

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C.2     How do the economic benefits of nuclear power compare to the people's investment?
[A. CANDU Technology] [B. The Industry] [C. Cost/Benefit] [D. Safety/Liability] [E. Waste] [F. Security/Non-Proliferation] [G. Uranium] [H. Research Reactors] [I. Other R&D] [J. Further Info]

Here are some recent figures that help answer this question:

The economic value of nuclear power in Canada is reflected in the level of investment for upgrades that Bruce Power, a private nuclear operator (see related FAQ), is planning for the Bruce Nuclear Power site in Ontario. About Cdn$1.8 billion (US$1.2 billion) is planned in the period up to 2005-6, including Cdn$800 million (US$520.2 million) to replace turbines and make other upgrades to Bruce B, plus Cdn$340 million (US$221.1 million) to return to operation the mothballed units 3 and 4 at the four-unit Bruce A plant (see related FAQ) [3]. The improvements at the Bruce B plant also include a conversion to an advanced CANDU fuel, called "CANFLEX", using low-enriched uranium see related FAQ).[4]


[1] Study of the Economic Effects of the Canadian Nuclear Industry, conducted on behalf of AECL by Ernst and Young, 1993.

[2] Canadian Nuclear Association (quoting UNECAN News).

[3] World Nuclear Association, 2002 June 6-11 weekly news briefing.

[4] World Nuclear Association, 2003 April 23-29 weekly news briefing.

[5] The Canadian Nuclear Industry: Contributions to the Canadian Economy, conducted on behalf of the CNA by the Canadian Energy Research Institute, 2008.

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C.3     What are the environmental benefits of nuclear power in Canada?
[A. CANDU Technology] [B. The Industry] [C. Cost/Benefit] [D. Safety/Liability] [E. Waste] [F. Security/Non-Proliferation] [G. Uranium] [H. Research Reactors] [I. Other R&D] [J. Further Info]

All technologies for generating electricity have some environmental impact, making it an ethical responsibility to make choices based not only upon economics, reliability, and safety, but also upon minimization of the environmental "footprint".

Nuclear fuel is a much cleaner option than fossil fuels, for instance, since nuclear plant operation emits no greenhouse gases, acid gases, or particulate air pollution. Furthermore, the high energy density of nuclear fuel ensures low emissions of greenhouse gases and air pollution from the entire life cycle of a nuclear plant (i.e., accounting for the emissions from uranium mining and refining, fuel fabrication, plant construction, decommissioning, and waste management).

The waste product from the nuclear fuel cycle is compact (small in volume) and solid, making it much easier to manage than the waste products from coal fuel cycles (ash, gases, and airborne particulates). In fact, for economic reasons many of these fossil-fuel waste products are not "managed" at all, being simply released to the atmosphere.

If the nuclear waste product is small in volume, so is the fuel at the input end of the fuel cycle, and this presents another inherent advantage. A single 20 kg CANDU fuel bundle, half a metre long, can supply 100 homes with electricity for a year. The same electricity from a fossil station would require 400 tonnes (400,000 kg) of coal, or 270,000 litres (almost 60,000 gallons) of oil, or 300 million litres (10 million cubic feet) of natural gas. This minimization of resources is a remarkable benefit, compounded by the subsequent reduction in pollution per unit of electricity generated (ie., that "400 tonnes" of coal would go on to produce about 100 tonnes of ash, 1000 tonnes of CO2 gas, and 5 tonnes of acid gas; the "300 million liters" of natural gas would produce 600 tonnes of CO2 and 2 tonnes of acid gas).

As a rule of thumb, one may say that in Canada, a kilogram of air pollution is avoided for every kilowatt-hour of electricity generated by nuclear power (which would use 20 milligrams of uranium). This assumes that coal generation is displaced by nuclear generation, as is currently the case in this country.

In addition, studies [1] predict between 20 and 100 deaths per GWe-year of coal-fired electricity generation in North America, due to respiratory illness. Using recent statistics this translates to a range of 300 to 1600 deaths in Canada each year. It also implies that nuclear power in Canada has saved between 4000 and 20,000 lives since its inception.

In total, it is estimated that nuclear power in Canada, over its lifetime, has prevented the introduction into the environment of:

This website features a monthly tally of pollution avoided by nuclear power in Canada.

The only large-scale electricity-generating technology in Canada with cleaner air emissions than nuclear plants is hydroelectric power. However, the power of falling water has a different environmental price tag, in the form of large reservoirs that must be flooded behind each dam. The potential for widespread environmental destruction, and often the alteration of major river systems, has made new hydroelectric development unpopular. This was, in fact, the reason why Ontario Hydro (now known as Ontario Power Generation Inc.) turned to fossil fuels (and later, nuclear power) in the middle of the last century.

Recent evidence suggests that even hydroelectric power can't claim "clean air" superiority, since methane (a greenhouse gas 20 times more effective than carbon-dioxide) is released by the decay of organic matter trapped within hydroelectric dam reservoirs. A portion of the organic matter is vegetation (e.g. forests) submerged when the reservoir was initially filled, but the bulk appears to be washed in from upstream -- a process that reportedly can continue for the life of the dam. According to a report (November 16, 2000) by the World Commission on Dams, Dams and Development: A New Framework for Decision-Making, this can potentially make hydroelectric power a stronger greenhouse-gas polluter than fossil-fuel power. See also the BBC story, "Water power fuels climate change".


[1] See R. Wilson, S. Colome, J. Spengler, D. Wilson, Health Effects of Fossil Fuel Burning: Assessment and Mitigation, Ballinger Publishing Co., 1980; Also, P. Beckmann, The Health Hazards of Not Going Nuclear, The Golem Press, 1979.


See also...

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C.4     Why are CANDU units favourable for developing economies?
[A. CANDU Technology] [B. The Industry] [C. Cost/Benefit] [D. Safety/Liability] [E. Waste] [F. Security/Non-Proliferation] [G. Uranium] [H. Research Reactors] [I. Other R&D] [J. Further Info]

A CANDU reactor can be built with very little heavy-industry infrastructure, which is the reason Canada settled on this design in the first place. This is a distinct advantage for developing economies that wish to make domestic contributions to the power plant they purchase. Furthermore, the use of natural uranium decouples the owner from the enriched-uranium market, which is centred around three or four key players. Natural uranium, on the other hand, is available throughout the world. Finally, the flexibility of the CANDU fuel cycle leaves the door open for diversity down the road as economic conditions warrant. The Indians, for example, are making use of the thorium capability in one of their "CANDU-derivatives".

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C.5     How are CANDU reactors well-suited to a hydrogen-fuel economy?
[A. CANDU Technology] [B. The Industry] [C. Cost/Benefit] [D. Safety/Liability] [E. Waste] [F. Security/Non-Proliferation] [G. Uranium] [H. Research Reactors] [I. Other R&D] [J. Further Info]

To reduce pollution, including greenhouse-gas emissions, the transportation sector is poised to move from fossil-fuels to hydrogen fuel in the near future [1]. Hydrogen is abundant on this planet, especially in the form of water, and it burns cleanly (producing only water vapour). One method for safely packaging and extracting energy from hydrogen is to use fuel-cell technology, such as that under development by Canada's Ballard Power Systems.

Hydrogen is not a primary resource, however, and must be generated from other forms. The obvious strategy is to extract the hydrogen from water, and the most efficient way to do this on a large scale, without emitting more pollution in the process, is through electrolysis -- using electrical energy to separate water molecules into their constituent hydrogen and oxygen. Currently, however, hydrogen is produced largely through methane reformation, a process that necessarily emits the greenhouse gas carbon-dioxide and usually employs fossil-fuels as a primary energy source.

Nuclear power is therefore a natural match for a process seeking to generate large amounts of hydrogen relatively cleanly. It would be supplemented by hydroelectric plants, plus more intermittent renewable sources like solar and wind power plants. In Canada about 20 CANDU plants -- roughly the same number already operating in this country -- would be needed to generate the hydrogen fuel for our nation's transportation needs on an on-going basis. Unlike with petroleum, the fuel would have an inexhaustible supply, and would be generated 100% domestically (from natural resource to user end-product).

CANDU reactors are further well-suited to a hydrogen-fuel economy because they run on heavy water. Heavy water is a natural material that can be generated on the sidestream of conventional electrolysis plants, using CECE technology developed at AECL (see related FAQ). The heavy water would thus be procured at virtually no extra cost. One then achieves a symbiotic relationship whereby hydrogen fuel is generated cleanly using nuclear-powered electrolysis, which generates heavy water as a byproduct for the operation of the nuclear power plant.


[1] J.M. Hopwood, "The Next Generation of CANDU Technologies: Profiling the Potential for Hydrogen Fuel", AECL publication available for download in PDF format (506 kB).

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C.6     How are CANDU reactors well-suited to oil extraction from the "oil sands" of western Canada?
[A. CANDU Technology] [B. The Industry] [C. Cost/Benefit] [D. Safety/Liability] [E. Waste] [F. Security/Non-Proliferation] [G. Uranium] [H. Research Reactors] [I. Other R&D] [J. Further Info]

Massive reserves of oil are located deep under the Athabascan Basin in northern Alberta, in the form of a tar-like bitumen dispersed in sand and sandstone. These are known as "oil sands" (or "tar sands"), containing over 174 billion barrels of recoverable oil (second only to that found in Saudi Arabia) and currently providing almost 50% of Canada's domestic oil production, and about 10% of the North American production [1]. The two corporations currently producing oil from the oil sands are Suncor and Syncrude, although other companies (e.g.. Mobil, Shell) own leases to parts of the Basin and plan to extract oil in the future (see map of holdings).

The oil found near the surface (up to 75 metres down) can be economically open-pit mined, but much of the resource is located below 200 metres and must be extracted using high-pressure steam. Once injected into a tar-sand layer, the steam heats the bitumen so it can separate from the sand and be pumped to the surface.

Fossil fuels are currently burned to create the steam for this process, but projects are underway to evaluate the suitability of nuclear energy as a heat source. Unlike fossil fuels, a nuclear reactor can generate large volumes of high-pressure and high-temperature process steam without emitting air pollution or greenhouse gases. To be useful to the Alberta tar-sand projects, however, nuclear heat must also be economical. [2], [3]

A study by the Canadian Energy Research Institute (CERI) suggest this is the case: The study indicates that process steam from a dedicated CANDU-ACR reactor, AECL's newest and most efficient power-reactor design (see related FAQ), can be delivered at a cost that is competitive with natural gas.

In 2007 interest was expressed by Energy Alberta Corporation in constructing to CANDU reactors in Alberta for use in the tar sands. In August 2007 Energy Alberta Corp. formally applied to the Canadian Nuclear Safety Commission for a license to site up to four Advanced Candu Reactors (ACR - see related FAQ) at Lac Cardinal near Peace River, Alberta. The proposed construction would start with one twin ACR plant (2 X 1100 MWe).

[1] Government of Alberta "Oil Sands" webpage

[2] Cosmos M. Voutsinos, "Using nuclear energy to get the most out of Alberta's tar sands", Rev.1, Jan. 2007 (above link to authorized version on Computare website).

[3] John K. Donnelly and Duane R. Pendergast, "Nuclear Energy in Industry: Application to Oil Production", Proceedings of the 20th Annual Conference of the Canadian Nuclear Society Montréal, Québec, Canada, 1999 May 30 - June 2, (above link to authorized version on Computare website).

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C.7     Why was the cost of Ontario's Darlington plant so high?
[A. CANDU Technology] [B. The Industry] [C. Cost/Benefit] [D. Safety/Liability] [E. Waste] [F. Security/Non-Proliferation] [G. Uranium] [H. Research Reactors] [I. Other R&D] [J. Further Info]

The Darlington Nuclear Generating Station (DNGS) is a 3524 MW(net), 4-unit CANDU station on the shore of Lake Ontario about 70 km east of Toronto, Ontario. Darlington is Ontario Power Generation's (OPG's) newest and largest nuclear station, providing about 20% of Ontario's electricity supply (the equivalent of about 2 million homes), or about CDN$1 billion per year worth of electricity at an arbitrary market price of $0.04/kWh.

Darlington was designed and built by Ontario Power Generation (then Ontario Hydro), and brought into service between 1990 and 1993 at a final cost of CDN$14.5 billion (1993 dollars). This represents almost twice the estimated final cost (capital + construction) of CDN$7.4 billion (1993 dollars) projected at the time that construction started in 1981 [1]. About 70% of this cost increase, and about 40% of the total cost, was due to interest charges alone. This arose through a stipulation of Ontario's Power Corporation Act (RSO 1990), and originating with Ontario's historic Power Commission Act (SO 1906), which precludes the paying down of capital debt through the utility's rate base, until the capital asset is in service.

The final cost of a large generating station like Darlington is thus sensitive to schedule delays. In the case of Darlington, eleven major delays (amounting to about five years of net lost time per unit) were experienced after the project's initial approval by the utility's Board of Directors in 1977 [2]. The single largest cost increase occurred in 1983, when Units 3 and 4 were deferred for two years due to low-growth in the electricity forecast. This relatively early delay in the project, along with changes in financial policy and worsening economic conditions, increased the final capital cost estimate by about CDN$4 billion, to CDN$11 billion. Reduced load growth accounted for the most significant delays to the Darlington project, but other contributors included labour actions, staff shortages, and two unforeseen technical issues requiring the replacement of generator rotors and pump impellers.

In the end about 70% of Darlington's final cost increase was due to schedule delays and financial policy changes. The remainder of the increase is attributable to changes in scope, including that imposed by an evolving regulatory environment over the course of the project.

The experience of Darlington underscores the importance of schedule (both optimization of, and adherence to) in the construction of large generating plants, and, in particular, the ramifications of imposing schedule delays based upon government policy or load forecasts once a major capital project is under construction. At the same time, however, it is also important to compare the capital cost of Darlington with its low operational cost, and ultimately its worth to both the Ontario and Canadian economy (also indicated in the first paragraph above), and the environment.

More recent experience by Atomic Energy of Canada Ltd. (AECL) with CANDU 6 new-build projects indicates that adherence to budget and schedule is routinely achievable. In the near future, the CANDU-ACR is projected to further minimize costs through a 40% reduction in capital costs and a streamlined construction process.


[1] "Darlington Cost Increases", Nuclear Canada Yearbook 1992, Canadian Nuclear Association, 1992.

[2] J. McCredie, "Domestic Project Management", Canadian Engineering Centennial Conference, published by the Canadian Nuclear Society, May 1987.


See also...

"Can CANDU estimates be trusted?" by J.A.L. Robertson (2004).


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C.8     Who said that nuclear electricity would be "too cheap to meter"?
[A. CANDU Technology] [B. The Industry] [C. Cost/Benefit] [D. Safety/Liability] [E. Waste] [F. Security/Non-Proliferation] [G. Uranium] [H. Research Reactors] [I. Other R&D] [J. Further Info]

It is a common perception that early nuclear power proponents boasted of electricity from nuclear reactors becoming "too cheap to meter" in the near future. In fact, while nuclear reactors have become one of the cheapest large-scale options for base-load electricity (see related FAQ), it was never the expectation of earlier nuclear engineers that costs would come down low enough to render metering irrelevant.

In fact, the oft-quoted prediction, "too cheap to meter", was made in 1954 by an American bureaucrat, Lewis Strauss, in a speech that very much reflects the public's post-war euphoria over nuclear technology (and technology in general), galvanized by President Eisenhower's vaunted "Atoms for Peace" program launched in December 1953. Strauss' comments predated the first nuclear power plants by three years, and included other optimistic references to wiping out world hunger and extending human life expectancy.

A brief retrospective look at official Canadian predictions (published by the Canadian Nuclear Society) reveals a much more conservative outlook, and puts to rest the notion that the nuclear industry itself supported the "too cheap to meter" portrayal.

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C.9     How many recent CANDU plants have been built on time and budget?
[A. CANDU Technology] [B. The Industry] [C. Cost/Benefit] [D. Safety/Liability] [E. Waste] [F. Security/Non-Proliferation] [G. Uranium] [H. Research Reactors] [I. Other R&D] [J. Further Info]

The following table gives the record of recent CANDU build projects undertaken by Atomic Energy of Canada Ltd. (AECL) [1]. See related faq for information on the financing of these projects. NOTE: "CANDU 6" is the commercial CANDU product marketed and installed by AECL worldwide (see related faq on different CANDU designs).

 
CANDU 6 New-Build Track Record

 
In-Service Date
 
 
Plant
 
 
Country
 
 
Status
 
1996 Cernavoda-1 Romania On budget, on schedule
1997 Wolsong-2 South Korea On budget, on schedule
1998 Wolsong-3 South Korea On budget, on schedule
1999 Wolsong-4 South Korea On budget, on schedule
2002 Qinshan-4 China On budget, 6 weeks ahead of schedule
2003 Qinshan-5 China On budget, 4 months ahead of schedule
2007 Cernavoda-2 Romania On budget, on schedule


[1] R. Van Adel, "The Power of Partnerships", presentation to the 2004 Nuclear Industry Seminar, Canadian Nuclear Association, February 19, 2004.

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End of Section C
[A. CANDU Technology] [B. The Industry] [C. Cost/Benefit] [D. Safety/Liability] [E. Waste] [F. Security/Non-Proliferation] [G. Uranium] [H. Research Reactors] [I. Other R&D] [J. Further Info]

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