No business case for new nuclear reactors in New Brunswick

Premier Blaine Higgs has endorsed so-called “small modular nuclear reactors” or SMRs. SMRs represent an untested technology but what we know on the basis of technical characteristics and historical precedent is that they will be expensive and any electricity they generate will not be economical.

The nuclear industry is pushing small reactors because large reactors are simply not economical. Constructing nuclear plants is just too expensive—as Ontario’s government found out after its call in 2008 for bids to build two more reactors at the Darlington site. Atomic Energy of Canada Ltd. reportedly bid $26 billion for two 1200-megawatt CANDU reactors and the province abandoned its nuclear plans.

Since then, the business case for nuclear power has become much worse as the cost of renewables has fallen dramatically.

Nuclear energy more expensive than renewable energy

Last November, the Wall Street advisory firm Lazard reported that the average construction costs of solar photovoltaics and onshore wind turbines in the United States—one of the largest renewable energy markets in the world—are $1,000 and $1,300 per kilowatt of generation capacity respectively, down from $1,750 per kilowatt for either technology in 2013. During this period, the cost of building a new nuclear reactor rose from $6,792 to $9,550 per kilowatt.

Lazard also reports rapid decreases in the costs of batteries and other storage technologies, which would be needed to deal with the intermittent nature of wind and solar energy once these become a much larger component of our electricity supply.

Solar backed with battery storage has been breaking cost records. As costs of batteries decline further, it may even be possible to transition to obtain all electricity from renewable energy and phase out nuclear energy and fossil fuels altogether.

Can small nuclear reactors change this picture?

As their name suggests, SMRs produce small amounts of electricity compared to current reactors. But their price tag will not be small. The reason is simple: the cost of building and operating a reactor is not proportional to the power generated, because a reactor generating thrice as much electricity as a smaller plant does not need thrice as much concrete or three times as many operators.

Therefore, small reactors will be more expensive to build and operate per unit of power than large reactors, and their electricity will have to be priced higher. There is historical evidence for this: many small reactors built in the early decades of nuclear power shut down early because their electricity was too expensive for the market or consumers.

No market for small nuclear reactors

Nuclear proponents argue that they can compensate for the loss of economies of scale by factory manufacturing and through learning. Again, history indicates otherwise.

Both the United States and France, the countries with the highest numbers of nuclear plants, found that costs went up, not down, as they built more reactors and discovered newer safety risks. Even if we optimistically assume that there are cost reductions, small reactors have to be manufactured by the thousands just to become competitive with large nuclear plants, let alone other sources of power. Who is going to buy so many reactors?

SMR proponents claim that they can be deployed in Canada at small and remote communities and mines that are not connected to the electric grid. But the electricity demands of these mines and remote communities are too limited and the cost of electricity from SMRs will be too expensive for these to offer a viable energy alternative. Indeed, the hypothetical market offered by these would not even justify building a factory.

Lack of a market can prove critical. Take the case of Westinghouse, the company that has directly or indirectly designed the majority of the world’s nuclear reactors. After pursuing a small reactor design for over a decade, the company abandoned that effort in 2014. Its CEO explained: “The problem I have with SMRs is not the technology, it’s not the deployment—it’s that there’s no customers.”

Radioactive waste and other problems

There are other problems with SMRs. All nuclear reactors, whether large or small, produce multiple kinds of radioactive nuclear waste, an inevitable accompaniment to the fission process that produces the energy that these reactors convert into electricity. Different reactors vary in the amounts and kinds of radioactive wastes they produce.

The SMR designs being proposed for construction in New Brunswick, a molten salt reactor design and a fast neutron reactor design, will produce varieties of wastes that have technical characteristics that make them very difficult to manage.

If building nuclear reactors is unwise, pouring public money into these is worse because it will not result in any widespread economic benefit. Nuclear power in general is not a good job creator. According to one widely cited study, solar energy leads to six times as many jobs as nuclear power for each gigawatt-hour of electricity generated. Because solar power plants are far cheaper to build and maintain than nuclear reactors, the number of jobs created per dollar of investment will be even lower in nuclear power.

Small reactors also suffer from the usual problems associated with nuclear power: the risk of severe accidents, and the potential for nuclear weapons proliferation. Indeed, they might make some of them worse. The bottom line: investing in SMRs is not likely to be a successful business proposition, and is not the opportunity for New Brunswick or Canada that advocates claim.

M. V. Ramana is the Simons Chair in Disarmament, Global and Human Security and Director of the Liu Institute for Global Issues at the School of Public Policy and Global Affairs, University of British Columbia and a Scholar at the Peter Wall Institute for Advanced Studies during 2020. He is the author of The Power of Promise: Examining Nuclear Energy in India, and a member of the International Panel on Fissile Materials, the Canadian Pugwash Group, the Global Council of Abolition 2000 and the team that produces the annual World Nuclear Industry Status Report.

A version of this article was previously published in the Brunswick News dailies: Telegraph Journal, Fredericton Daily Gleaner and the Moncton Times & Transcript.