NB Power will be mandated to buy power from SMRs, even if not the lowest-cost option

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New bill forces NB Power to purchase power from small modular reactors
WATCH: A new bill will force NB Power to purchased power from small modular reactors once they’re available, even if they aren’t the most cost effective option. Critics say it’s an admission that the technology will be expensive and will impact power rates. Silas Brown reports. – Nov 1, 2023

New amendments to the Electricity Act would force New Brunswick Power to purchase electricity generated by small modular nuclear reactors, even if it isn’t the lowest-cost option.

The utility is required to purchase power at the lowest cost, but Energy Minister Mike Holland said that may have prevented power purchase agreements with SMR operators.

“NB Power has to buy generation at the least-cost option,” he said.

“We know that the first of a kind when it comes to the development of an SMR would fall outside of the auspices of that legislation and therefore the utility would be precluded from buying it.”

There are two companies with Saint John offices developing the next-generation “modular” reactors that will be built at the province’s lone nuclear power site at Point Lepreau. According to NB Power’s latest integrated resource plan (IRP), it’s expected that ARC’s 150-megawatt sodium-cooled reactor will be up and running by 2035, while Moltex’s 300 MW molten salt reactor will be ready to join the grid in 2039.

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The plan says that it’s possible another 300 MW of SMR generation will be built in the 2040s.

The IRP breaks down various scenarios of how the province could move toward a net-zero electricity grid, but while it provides generation cost breakdowns for each other type of possible electricity, it doesn’t have projections for what it will cost to purchase power from SMRs.

Green Leader David Coon said the new bill is an admission that it won’t be cheap.

“I think it’s a recognition by government that they’re uneconomic, they’re unaffordable and so they’re actually enacting a law to force NB Power to purchase electricity produced by small modular reactors,” he said.

“It’s bizarre.”

A key claim from both companies is that the reactors will be cheaper to manufacture than traditional nuclear because of their modular nature and will become cheaper over time as more of them are produced. Holland said the province is counting on future reactors providing cheaper power than the first provided by either company.

“With what we’ve been given as far as projections, when we move into that technology past first of a kind, second of a kind, we’re going to be dealing with significantly lower costs,” he said.

“The economy of scale is going to allow us to have that generated power that fits within that legislative requirement (for lowest -ost power to be purchased.)”

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Moe Qureshi, the director of climate solutions at the New Brunswick Conservation Council, says the bill is sending up “red flags” in the way that it ties the hands of the utility.

“This is kind of undermining NB Power, because that’s kind of their domain to look at the cost of electricity from every single source,” he said.

“It’s quite strange and it’s going to come at the cost of ratepayers.”

Both companies have received tens of millions of dollars in public money from the provincial and federal governments. NB Power will not foot the bill for construction; it’s expected that the units will be constructed with private investments and then the power will be sold to the utility. CEO Lori Clark said earlier that it is possible the utility takes some form of ownership stake in the reactors, but that no deal has been reached yet.

Ontario, Alberta and Saskatchewan have all expressed interest in SMR technology to help meet their power needs as the country approaches net-zero generation in 2050.

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