OTTAWA
The federal government is defending its $2-billion investment in Ontario's Darlington small modular reactor project as the first unit faces delays and cost overruns.
Energy Minister Tim Hodgson called the setbacks "a reality in all first-of-a-kind projects."
"It's important for Canada that we do not balk on making these important investments," he said.
Ontario Power Generation said this week the first reactor unit will not be completed within its previously disclosed $7.7-billion budget and will miss its October 2030 target.
The utility did not specify the size of the cost overrun or the extent of the delay, but a production forecast suggests the project's timing could slip by at least a year.
OPG is undertaking a comprehensive assessment of the project's cost and schedule, which is expected to be substantially completed by mid-2027.
The Crown corporation reported that the overruns reflected the "ongoing engineering" work of its partner, GE Vernova Hitachi Nuclear Energy, which is designing the BWRX-300 reactor.
In a statement, GE Vernova Hitachi spokesperson Jonathan Allen pointed to factors outside his company's control, including evolving market conditions, inflation and geopolitical risks.
Hodgson defended the Canada Growth Fund's $2-billion equity investment in the project, saying it aligns with the taxpayer-backed fund's mandate to shoulder risk for technologies that can drive economic growth and advance climate goals.
"There are on and off ramps for the CGF to be involved, and I'm confident that it is well structured project-to-project to protect the CGF," he said.
A corporate presentation from the fund said the investment is subject to certain conditions and will be deployed in two tranches, one tied to the first reactor unit and another for the remaining three units.
The Darlington New Nuclear Project, with a total approved budget of $20.9 billion, involves building four BWRX-300 reactors adjacent to the existing generating station in Clarington, Ont.
Federal and provincial investment funds have committed up to $3 billion for minority stakes in the project.
OPG has said the government is not funding construction directly and that the utility would use its own resources, including cash on hand, cash flow from generating stations and debt.
The project is being watched globally because it's the first small modular reactor to begin construction in a Group of Seven country.
In the U.S., GE Vernova Hitachi has partnered with the Tennessee Valley Authority to build a BWRX-300 at its Clinch River site.
"It would be premature to speculate on any direct impact to TVA's potential projects," wrote TVA spokesperson Elizabeth O'Connor in a statement.
Ontario's Independent Electricity System Operator did not respond directly to questions about how the delays might affect electricity supply plans for the early 2030s.
IESO spokesperson Michael Dodsworth noted the organization was promoting electricity efficiency to reduce peak demand and would consider relevant information as part of future system plans.
Pierre-Olivier Pineau, chair in energy sector management at HEC Montréal, said the challenges underscore the need for caution in energy policy.
"We should never think because we've invested so much, we should keep investing," he said.
He argued governments should take their time to evaluate any potential future investment, describing the initial costs as already more than what anyone would ever want to pay for electricity.
This story was written by the e2gold.ca newsroom from reporting by The Globe and Mail and Rich Picks Daily. Quotes are checked word for word against that reporting.