Brian Zinchuk is editor and owner of Pipeline Online
With costs of nuclear possibly rising beyond our reach, SaskPower may need to rejuvenate its coal fleet, instead. Photo by Brian Zinchuk
Back in 2014, I bought a used 2011 Ford Expedition Max for $27,000. Its original sticker price was $72,000, so I thought I bought a hell of a deal. And I did. But over the last decade I’ve miled it out. It’s pretty much done – needs new shocks, brakes, and a few grand to sort out an impossible gremlin with the heating system. My mechanic apprentice daughter warns failing gaskets could mean I need new engine if I plan on continuing to drive it.
But when I drive to the local Ford dealership and look at the price in the window, the current, similarly spec’d model is listed for an MRSP of $112,500. And the Platinum MRSP is $118,555. And that’s before taxes and luxury tax.
There is no way on God’s green earth I can afford that sort of money. All of a sudden rebuilding my old Expedition looks a lot more appealing.
It may be old and worn out, but if a new one is unaffordable, looking at major repairs might be the best option for this Expedition. SaskPower may be in a similar predicament when it comes to its power generation fleet. Photo by Brian Zinchuk
This is a similar scenario facing Saskatchewan and SaskPower right now when it comes to its coal-fired power generation fleet. Except for Shand Power Station and Boundary Dam Unit 3, nearly all of it is close to miled out, end of life. And this is to be expected since we were all told by the federal government that thou shall not burn coal past 2030 lest the world come to an untimely end.
Huge shift in narrative
Recent developments have changed that narrative. Crown Investments Corp and SaskPower Minister Jeremy Harrison came to Coronach on Jan. 15 and Estevan on Jan. 16 to tell about a thousand coal workers that the province is going to seriously take a look at rebuilding its coal fleet and continue to operate it for decades to come.
Jaws all around had to be picked up off the floor.
For the last several years, Saskatchewan and SaskPower has been moving heavily towards small modular reactors (SMRs) to replace our coal fleet. The initial announcement, which I attended, was made at a press conference on March 28, 2022.
The technology of choice would be the GE-Hitachi BWRX-300, which stands for Boiling Water Reactor, X (tenth) Generation, 300 megawatts.
Ontario Power Generation (OPG) would build the very first of this model at its Darlington New Nuclear site. OPG has since increased its planned buildout from one unit to four.
Back in 2022, then-SaskPower Minister Don Morgan said, “A small reactor would cost in the range of $5 billion, so they’re certainly not inexpensive.”
Then-Ontario Energy Minister Todd Smith said, “I’m going to suggest that the $5 billion number is quite high.”
Morgan added, “I would rather use a high figure and have it come in substantially lower than then one where we have to say it’s this much higher or have an overrun in construction. We’ll be watching carefully, as Ontario goes ahead, to make sure that the processes that they follow work well here, and we’re able to they have a significant benefit already. They are already licensed for nuclear facility, we have to go through both provincial and federal licensing requirements. And we want to watch that, as we as we go forward as we watch cost containment.”
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First of a kind
Since then, there hasn’t been much discussion in the public about how much the proposed reactors for Saskatchewan would cost. But we can perhaps look to other jurisdictions looking at the exact same reactor model.
The whole reason SaskPower has aligned with Ontario Power Generation (OPG) is that we don’t want to be the first to build this sort of thing. We want to learn from their experience. It turns out SaskPower isn’t the only utility of that mindset.
SaskPower is not the second company intending to build these, but it may end up the third or even fourth. The second company up to bat is the Tennessee Valley Authority (TVA), the largest power utility in the United States. They, too, are following OPG’s lead, not wanting to be the first.
TVA already operates three nuclear power plants totalling 8,275 megawatts of capacity, so they know a thing or two about nuclear. And their planned Clinch River Project site for SMRs is near Oak Ridge, Tennessee, birthplace of the Manhattan project.
So what has TVA said about the cost of building four of the GE-Hitachi BWRX-300?
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In September, 2024, the TVA released its draft Integrated Resource Plan 2025. On page 3-18, it discusses “overnight capital costs” by technology.
The plan states, “A key assumption contributing to resource selection is the cost to construct a particular resource. Overnight capital costs represent the total estimated cost to build a given resource in the first year available, restated in 2024 dollars and divided by its capacity in kilowatts ( /kW). Cost assumptions were derived from the sources explained in the general methodology section, incorporating the impacts of recent policy changes. The table below summarizes overnight capital costs for the utility scale resource options considered in the IRP. Capacity is expressed as Summer Net Dependable Capacity (NDC) for thermal resources and as nameplate for renewable and storage resources.”
Note these are in US dollars. I’ll provide Canadian dollars conversions.
| Resource Type | Nameplate (MW) | Overnight Capital Cost (2024 US$/kW) | Extrapolated cost (US$) | Extrapolated cost (CAD$) |
| Small Modular Reactor – Light Water (first-of-a-kind) | 285 | 17,949 | 5,115,465 | 7,278,382 |
| Small Modular Reactor – Light Water (nth-of-a-kind) | 285 | 12,471 | 3,554,235 | 5,057,034 |
When you do the kilowatt to megawatt conversion and price that in millions of dollars, lop off the last three digits. So the extrapolated cost of the first reactor would be CAD$7,278 million, or CAD$7.3 billion.
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When Morgan made the initial announcement, SaskPower was looking at up to four reactors. That number has since wobbled a lot, both from him, and from Premier Scott Moe. It’s been like stapling Jello to a wall. The best figure thus far has been the allusion that it’s highly unlikely we would build just one. So that means at least two reactors, at Estevan, is the most likely number.
SaskPower president and CEO Rupen Pandya, left and then-CIC Minister Don Morgan, in Regina on Sept. 20, 2023 announcing two possible sites for nuclear power development in Saskatchewan. Photo by Brian Zinchuk
But two only puts us at approximately 600 megawatts – just enough to replace Poplar River Power Station, never mind Shand or Boundary Dam. The reality is we need not four, but five, reactors, to replace our coal fleet. And that’s not taking into account any expansion of demand for electric vehicles, population growth, economic growth or megawatt-gobbling data centres. So let’s wargame these numbers out a bit, based on TVA’s publicly available numbers. All figures are in millions, Canadian funds. So if there’s a comma, it’s a billion.
| Reactor 1 | Reactor 2 | Reactor 3 | Reactor 4 | Reactor 5 | |
| Per unit | 7,278 | 5,057 | 5,057 | 5,057 | 5,057 |
| Running total | 7,278
|
12,335 | 17,393 | 22,449 | 27,507 |
Those numbers are based on no price escalation between units (which is certaintly impossible given the construction of five units would far exceed a decade.)
Let’s do the same table, but with the assumption that a one-third savings is not realized between units, but instead the initial $7.2 billion remains consistent.
| Reactor 1 | Reactor 2 | Reactor 3 | Reactor 4 | Reactor 5 | |
| Per unit | 7,278 | 7,278 | 7,278 | 7,278 | 7,278 |
| Running total | 7,278
|
14,556 | 21,835 | 29,114 | 36,392 |
Holy mackerel, those numbers get real big in a hurry. Four reactors come in at $29.1 billion. Five total $36.4 billion. Put in perspective, our 2024 budget for the entire Canadian military is $41 billion.
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Real world price escalation
Let’s look at this again, but with a price escalation identical to what SaskPower has already seen in its construction of large scale, single unit combined cycle natural gas power stations at Swift Current (Chinook), Moose Jaw (Great Plains) and now Lanigan (Aspen). Now remember – this is common, every day, widespread use technology – nothing near the complexity of nuclear. Each plant is essentially a clone of the previous. These are the very real results SaskPower has had.
Note that according to the 2024 SaskPower annual report, the estimated cost of Aspen, to be in service in 2027-28, is $1.4 to $1.7 billion. I used the average, $1.55 billion, in my calculations.
| Chinook | Great Plains | Aspen | |
| In Service | 2019 | 2024 | 2027-2028 |
| Capital Cost | $605 million | $825 million | $1.55 billion |
| Cost escalation from previous facility | 36.4% | 87.9% |
So let’s apply the 36.4 per cent escalator to the initial $7.2 billion.
| Reactor 1 | Reactor 2 | Reactor 3 | Reactor 4 | Reactor 5 | |
| Per unit | 7,278 | 9,928 | 13,541 | 18,470 | 25,194 |
| Running total | 7,278
|
17,206 | 30,747 | 49,218 | 74,412 |
One could argue that’s a ridiculous assumption, that you could see a little over a third price escalation compounding on identical units. And you would be right, except that is precisely what we have already seen on our current build-out of large-scale natural gas units, which are supposedly nth-of-a-kind arguments. Aspen and Great Plains are for all-intents-and-purposes clones of Chinook, with slight increases in power output. Why isn’t Aspen a third less than Chinook? Why not at least on par? Instead, it’s more than double, and on the high end, could be close to triple the cost of Chinook.
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So why would the dramatic cost savings of nth-of-a-kind building for nuclear hold sway, but not so for much, much simpler combined cycle natural gas?
And, it turns out the capital price curve for natural gas, which we already know – has been much higher than 36.4 per cent for the third of the kind. It was 87.8 per cent between the second and third.
I’ll run these numbers one more time, using the optimistic lower price of $5.1 billion as the starting point, but with the 36.4 per cent escalator.
| Reactor 1 | Reactor 2 | Reactor 3 | Reactor 4 | Reactor 5 | |
| Per unit | 5,057 | 6,898 | 9,409 | 12,833 | 17,505 |
| Running total | 5,057 | 11,955 | 21,363 | 34,197 | 51,701 |
Maybe you can knock off the fifth reactor column off all my calculations – that’s fine. SaskPower has never said five reactors, but they did say up to four. And four does not replace the coal we already have.
If we use this last set of numbers – and only build four reactors, that’s $34,197,000,000 divided by 1,246,691 people currently in this province. That’s $27,439 for every man, woman and child in this province. That includes grandma in the nursing home, your infant child in daycare, and the homeless people on the streets of Saskatoon and Regina. If we figure that roughly half the population is working and paying meaningfully into society, then double that number. That’s $54,860 per person whose actually paying the bills.
Maybe the number is more than half. At this point, whether its 50 per cent or 65 per cent, it’s immaterial. That potentially would be the cost we’d be committing ourselves to. And notice I never even brought up interest costs?
Those dollar figures also might lend themselves to question why build small nuclear at all? Maybe it might be better just to go big. But that’s another discussion.
Preliminary numbers
All of these numbers are still based on preliminary numbers – TVA has yet to scratch dirt on its project, and these are the numbers they are using in planning. By the time the dozers start ripping, there could be plenty of escalation. Can anyone name any major project five years down the road they expect to cost less than current estimates? And nuclear is notorious for being both long on budget and schedule.
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Coming back to reality
Bringing this down to Saskatchewan, when you look at the dizzying figures that could be hit, all of a sudden reinvesting into coal-fired power generation looks pretty cheap. The cost of a few new draglines is a rounding error compared to these charts. Refurbishing the 150 megawatt power island of Boundary Dam Unit 3 in 2011-2014 was way over budget – and still came in around $600 million. If we are to rebuild the larger 300 megawatt units, you could triple that cost, and redo the entire fleet for what could be around the price of just the first reactor, and certainly less than the price of the first two – even with the most optimistic costs on nuclear.
And while we pay Westmoreland about $300 million a year to mine the coal, we charge ourselves effectively nothing for the coal itself – just $25 million per year, according to the most recent numbers from Minister Harrison. That, again, is a rounding error.
And a good chunk of that $300 million stays in Saskatchewan as salaries and to support companies, everything from the machine shop to the local crane outfit.
Computer rendering of the planned Aspen Power Station, west of Lanigan. SaskPower
As for building more natural gas-fired power generation, according to Harrison, 80 to 90 per cent of the gas we’re using in our gas-fired power stations comes from Alberta. In 2022-23, SaskPower spent $449 million on gas. In 2023-34 it was $366 million. But these are based on gas prices that have been around $2 a gigajoule for well over a decade. Does anyone expect gas prices to remain at that rock-bottom level after LNG Canada and other liquefied natural gas facilities come online? The entire point of building out that industry is to get a better price for Canadian gas on world markets. Certainly, that will also have a knock-on effect on domestic prices (the part no one likes to mention.) So if gas prices double, or triple, let’s say to $6 a gigajoule, spending well over a billion per year on gas is not out of order – and nearly all of that money will leave Saskatchewan, never to return. That’s only based on current gas consumption, let alone replacing the coal fleet with natural gas-fired power generation. If we did, that billion per year could become two, again, never to return.
So SaskPower and the Government of Saskatchewan will continue to look seriously at nuclear. But if the numbers the Tennessee Valley Authority is already using it its own calculations bear any weight, we could rapidly find ourselves priced out of the market.
And that is why SaskPower is taking a real hard look at rejuvenating its coal fleet – it might be the only option we can afford.
Just like me looking at a new Expedition, we might have to stay with what our pocketbooks will allow, and not otherwise bankrupt ourselves.
Brian Zinchuk is editor and owner of Pipeline Online. He can be reached at brian.zinchuk@pipelineonline.ca
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