Higher risk profile for planned new small modular reactors ‘limits access to traditional financing’
Canada Growth Fund (CGF) and Building Ontario Fund (BOF) have announced an equity commitment agreement to finance up to CAD3bn (€1.8bn, $2.1bn) between them in a small modular reactor (SMR) project at the existing Darlington nuclear power station site in Ontario.
Through the agreement, CGF and BOF have committed to invest up to CAD2bn and CAD1bn respectively, each taking minority ownership positions in the Darlington New Nuclear Project (DNNP), which will be majority owned and operated by power company Ontario Power Generation (OPG).
CGF is a government-backed fund that aims to attract private capital to build Canada's clean economy. BOF is a state agency that finances large-scale, revenue-generating infrastructure projects in Ontario.
The deal means CGF and BOF will acquire minority stakes representing up to 15% and 7.5% ownership respectively.
The current estimate to construct four SMR units at Darlington is CAD20.9bn, including interest, escalation and contingency.
The DNNP will see the construction of grid-scale commercial SMRs that, when completed, are expected to deliver up to 1,200 MW of electricity, enough to power 1.2 million homes. The project could potentially see the first SMRs deployed in a G7 nation.
OPG said CGF and BOF are investing in the project to de-risk the construction and operation of the first SMRs.
“As a first-of-its-kind project, DNNP has a higher risk profile that limits access to traditional financing. In line with their mandates, CGF and BOF are investing at a stage where the project is exposed to certain construction and technological risks,” OPG said.
Innovative Financial Arrangements
OPG said both organisations are bringing forward innovative financial arrangements to temporarily share certain risks that currently limit private sector interest today.
As a result, this transaction is paving the way to spur private sector and Indigenous investment in the project over time, OPG said.
In May the Ontario government and OPG approved a plan to build the first of four SMRs at the Darlington site.
Construction of the BWRX-300 plant will begin soon with completion of the first unit scheduled by the end of the decade.
The announcement on followed a decision by Canada’s nuclear regulator to issue a construction licence for the unit, designed and supplied by GE Vernova Hitachi Nuclear Energy (GVH).
In December 2021, OPG announced that it had selected the BWRX-300 reactor for deployment at the Darlington site.
Only a handful of SMRs have been completed and only in Russia and China.
