XYLENE POWER LTD.

ELECTRICITY SYSTEM EXPANSION

By Charles Rhodes, P. Eng., Ph.D.

1) The world is coming to realize that if humans are to survive there will have to be a major investments in both water cooled and moderated nuclear reactors and liquid sodium cooled fast neutron nuclear reactors. In Ontario the immediate requirement is a five fold increase in existing electricity generation using only reliable non-fossil generation and at least tripling of the existing transmission system capacity. Intermittent renewable generation cannot be used for further electricity system expansion in Ontario because Ontario lacks the geography necessary for building hydraulic energy storage to balance renewable generation when the wind does not blow and the sun does not shine.

2) In the immediate term the economical places to build additional new CANDU reactors are at Nanticoke and Darlington. Ontario Power Generation (OPG) already owns the land and has site approval for power generation. Hydro One already has sufficient 500 kV transmission lines from load centers to these locations to support at least 6 more CANDU 6E reactors at these sites. The necessary cooling water arrangements either already exist or have been fully investigated. The necessary subsurface studies have already been made.

3) More CANDU reactors could be built at Bruce subject to use of cooling towers for heat dissipation. An additional ~ $800 million transmission line would be required to move power from four new CANDU 6E reactors at Bruce to the GTA.

4) As the existing reactors at Pickering are retired the Pickering facility, which is convientient for high technology persons living in the GTA and which is already licenced for nuclear activities, can be used for pilot plant development of Fast Neutron Reactor related technology. Some of this work could also be done at Chalk River.

5) The only sources of long term capital sufficient to finance nuclear reactor construction on the scale required to address climate change imperatives are insurance and pension funds. A problem with mutual funds investing in nuclear reactors is liquidity requirements. A mutual fund is supposed to be convertable into cash within 7 days. The construction period for a nuclear power reactor is typically 5 to 10 years. There may not be sufficient market liquidity for mutual fund investment into nuclear reactor projects. Changes in legislation may be required to address this issue.

6)The key decisions that investors in nuclear power must make are whom do they trust to manage their capital. At this time due to past government regulatory interference and current government incompetence no party is able to obtain a meaningful construction performance bond to ensure on price and on time nuclear power reactor delivery, so the reputation of the parties involved in design and construction management is paramount. To protect investors there should be a technical management succession process that will automatically take effect if there is any sudden loss of technical management capacity. Historically technical management capacity problems have mainly occurred as a result of infectious disease, airplane accidents or governmental/court actions with unanticipated consequences. In senior management of a major nuclear project no amount of MBA like training is a substitute for 40 years of relevant physics/engineering experience. Many of the past problems at Ontario Hydro and OPG Nuclear arose as a direct result of promoting into senior decision making capacities persons who lacked deep scientific knowledge and mature engineering experience. It is equally imperative that persons with deep scientific knowledge and mature engineering experience be free to speak their minds in public without concern about personal consequences.

7) In order for nuclear reactors to be financed government must guarantee that the reactor's electricity output capacity will all be purchased at an agreed minimum average price. In effect government must guarantee that when the reactor is complete there will be a sufficient fossil carbon emissions tax or equivalent other price on fossil CO2 emissions to fund the difference between that the future cost of energy from the reactor and the future cost of energy from fossil fuels without a fossil carbon emissions tax. The nature of this guarantee must be such that all future governments will be bound by it. At present in Ontario such contracts are issued by the IESO (Independent Electricity System Operator) although that arrangement might change in the future.

8) Government guarantees with respect to future power prices must be expressed in terms of reliable kVA or kW capacity, not kWh. At the present Ontario allocates electricity system Global Adjustment costs over kWh, which is a fundamental error causing much grief and unemployment in Ontario. The present electricity pricing mechanism rewards parties that inefficiently use electricity system resources and penalizes parties that efficiently use electricity system resources. It is imperative that the Global Adjustment be allocated by peak kVA, not kWh, if Ontario is to climb out of its current financial mess. The Ontario government has failed to realize that it should be incenting optimal use of electricity system kVA, not incenting minimization of kWh consumption which drives consumers to use fossil fuels in place of electricity. Similarly generators should be paid for reliable kVA, not kWh. Ontario is currently purchasing wind generated kWh without kVA support for about $0.11 / kWh and is exporting the same energy at about $0.01 / kWh. The present electricity cost allocation system is absolute madness from the rate payer's perspective. The same money that the McGuinty government commited to unreliable wind generation could have purchased several more nuclear reactors which would have provided the required reliable kVA.

9) It is imperative that the financial community make clear to the present Liberal Ontario government that there will be no major capital available for electricity system expansion or any other purpose until this Global Adjustment allocation problem is fixed. A consequence of the present Global Adjustment allocation is that Ontario is discarding non-fossil energy worth about $2 billion per year and Ontario consumers are spending yet another $2 billion per year in otherwise unnecessary purchase of fossil fuels. This political madness should be stopped now.

10) To address climate change imperatives there will also have to be a near term four fold expansion in the Ontario electricity transmission system. This expansion will require many billions of dollars in long term capital for real estate acquisition and transmission system construction. The present OEB transmission line construction approval process is unwieldy and uncertain. Investors will need ROI certainty to provide the required capital. The process of land expropriation for energy transmission corridors needs urgent planning and simplification.

11) For investment in the Ontario energy system to make sense there must be legislative changes, particularly related to allocation of the Global Adjustment, to fossil CO2 emission pricing and to transmission corridor identification for Hydro One transmission system expansion. The sooner that these legislative changes are made the better.

12) At the federal level the entire objective of the Nuclear Waste Management Organization (NWMO) must be changed. Instead of attempting to bury nuclear waste on indian reservations the NWMO should be focusing on nuclear fuel reprocessing, interim storage of separated fission products and recycling the rest of the fuel through fast neutron reactors. Other neutron activated materials such as zirconium and stainless steel should also be recycled for use in nuclear applications.

13) Ontario must develop a parallel plan for distributed conversion of biomass into methanol, delivery of that methanol to central refineries and for upgrading of that methanol into energy dense liquid hydrocarbons such as synthetic gasoline.

14) Ontario must develop a detailed plan for fast neutron reactor deployment and for transmission system expansion as necessary to support space and domestic hot water heating in buildings, electric vehicle recharging and distributed methanol production wherever bulk agricultural and forest waste are available. Legislation must be passed, analogous to the Green Belt Act, to prevent new development and land price speculation along future energy transmission corridors and near future nuclear reactor sites. Lands adjacent to such corridors and sites should be zoned permanently agricultural or forest product.

15) Ontario must introduce legislation to the effect that all new internal combustion engine vehicles sold in Ontario must be flex fuel so that they can operate on bio-methanol as an alternative to gasoline. This requirement would have the practical effect of preventing use of aluminum in the fuel train of new internal combustion vehicles.

16) Ontario must consult with representatives of aboriginal peoples to agree on the locations of sufficient future energy transmission corridors and nuclear reactor sites to allow at least a ten fold increase in the Ontario electricity system capacity. The chosen sites must be consistent with safe application of CANDU or fast neutron reactor technology.
 

This web page last updated November 24, 2016.