Energy Policy 144 (2020) 111587

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Energy Policy
journal homepage: http://www.elsevier.com/locate/enpol

Too small to be viable? The potential market for small modular reactors in
mining and remote communities in Canada
Sarah Froese a, Nadja C. Kunz a, b, M.V. Ramana a, *
a
Liu Institute for Global Issues, School of Public Policy and Global Affairs, University of British Columbia, Vancouver, Canada
b
Norman B Keevil Institute of Mining Engineering, University of British Columbia, Vancouver, Canada

A R T I C L E I N F O A B S T R A C T

Keywords: Small modular reactors have been proposed as an alternative energy supply option for electrified processes in
Nuclear energy remote mining projects and communities in Canada, which currently have a high reliance on diesel fuel gen­
Remote mines erators. This paper examines the size of this potential market for SMRs by quantifying the electricity demand for
Remote communities
remote mining projects, late-stage exploration projects, and remote communities that are not connected to the
Canada
Small modular reactors
central electricity grid. The paper also calculates the Levelized Cost Of Energy for SMRs and other energy al­
Market size ternatives including diesel, solar, wind, and a diesel-wind hybrid option.
The analysis shows that the potential market for SMRs in Canada is currently too small to justify investment in
manufacturing facilities for SMR construction and the cost of generating electricity using SMRs is significantly
higher than the corresponding costs of electricity generation using diesel, wind, solar, or some combination
thereof. These results suggest that SMRs will be too expensive for these proposed first-mover markets for SMRs in
Canada and that there will not be a sufficient market to justify investing in manufacturing facilities for SMRs.

1. Introduction
In November 2018, Natural Resources Canada (NRCan), a ministry
within the Government of Canada responsible for natural resources
including energy sources and distribution, published the Canadian Small
Modular Reactor (SMR) Roadmap (CNS, 2018). Small Modular Reactors
are nuclear power plant designs that have electricity outputs of less than
300 MW (MW), considerably lower than the 700–1500 MW outputs
typical of nuclear reactors that are currently under construction around
the world. These reactor designs are intended to help expand nuclear
power into new and old markets.
The Roadmap resulted from a process that NRCan convened in
February 2018 (Natural Resources Canada, 2018a). Important targets of
this project were Northern and Indigenous communities and heavy in­
dustry stakeholders, who are identified as potential end-users (CNS,
2018). There have been earlier claims that remote mines and commu­
nities could provide a viable market for small modular reactors (CNL,
2017; HATCH, 2016; Moore, 2016a; Wojtaszek, 2017). Because of the
high costs of providing electricity at these remote locations, these are
considered the most promising markets for SMRs in Canada. While other
markets, including replacing coal plants in provinces that are phasing
out coal, are sometimes mentioned, the economic competition in these
cases would be significantly more difficult, and so are not considered
likely first-movers.
This paper examines the nature of the electricity market for remote
mines and communities. The economic viability of SMRs in these sup­
posed markets will depend on multiple factors, including the number of
reactors that would be needed to meet the demand and the costs of al­
ternatives. If the demand cannot support the setting up a factory to mass-
manufacture SMRs, or if there are alternative sources of electricity that
are cheaper, then investing public resources in the development of this
technology is wasteful.
Our paper builds upon the market analysis by Wojtaszek (2017),
which similarly sought to identify the potential for SMRs to service
electricity needs in the minerals sector, and attempted to account for
mining development up until 2025. We build upon that work in four
significant ways. First, we update the assessment of demand, based on a
more elaborate methodology to estimate the market. Second, we
consider other potential sources of demand for SMRs, namely remote
communities that are not connected to the grid. Third, we take into
account more recent cost estimates and actual costs for large scale nu­
clear projects, in contrast to the early cost figures used in Wotjaszek

* Corresponding author.
E-mail address: m.v.ramana@ubc.ca (M.V. Ramana).

https://doi.org/10.1016/j.enpol.2020.111587
Received 25 June 2019; Received in revised form 23 April 2020; Accepted 6 May 2020
Available online 23 June 2020
0301-4215/© 2020 Elsevier Ltd. All rights reserved.
S. Froese et al.
(2017). Fourth, we also carry out an economic comparison of SMRs with
other energy options, calculating the Levelized Cost of Energy (LCOE)
for wind, solar, diesel, and hybrid plants.
We use a quantitative methodology to estimate the size of the po­
tential market for SMRs. The first step was to use five data sources to
identify all the mines in Canada that can be considered remote and the
nature of the energy demand. We also look into future plans for these
mines, so as to exclude those mines that are scheduled to begin closure in
the mid 2020s, before the time SMRs are expected to be available for
deployment. The second step is to do the same with remote commu­
nities. The third quantitative element is to carry out an economic com­
parison of the various energy options for meeting the electricity needs of
these demand sources. We calculate the LCOE for these options using a
standard discounted cash flow methodology. Despite some limitations,
the LCOE has a number of virtues and is a widely-used metric used in
energy planning for mines and remote communities; see for example,
(Pinard, 2016; TUGLIQ Energy Company, 2016; Zharan and Bongaerts,
2017). For the specific case of SMRs, where there is no empirical
experience to derive cost figures, we use a standard power law scaling
methodology to derive these costs from those of large reactors that have
been constructed in the last decade.
The structure of the paper proceeds as follows. The next section
provides an overview of SMRs, and describes challenges faced in
implementation. Next, the potential size of the Canadian market for
SMRs is examined, starting with remote mines that are not connected to
the grid and then considering the potential energy demand from remote
communities. The final stage of analysis involves calculation of the
LCOE for SMRs relative to other energy alternatives including diesel,
solar, wind, and a diesel-wind hybrid option.
2. Nuclear power and SMRs
Canada operates 19 nuclear reactors that contributed 14.9 percent of
all electricity generated in the country in 2018 (IAEA, 2019, p. 10).
Canada’s National Energy Board projects a declining trend for nuclear
power. In its 2017 “Energy Future” report, the reference-case scenario
envisions nuclear power capacity declining from 9.7 percent of total
installed capacity in 2016 to 6 percent by 2040. The fraction of all
electricity generated is expected to come down to around 11 percent in
2040 (NEB, 2017).
There are no active plans to build new reactors, in large part because
of the high costs of constructing nuclear power plants. The last attempt
at a new reactor construction project was in 2008 when the government
of Ontario, the province with the highest number of nuclear plants in
Canada, asked reactor vendors to bid for the construction of two addi­
tional reactors. These price bids were reportedly more than three times
higher than what the province expected to pay (Hamilton, 2009). Since
then, the province has concentrated on refurbishing its aging reactor
fleet (Leslie, 2013). It is therefore not surprising that nuclear advocates
are focusing on new kinds of reactors to revive the sector.
For some years now, small modular reactors have been promoted as
viable alternatives to their larger-scale counterparts (Herstead et al.,
2011; Humphries, 2012; de Vos, 2013). As early as 2011, members of the
official regulatory body announced at a leading symposium on SMRs:
“Over the past several years, the Canadian Nuclear Safety Commission
(CNSC) has been working to ensure that it has the appropriate regulatory
framework and internal processes in place for the timely and efficient
licensing of all types of reactor, regardless of size” (Herstead et al., 2011,
p. 349). Westinghouse, one of the world’s leading nuclear reactor ven­
dors, proposed that the early 2020s would represent the “commercial
operation date for SMR in Canada” (Blinn, 2012).
SMRs, as the name suggests, produce relatively small amounts of
electricity in comparison with currently operational reactors. This al­
lows SMRs to service areas that have relatively low levels of demand and
that cannot provide a sufficiently large market to justify the installation
of 700 MW to 1500 MW reactors currently being constructed around the
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Energy Policy 144 (2020) 111587
world. Different SMR designs have different physical and nuclear
characteristics (Glaser et al., 2015), but by definition all of them have
power outputs that are less than 300 MW. While some of them could also
provide high temperature heat for use in industry, their primary product
in economic terms remains electricity and therefore we focus on that.
Along with the ability to service smaller power markets, SMRs also
have a disadvantage. For decades, economists have known that
increasing the output of power plants, including nuclear reactors, re­
duces the per unit capital cost of constructing these plants: these are
termed economies of scale (Haldi and Whitcomb, 1967; Bowers et al.,
1983; Cantor and Hewlett, 1988). This is because the expenses associ­
ated with constructing and operating a reactor do not increase in direct
proportion to the power generated. SMRs will, therefore, cost more than
large reactors for each unit of generation capacity. Most of the small
reactors built in the United States shut down early because they couldn’t
compete economically (Ramana, 2015).
SMR proponents argue that capital construction costs could be
reduced through mass manufacture in factories and learning effects from
experience (Carelli et al., 2010; Ingersoll, 2009; Locatelli et al., 2014).
This is a dubious assumption: In both the United States and France, the
two countries with the highest numbers of nuclear plants, costs went up,
not down, with construction experience (Komanoff, 1981; Koomey and
Hultman, 2007; Hultman et al., 2007a; Grubler, 2010; Rangel and
Lévêque, 2013; Boccard, 2014). Even if one were to assume that such
learning actually occurs, SMRs would have to be manufactured by the
thousands to achieve meaningful savings (Glaser et al., 2015). Expert
assessments of projected costs of SMRs bear out the prognosis that
learning will not adequately compensate for diseconomies of scale
(Abdulla et al., 2013; Anadón et al., 2012).
Even ignoring this cost premium, the idea that one would have mass
manufacture of SMRs implies that there be a factory where these SMRs
are manufactured in large numbers. In order for investment in such a
factory be financially viable, the first question that should be addressed
is whether there is indeed a market for such a large number of SMRs.
This is often termed the “order book”. As an early study on SMRs
highlighted, commercial deployment would require the “development
of an order book for additional SMR plants (of a single SMR technology)
in a sufficient quantity to justify the deployment of an SMR
manufacturing plant” (Rosner and Goldberg, 2011, p. 34).
The need for a large number of orders is a result of two large sources
of expenditures that any SMR vendor has to undertake before starting
construction of their first reactor. The first, as mentioned above, is the
cost of constructing a factory to manufacture SMR units. This was
“guesstimated” at 300 million US dollars (Rosner and Goldberg, 2011, p.
40); figures of the same order of magnitude have been derived by esti­
mating the necessary factory size (Vegel and Quinn, 2017). The second
large source of expenditure is that of developing the design and testing it
so that it can be certified by a regulator for construction, which is re­
ported to be around a billion US dollars (Lester, 2016). This figure is in
line with what NuScale Power had already spent as of mid-2019, which
is reported to be about $800 million (Hall, 2019), and it was only part of
the way into the certification process at that point. NuScale’s expendi­
tures do not include that of building a factory because it was expecting to
partner with another company to do that. Together, therefore, these
costs amount to about CAD 1.5 billion.
Estimating the minimum number of orders needed to recover these
large initial costs is a complicated problem in production economics
(Okhrin and Richter, 2011). For the 225 MW SMR design that was being
pursued by Westinghouse, one the world’s leading nuclear reactor
vendors, the size of this “order book” was implicitly estimated by Danny
Roderick, then the CEO of Westinghouse, who stated in 2014: “Unless
you’re going to build 30 to 50 of them, you’re not going to make your
money back” (Hashem, 2014). Another estimate of the size of the order
book provided by a SMR vendor, this time for the 180 MW mPower SMR
design developed by Babcock and Wilcox, was a hundred reactors
(Makhijani, 2013, p. 5). If one uses the standard scaling formula (see
S. Froese et al. Energy Policy 144 (2020) 111587

section 7.1) to estimate the costs of these reactor designs, these state­ and easily dispatchable solution for delivering electricity to remote
ments are equivalent to requiring an assured market worth about CAD mines. As a primary fuel source in many communities and mines, diesel
300 to 700 billion in value, or about 200–400 times the initial up front diesel continues to be a familiar, dependable source of electricity
expenditure. (Standing Senate Committee on Energy, the Environment and Natural
Resources, 2014). However, relying solely on diesel-powered generation
has several drawbacks.
2.1. Electricity requirements at remote mines
The price of diesel is exposed to the volatility of international oil
markets. These markets affect delivered fuel costs by impacting the rack
The mining sector is a significant energy user, accounting for 7% of
price and freight costs. While variable, the cost of specialized industrial
the world’s energy consumption by some estimates (Working Group on
energy and petroleum products have increased since the turn of the
the Environmental Impacts of Products and Materials to the Interna­
century. Fuel and transportation cost escalations have increasingly
tional Panel for Sustainable Resource Management, 2010). Energy is
posed a barrier to the economic viability of remote mining projects
required for transportation and haulage of ore, crushing and grinding (i.
(Mining Association of Canada, 2014). Industrial self-generators in
e. comminution), materials handling and to operate mechanical equip­
Canada’s north achieve between $0.25/kWh to $0.60/kWh (Tugliq
ment during minerals processing (Ballantyne et al., 2012). Within un­
Energy Co., n.d.). Other estimates put the figure at $0.30/kWh plus
derground mines, a substantial portion of energy is required for heating,
(Paraszczak and Fytas, 2012). One estimate for Ontario’s more southern,
cooling and ventilation (Bharathan et al., 2017). The total energy used
yet remote, Ring of Fire region is $0.33/kWh (Tollinsky, 2011).
by a mine depends on several factors including the commodity mined,
Cost reduction has been a key motivator of energy management and
the processing technologies employed, the nature of the mining process
efficiency initiatives (Levesque et al., 2014), and increasingly motivates
(e.g. surface vs. underground), and climatic factors (because mines
renewable powered electricity generation [see for example (Deloitte,
operating in extreme cold or hot environments require comparatively
2017a) and (Lombrana and Stillings, 2018)]. Evolving greenhouse gas
more energy for heating and cooling respectively). There are two typical
emission-mitigation policies such as carbon pricing have also triggered
types of energy used by mines: diesel fuel and electrical energy. Diesel
investment into alternative energy systems. For example, Goldcorp’s
fuel is used for transportation and haulage, and in some cases has been
Borden mine in Ontario, Canada will be the first all-electric underground
reported to account for ~40% of a site’s energy consumption in terms of
mine in Canada. The Executive Vice President of Corporate Affairs and
CO2 emissions (Dorai, 2006; Ballantyne et al., 2012). All other functions
Sustainability cited financial benefits from electrifying diesel-powered
are typically electrified. This is the case with remote mines too. Fig. 1
operations as one reason for this change in operations. Borden was a
displays a typical demand profile for a northern Ontario open-pit mine
suitable project for this initiative because Ontario had a carbon emis­
for a representative day during each month of the year (Carvalho et al.,
sions cap and trade program, and has accessible supply of renewable
2014). This paper is concerned with comparing energy options for
electricity (Friedman, 2018).
electrified processes in remote mines.
Diversification of fuel sources is also a way to hedge against dis­
Remote mines, however, face unique challenges in meeting electrical
ruptions to operations from weather or climatic events. For mines
energy needs (Arriaga et al., 2013; Carvalho et al., 2014; Goad, 2017;
without all-year road access in northern Canada this is a particularly
Government of Canada and Government of Canada, 2011; Hessami
acute concern. Some such projects are only accessible by ice road for
et al., 2011; Karanasios and Parker, 2018; Romero et al., 2015; Sumi and
8–10 weeks during the winter season. Annual diesel fuel requirements
Thomsen, 2001). Remote mines that cannot connect to a centralized
are usually delivered by truck during this time and stored in local or on-
electricity grid must generate their own electricity; a logistical challenge
site storage tanks. However, an unexpectedly mild winter can force
and financial burden that centrally located mines do not bear. Compared
mines to fly-in fuel at great expense if the road is not open long enough.
to other operations, remote mines can also experience harsh climates,
This was a key consideration in integrating wind energy into Diavik
human resource constraints, limited access to infrastructure, and vari­
Diamond mine’s energy mix (Kirby, n.d.). Diavik Diamond mine is
able access to land and water (Paraszczak and Fytas, 2012).
located 300 km northeast of Yellowknife and 220 km south of the Arctic
Remote mines in Canada and elsewhere meet the majority of this
Circle. It is situated on a 20 square km island at Lac de Gras (Dominion
demand through diesel generators (Paraszczak and Fytas, 2012). Diesel
Diamond Mines, n.d.).
generators have historically presented the most cost effective, reliable,

Fig. 1. Demand profile for a remote Ontario open-pit mine for one representative day per month; charts produced using data from (Carvalho et al., 2014).

3
S. Froese et al.
The impacts of diesel-powered generation can also influence the
public’s perception of mining. Disturbance because of transportation
through fragile, valued ecosystems, contributions to climate change
through GHG emissions, and air and noise pollution are some of the
negative social and environmental effects that northern stakeholders
have identified [see for example (InterGroupConsultants of Winnipeg,
2017]. Environmental and social impacts are now a routine component
of environmental and impact assessments, and contribute to growing
expectations of mines to operate sustainably. Policy and regulatory
measures to mitigate climate change, including carbon pricing, and
associated socio-technological transitions toward renewable energy al­
ternatives in many sectors have increased the salience of integrating
renewable and low-carbon alternatives into the mining sector (Fitzpa­
trick et al., 2011).
These challenges and opportunities have prompted SMR proponents
to advance the idea that next generation modular reactors can wield a
competitive edge (Canadian Nuclear Laboratories, 2018; Canadian Nu­
clear Laboratories, n.d.). There has been some limited interest in the
idea from potential users. For example, in 2011, the then president and
CEO of Quilliq Energy Corp. (QEC), Nunavut’s energy provider,
remarked that mini-nuclear reactors had been on Nunavut’s radar for
several years (Brusilow, 2011).
At the same time, the mining sector has also traditionally been risk
averse and slow at innovation (Clifford et al., 2018). Recent energy
alternative analyses and energy plans undertaken by remote miners and
northern utilities demonstrate, most notably by its absence, that nuclear
energy is not perceived as a top contender among alternatives to diesel
(Dominion Diamond Ekati Corp & Sysene Consulting Inc, 2017; NT
Energy, 2013).
Regardless of the actual interest among mining companies, northern
utilities, and communities, as discussed in the introduction to this paper,
the question of whether SMRs will be able to economically fulfill this
niche needs careful examination.
Fig. 2. Process for identifying the potential size of the SMR market for remote mining projects.
4
Energy Policy 144 (2020) 111587
3. Methods
We now turn to estimating the potential size of the most likely first-
mover markets for SMRs starting with remote mines that are not con­
nected to a central electricity grid, followed by a consideration of remote
communities.
3.1. Identification of remote mining projects
We begin by quantifying the electricity demand of remote mines,
both those that are currently operational and those that are expected to
start operating in the near future. Five data sources were utilized
(Fig. 2). The two main data sources were from Natural Resources Can­
ada: The first is the Remote Communities Energy Database (RCED)
(Natural Resources Canada, 2018b) and the second is Map 900A: Prin­
cipal Mineral Areas, Producing Mines, and Oil and Gas Fields in Canada
(Natural Resources Canada, 2018c). From the RCED we identified 11
operational, remote mines. We excluded 6 other commercial sites
recorded in the RCED that were not mines. Using Map 900A’s Producing
Mines Layer we identified one grid-connected mine with considerable
self-generation because the grid cannot support the full load required.
Map 900A also includes NRCan’s Top 100 Exploration Projects. From
these projects we identified 6 remote projects that were in late devel­
opment in spring 2018. Additional data sources led to the inclusion of
five further remote mining projects: from the Government of Yukon’s
2017 Mining and Exploration Map (Government of Yukon, 2017) we
identified two remote, late development mines; from the North West
Territories (NWT) and Nunavut Chamber of Mines January 2018 issue of
Northern Mining News (NWT and Nunavut, 2018), we identified three
remote, late development projects; from British Columbia Minerals In­
formation website (Government of British Columbia, 2017), we identi­
fied one remote operational mine.
It was assumed that late development projects will be operational in
the near future. The actual duration of exploration, development, and
operation depends in part on market conditions, creating uncertainty in
S. Froese et al. Energy Policy 144 (2020) 111587

projecting when potential projects will reach commercial production.
While exploration, evaluation, and construction and early production
can take 15–25 years (Ontario Mining Association n.d.), these mines
were chosen among noted promising and major developments because
they have undergone legislated environmental assessments or taken
other financial and infrastructure-related steps to advance late stage
exploration or development. Two remote projects listed in the Top 100
Exploration list were projects to extend the life or increase the produc­
tion of operational mines, and Glencore has proposed the Sivumut
Project beginning in 2020 to extend Raglan mine. Analysis of energy
needs associated with these projects were considered a part of the
existing overall operation.
Applying this process (Fig. 2), we identified 24 remote mining pro­
jects that could be candidates for SMR deployment within the next
decade, comprising 13 operational remote mines, and 11 late-
development remote mines (Table 1).
3.2. Estimating energy demand for mining projects
lifetime of the mine.
The total installed capacity required by operating and near future
mines was found to be 617 MW (Table 2). These figures do not include
the capacity of emergency back-up generators. However, they do
include the capacity of active redundant generators. Remote mine power
plants in Canada’s north are typically designed in an (N + 2) or (N + 1)
redundancy configuration, where N refers to the number of generators
required to meet peak demand running at 80–85% capacity. The plus
one or two indicates the number of additional generators dedicated to­
ward spinning reserve or to replace generators that are undergoing
maintenance. Main powerhouses typically consist of four plus two
generators, which are now commonly fitted with waste heat recovery
systems to utilize thermal outputs for space heating (HATCH, for
Ontario Ministry of Energy, 2016).
The peak demand for operating and near future mines was estimated
by assuming that typical diesel capacity (N + 1 or 2) is 180% of peak
demand (HATCH, 2016, p. 24). The average installed capacity is 26 MW
(Table 2).

A comprehensive database of site-level mining energy requirements

Table 2
in Canada does not exist and there is a dearth of information on mining
Summary of current and near future capacity and demand estimates (MW).
and energy in Canada (Levesque et al., 2014). However, considerable
insight was gained from consulting the Remote Communities Energy Operational Development Total In 2028
(13) (11) (24) (19)
Database, and public reports such as Environmental Impact Statements
and the National Instrument 43–101 Standards of Disclosure for Mineral Installed capacity 307 310 617 500
Projects within Canada. The latter are a set of reporting requirements for Peak demand 170 172 343 277
Average installed 24 28 26 26
mining properties listed on stock exchanges overseen by the Canadian capacity
Securities Administrators. Such publicly available energy system infor­ Average peak 13 16 14 15
mation was used to determine installed capacity, estimate demand, and demand
gain insight into how that demand is currently met, as well as the

Table 1
Remote Canadian mines identified as potential candidates for SMR deployment within the next decade.
Status Record Mine Electricity Source Capacity Life of Mine Region
(MW) (years)

Operational RCED Ekati Diesel 30.8 36 North Slave, NWT

(13)
RCED Raglan Diesel 16.5 40 Nord-du-Quebec, QC
Wind 3.0
RCED Diavik Diesel 46.8 22 North Slave, NWT
Wind 9.2
RCED Meadowbank Diesel 29.0 16 Kivalliq, NU
(Amaruq) Diesel 3.3
RCED Mary River Diesel 37.8 21 Qikiqtaaluk, NU
RCED Nunavik Nickel Diesel 23.6 10 Nord-du-Quebec, QC
RCED Voisey Bay Diesel 27.0 16 Labrador, NL
RCED Renard LNG 14.7 14 Nord-du-Quebec, QC
RCED Hope Bay Diesel 18.9 20 Kitikmeot, NU
RCED Gahcho Kue Diesel 14.0 11 North Slave, NWT
RCED Myra Falls Diesel 2.0 10 Vancouver Island/
Coast, BC
Top 100 Musselwhite Grid 19.5 31 Skinner Lake Area,
ON
Diesel 4.5
BC Minerals Information website Silvertip LNG 6.0 5 Nechako, BC
Development Top 100 Prairie Creek Dual Diesel/LNG 11.1 12 Dehcho, NWT
(11)
Top 100 Back River Diesel 16.5 10 Kitikmeot, NU
Top 100 Chidliak Diesel 3.1 10 Qikiqtaaluk, NU
Top 100 Meliadine Diesel 31.3 13 Kivalliq, NU
Top 100 Kudz Ze Kayah Dual LNG/Diesel 25.2 10 Campbell, YK
Top 100 Eagle’s Nest Diesel 23.6 20 Kenora, ON
NWT and Nunavut Chamber of Mines NICO Grid or Dual LNG/ 10.0 18 North Slave, NWT
Diesel
NWT and Nunavut Chamber of Mines Nechalacho Rare Earth Diesel 14.5 18 North Slave, NWT
Elements/Thor Lake
NWT and Nunavut Chamber of Mines Howard’s Pass na 16.0 11 Sahtu, NWT
Yukon (2017) Mining and Exploration Casino Dual diesel/LNG 150 22 Kluane/Klondike, YK
Map
Yukon Energy Corporation (2017a) Coffee Diesel 9.0 12 Kluane/Klondike, YK
Mining and Exploration Map

5
S. Froese et al.
3.3. Market scoping
For the purposes of this study, mines scheduled to begin closure in
the mid 2020s were excluded from the “In 2028” scenario (Table 2),
which represents a 10 year outlook. It was assumed that mines
approaching closure are unlikely candidates for new electricity systems.
However, it should be noted that the 2028 figure may be an under-
estimate or over-estimate of the actual energy demand at that time. It
might be an overestimate if some proposed projects are canceled due to
changes in market outlook or shifts in corporate strategy or because a
mine reaches its end of life earlier than projected. Conversely, it could be
an underestimate if additional projects come online quickly. The life­
times observed for the operational mines and anticipated for projects in
late development are highly variable, ranging from 5 to 40 years, with
an average of 17 years.
The number of operational mining establishments in Canada has
grown between 2005 and 2016, from 859 to 1201 (The Mining Associ­
ation of Canada, 2017), and exploration expenditures, an indicator of
future mine development, have generally increased across the country.
However, exploration expenditures have fallen in some regions of the
north especially the North West Territories (NWT) and Nunavut (Gov­
ernment of Canada, 2015; Strong, 2018).
The potential energy demand laid out in Table 2 is comparable to
those identified in the aforementioned market analysis by Wojtaszek
(2017). Wojtaszek identified 32 operating or proposed mines in Canada
that rely on diesel power. The total electricity demand identified was
658 MW, and the demand for each individual mine ranged from 4 MW to
125 MW. The majority of mines—29 out of 32—required between 5 MW
and 30 MW. Wojtaszek attempted to account for mining development up
until 2025. He included existing and potential mines indicated in the
2012 Yukon Energy Corporation Resource Plan, 2013 Northwest Terri­
tories resource plan, and 2013 Nunavut Economic Outlook report. Our
estimates reflect adjusted projections in more recent documents.
3.4. Electricity demand from remote communities
Remote mines are not the only potential customers explored in
Canada. SMR advocates have also held out the possibility that remote
communities (not necessarily involved in mining) might also derive
electricity from SMRs. In line with the methodology we have adopted
while dealing with mines, we therefore quantitatively examine the
viability of SMRs meeting this additional energy niche, by estimating the
potential size of the market for electricity that could cater to remote
communities.
The Remote Communities Energy Database documents 265 remote
communities. We have found capacity figures for only 202 of these
communities. Together, they have a fossil fuel (primarily diesel) gen­
eration capacity of 506 MW. This figure includes larger communities in
and surrounding centres such as Yellowknife, Whitehorse, the Magdalen
Islands, and the North Coast Regional District in BC, which are not
connected to the North American electrical grid, but have regional grids.
These centres represent more highly concentrated demand than the
majority of communities spread across remote and northern regions of
Canada. While the number of remote communities has been declining
due to grid extension or relocation, the overall population has been
relatively stable. Most of these sites have low levels of electricity de­
mand. Fig. 3 illustrates the size of the demand for most communities, for
which the necessary information could be obtained. Of the demand
centres where installed capacity is documented, 72.8% have a fossil fuel
capacity of less than 2 MW. The mean installed capacity of documented
communities is 2.5 MW.
4. Translating market potential into demand for SMRs
We now calculate how many SMRs will be required to service the
market identified in Section 2 and 3, by assuming that all remote mines
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Energy Policy 144 (2020) 111587
and communities install SMRs.
The SMR designs that can plausibly be used in these areas have to
first be licensed by the Canadian Nuclear Safety Commission (CNSC);
this is a demanding process (Ramana et al., 2013). Since we are
considering the demand over the next decade, the only SMR designs that
can be deployed would have to be at a fairly advanced stage of devel­
opment. One measure of this readiness is whether the reactor vendor has
entered into the pre-licensing vendor design review process with CNSC;
as of May 2019, there are 11 designs at various stages of this process
according to CNSC (CNSC, 2019).
Not all of these designs are suitable for the markets we are consid­
ering. Six of these designs have electrical outputs in the range of 60–300
MW, well above the demand from all but one of the remote mines listed
in Table 1. Of the remaining, there is one design from Westinghouse that
is at a very early stage of development and has a variable output of up to
25 MW. The rest have outputs of 3 MW, 4 MW, 5 MW and 10 MW (CNSC,
2019). Thus, none of these designs would be suitable for the vast ma­
jority of remote communities (over 80 percent of those with publicly
available data on energy demand), and at least one of the mines.
Even among the larger mines and remote communities, meeting the
demand, in most cases, would require a combination of an SMR and
some other sources of generation because the total demand might be too
high for one SMR but not sufficient to support two SMRs. Taking into
account all of these challenges, we estimate that there is significantly
less than 600 MW of demand in all. Based on the cost of SMRs that we
estimate below, the total size of the market, even in the best case sce­
nario, will be a factor of 3–7 lower than the cost of the “order book” in
the case of the mPower and Westinghouse SMRs mentioned earlier.
The demand will also depend on the cost of electricity from SMRs
and how that compares to the alternatives. If electricity from SMRs is
much more expensive than other alternatives, or even the current choice
in the majority of these mines and communities, i.e. diesel, then it is
unlikely that there will be any market for SMRs.
5. Analysis of energy alternatives
SMRs are not the only alternative to diesel. In principle, the use of
diesel can be reduced or eliminated by extending transmission lines from
territorial and central grids. While extension costs can be substantial,
this may be an economically viable option in some cases. Increasing
electrification of mining operations and enabling other economic
development opportunities may provide increased incentive for such
extension. However, for the purposes of our analysis, we assume that the
remote mines and communities we are considering are too far away to
economically connect to the grid. This leaves two main alternatives.
5.1. Renewable energy
The first of these alternatives is replacing, wholly or in part, diesel
generation with renewable sources of electricity, in particular, wind
energy. The key drivers behind the potential adoption of renewable
energy are the challenges associated with diesel, pressures to reduce
carbon emissions, substantial renewable resource potential in the north,
and the declining cost of renewable technologies (Deloitte, 2017b,
2017c). Of remote mines in Canada, two have substantially integrated
renewable energy into their electricity mix; Diavik and Raglan diamond
mines have installed 9.2 and 3 MW of wind capacity, respectively.
Raglan’s microgrid also incorporates hydrogen-based storage. The wind
project at Raglan aims to displace “2.4 million liters (equivalent to 50
percent) of” the annual diesel consumption of Raglan’s satellite Mine 2
site (Natural Resources Canada, 2018d). Avalon’s Nechalacho project in
the NWT has also been noted for its use of solar panels during explo­
ration (Wiles, 2016). However, managing intermittency and achieving
high levels of renewable penetration remains a challenge. Equipment
must also be designed to withstand temperatures of − 30 to -40 ◦ C.
The fraction of energy needs that might be met with renewables is
S. Froese et al.
Fig. 3. Distribution of Remote Community Fossil Fuel Generating Capacity (Natural Resources Canada, 2018b). Note: Values equal to the boundary appear in the
lesser range.
likely to increase as a variety of energy storage technologies are further
developed and become cheaper. The Wall Street company Lazard has
been tracking the costs of different storage technologies and publishing
annual cost updates since 2015. In its 2018 report, it records “significant
cost declines across most use cases and technologies” (Lazard, 2018, p.
3). The report also projects continued and significant cost declines over
the next five years: 28 percent in the case of Lithium-ion batteries, 38
percent for flow batteries based on Vanadium, and 45 percent for flow
batteries based on Zinc Bromide (Lazard, 2018, p. 14).
There are social concerns that might determine the rate of adoption
of renewables. Weis, Ilinca, and Pinard (2008) found that there are
disparate perceptions regarding the technological maturity of wind
hybrid systems for industry in Canada’s north, with utilities expressing
less confidence than the rest of respondents, including developers.
Capital and operational costs were also broadly noted as significant
barriers. Indeed, the early history of wind system pilots in the north was
not reason for much confidence (Weis et al., 2008; Weis and Ilinca,
2008).
However, recent successful demonstrations suggest that renewable
applications are becoming increasingly feasible, and the existence of
numerous kilowatt-scale projects in northern communities suggests a
high level of social acceptance (Cherniak et al., 2015). The energy sys­
tem’s alignment with community values and identity can play a critical
role in adoption (Cherniak et al., 2015; Keyte, 2015). The level of
community interest in electricity generation and the match between
community’s sustainability goals and policy frameworks can also be a
key factor in determining the deployment of community-level renew­
able systems (Karanasios and Parker, 2018). Many northern, and in
particular, Indigenous communities, have an interest in autonomy as
well as maintaining a good relationship with the land. While there are
social and environmental drawbacks to renewable energy systems,
northerners, such as those in Yukon, have expressed a clear preference
for renewable energy over fossil fuels (Yukon Energy Corporation,
2017a). Of course, renewable projects are not immune from social op­
position, as has been widely documented in the case of Ontario wind
projects, if not implemented in genuine partnership with communities
(Fast et al., 2016; Jami and Walsh, 2016; Walker, 2017).
5.2. Liquefied natural gas
The other alternative that has been gaining traction in recent years is
Liquefied Natural Gas (LNG), a lower-carbon, economically competitive
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Energy Policy 144 (2020) 111587
alternative to diesel for remote mines. A market analysis funded by the
Canadian Gas Association identified 58 potential remote industrial
customers and 23 power generating stations that could save money by
switching from diesel to LNG (ICF International, 2016). The study pro­
jects the highest cost savings potential in the Yukon and Quebec,
although only after a considerable amount of infrastructure has been
built up.
Renard Diamond mine is the first remote Canadian mine to use a
LNG-powered power plant (Stornoway Diamond Corpporation, 2013).
Daily truck deliveries of LNG were enabled by the construction of a 234
km extension off of Quebec’s Route 167. Four up and coming mines have
also decided to, or are contemplating integrating LNG into their elec­
tricity mix: Prairie Creek, Kudz Ze Kayah, NICO, and Casino. The com­
munities of Whitehorse, Inuvik, and Norman Wells have also integrated
LNG into their electricity mix.
In the case of Casino, mine planners considered a coal, diesel, and
LNG power plant. The coal plant was discarded due to anticipated
permitting and social acceptance challenges associated with environ­
mental impacts even though it had the lowest LCOE. LNG was chosen
over diesel for economic and environmental reasons (Casino Mining
Corporation, 2014).
A differentiating feature of these projects compared to the majority
of remote mines is that they are accessible by road all year long. Given
the challenges of storing LNG, lack of remote pipeline infrastructure,
and the high cost of flying fuel in, year round road access is required to
operate these plants. As a result, we do not consider this as an alternative
alongside renewable energy and SMRs.
5.3. Comparison of levelized cost of energy
The decision about which alternatives to use instead of diesel will
primarily, although not solely, be driven by the comparative cost of
these energy sources.
5.4. Costing methodology and assumptions
We use the standard discounted cash flow methodology to calculate
the Levelized Cost of Energy (LCOE) for three alternatives to diesel:
nuclear power from small modular reactors, wind energy, and solar
energy. We also calculate the costs for a hybrid option with both wind
and diesel. All cost figures were converted to 2018 Canadian dollars.
The LCOE is the ratio of the discounted sum of all the costs associated
S. Froese et al.
with generating electricity over the lifetime of the plant, and the dis­
counted sum of electricity produced over the lifetime of the plant. The
LCOE aims to compare the cost of various generating technologies in a
technology-neutral manner.
We calculate the LCOE by amortizing the capital cost of different
technologies over the assumed lifetime of the appropriate power plant to
come up with an average annual capital cost that is given by ACC = K x
CRF where K is the total capital cost of the plant including interest
during construction (IDC) and CRF is the capital recovery factor. The
capital recovery factor, in turn, is given by CRF = r/(1-(1+r)(-N)) where r
is the discount rate, and N is the period over which the capital cost is
amortized, which we have chosen to be the lifetime of the plant. The
cost, C(Y), of production of electricity in year Y is given by C(Y) =
K*CRF + OMF(Y). OMF represents the annual costs involved in oper­
ating, maintaining and fueling the plant. For solar and wind energy
fueling costs are zero. For nuclear reactors, there is also the cost involved
in dealing with the radioactive waste generated in the plant as well as
dealing with various components of the plant that become radioactive
over the course of operating the reactor, but for simplicity we ignore that
cost.
The annual electricity production P is given by P = R*CF where R is
the rated capacity of the plant and CF is the assumed average capacity
factor (independent of year). The LCOE is the ratio of C(Y) and P.
The data for the various parameters used in these calculations were
drawn from a range of sources (Buongiorno et al., 2018; Dominion
Diamond Ekati Corp and Sysene Consulting Inc, 2017; Goad, 2017b;
HATCH, 2016; Moore, 2016a; Yukon Energy Corporation, 2017a). We
also used various NI 43–101 reports.1 All figures are presented in 2018
CAD. Fuel prices were converted to 2018 CAD using the Energy and
Petroleum Products component of the Industrial Product Price Index put
out by Statistics Canada (Government of Canada, 2018). All other prices
were converted using the Statistics Canada Machinery and Equipment,
Domestic and Imported Index (Government of Canada, 2017).
Another critical variable is the discount rate, a measure of how future
benefits are valued relative to current costs. We use a discount rate of 5
percent, which is used in various NI 43–101 reports.
The capital cost for SMRs is derived from the capital cost of large
reactors using the same scaling law as used by the Canadian Nuclear
Laboratories (Moore, 2016b):
Capital Cost (SMR) = Capital Cost (Large Reactor)
( )0.55
Power capacity of SMR
×
Power capacity of Large Reactor
This is a standard scaling law that has been widely used (Behrens,
1985, p. 362; National Research Council, 1996, p. 421; NEA, 2011, p.
17; Kessides, 2012, p. 201). The capital cost estimates of the four large
nuclear power plants under construction in the United States and
Western Europe, namely Olkiluoto, Flamanville, Vogtle, and Hinkley
Point, have been reported in a recent report from the Massachusetts
Institute of Technology (Buongiorno et al., 2018). None of these are
complete and thus we do not know what the final costs will be. In 2018,
the average estimated cost of these four large nuclear plants was
$8100/kW in 2017 US Dollars. When converted into 2018 Canadian
Dollars, this translates to nearly CAD 10,700/kW. Using the above
equation, we can estimate the capital cost of a 3 MW small modular
nuclear reactor to be CAD 520 million. To this, we must add the cost of
loading the reactor with the initial core, which has been estimated at $7
million (Moore, 2016b), equivalent to ~ CAD 9 million.
1 determined by the insolation and wind patterns respectively. Based on
NI (National instrument) 43–101 reports are reports that mining companies
are required by the government to submit in order to be listed on Canadian
stock exchanges. They are meant to provide investors with accurate informa­
tion. These reports are endorsed by “qualified persons”, but it is unclear how
they are validated otherwise.
8
Energy Policy 144 (2020) 111587
Before proceeding further, we briefly address one potential criticism.
Some might look at the calculated cost of the SMR and question the
methodology used for derivation. They may also cite far lower costs
projected by some technology developers. Given the long history of cost
overruns and under-estimations for nuclear power plants (Gilbert et al.,
2017; Koomey et al., 2017; Hultman et al., 2007b), it is not justifiable to
take costs as projected by developers in the case of any nuclear reactor
design that is yet to be deployed at scale. However, even without
addressing that question, as we will see further on, our qualitative re­
sults still hold even if the calculated SMR cost is a factor of 10 too large.
The corresponding costs for a 3 MW wind or photovoltaic plant are
CAD 23 million and CAD 9 million respectively; both are derived by
interpolation from the cost estimates presented in the Yukon Energy
Corporation’s 2016 Energy Plan (Yukon Energy Corporation, 2017a).
The Ontario Ministry of Energy SMR study (HATCH, 2016) estimated
diesel generator costs at CAD 3000/kW, as did a 2016 Alternative En­
ergy study for the Ekati Diamond mine (Dominion Diamond Ekati Corp
and Sysene Consulting Inc, 2017). The Yukon Energy Corporation’s
2016 Energy Plan estimated the costs at CAD 1200/kW. In an interview
at the Energy and Mines World Congress in 2017 Robin Goad, CEO and
President of Fortune Minerals quoted the cost of diesel plant at CAD 1,
000,000/MW. Based on these figures a middle point of CAD 1500/kW
was selected.
Based on the Hope Bay NI 43–101 report, we assumed that diesel
plants generate 3.8 kWh of electricity per litre of diesel (TMAC Re­
sources Inc, 2015). We set the baseline cost of delivered diesel at
$1.1/litre. This figure was obtained by averaging the costs reported for
10 sample mines between 2014 and 2018.
The diesel price takes into account the transport costs to remote re­
gions. There is also a cost premium associated with constructing these
plants as a result of having to transport equipment to these regions. The
costs used by Yukon Energy Corporation reflect this premium. This is
evident through the fact that the per unit costs for diesel, wind, and
photovoltaic plants (CAD 1500/kW, CAD 7700/kW and CAD 3000/kW
respectively) are much higher than costs elsewhere. For example, a large
photovoltaic project and a large wind project that are both being con­
structed in Alberta were estimated at CAD 938/kW and CAD 1573/kW
respectively (Lillian, 2018; Van Voorhis, 2019). For the SMR project, we
have not added any corresponding premium, an assumption that is
favourable to the estimate of the cost of nuclear power from SMRs.
Because of the dependence on financing parameters, the LCOE is also
sensitive to the time period it takes to construct power plants. For
simplicity, we assume that all plants are constructed within one year. In
reality, a nuclear plant will likely take longer than a wind turbine, a solar
plant, or a diesel plant, and thus its LCOE would become larger if the
period of construction is taken into account. The average lifespan of
operational and near future mines considered within this analysis is 17
years (see Table 1), which we round up to 20 years. Because the energy
system will only be of primary use to the project operator/owner during
the mine’s lifespan, we use this figure rather than the potential lifespan
of the energy system to evaluate LCOE numbers.
As described earlier, the mine’s electrical demand varies substanti­
vely over the year. It also varies during each day. As a result, mines do
not require diesel generators to operate at their rated or maximum value
24 h a day, 365 days a year. We use data on the installed capacity and
actual electrical energy generated by the diesel generators at the Coffee,
Chidliak, Back River, Hope Bay, and Kudz Ze Kayah mines to estimate
that on average a diesel generator operates at a capacity factor of 45
percent. This is the appropriate figure to use for a nuclear plant as well, if
it were to be a replacement for a diesel generator.
In the case of solar and wind power plants, the capacity factor is
the Yukon Energy Corporation’s 2016 Energy Plan these are approxi­
mated at 15 percent and 25 percent respectively.
S. Froese et al.
5.5. LCOE results
The results of the LCOE calculations are listed in Table 3. These show
that solar energy is the lowest cost option, followed by wind, and then
diesel.
The LCOE numbers listed here are not an ‘apples to apples’ com­
parison because wind and solar do not generate electricity all the time.
However, we can imagine a hybrid combination of solar or wind and
diesel meeting the electricity demand for a mine. For a mine with a
maximum demand of 3 MW and a total electricity demand of 3942 MWh
(as implied by the capacity factor), in the case of a diesel-wind hybrid,
the wind turbine would produce 2190 MWh and diesel would be used to
meet the remaining 1752 MWh. The cost of generation would reduce
slightly, to CAD 0.28/MWh and the total annual cost of electricity
generation would be CAD 2.6 million. In comparison, the total annual
cost of electricity generation in a purely diesel based energy system
would be approximately CAD 3.9 million, whereas the total annual cost
of electricity generation in a purely SMR based system would be nearly
CAD 44 million.
Before we go on to discussing the sensitivity of these results to
various factors, it is worth briefly comparing these results with the few
estimates for these energy sources in the literature. LCOE numbers are
dependent on assumptions about the many parameters that we have
described earlier and it is not possible to expect identical results.
Nevertheless, comparing figures provides some sense of the nature of the
assumptions.
The Yukon Energy Corporation Energy Resource Plan Wind Site In­
ventory has come up with estimates that range from a high of CAD
0.186/kWh for a 6 MW wind site to CAD 0.149/kWh for a 10 MW wind
site and CAD 0.128/kWh for a 20 MW site when converted to 2018
dollars (Yukon Energy Corporation, 2017b). Our figure is quite a bit
higher, reflecting the smaller size of the wind capacity that we have
assumed (3 MW) and other conservative assumptions, such as a shorter
lifetime. Likewise, the LCOE we have derived for solar is slightly higher
than the estimates of CAD $0.16- CAD $0.20/kWh, CAD $0.14- CAD
$0.18/kWh, and CAD $0.16- CAD $0.17/kWh for 1 MW, 5 MW, and 10
MW systems reported in the Yukon Energy Resource Plan Solar Site
Inventory. Again, this reflects the more conservative assumptions we
have used, for example, our assumption of 20 year lifetime as compared
to the 30 year lifetime assumed by the Yukon Resource Plan.
The LCOE we have derived for diesel based power is consistent with
prices reported at the outset of this paper.
Despite the assumptions that drive up the costs of power from diesel
and renewables, nuclear power from small modular reactors turns out to
be nearly an order of magnitude more expensive than these.
These figures are sensitive to the discount rate used. The 5 percent
rate that we have used may not be appropriate for risky projects, espe­
cially involving untested technologies like SMRs as investors might
require a higher rate of return. Assuming an 8 percent discount rate
would result in annual expenditures of nearly CAD 3 million for the wind
plus diesel combination whereas the cost of the SMR option would go up
to over CAD 55 million per year.
The dependence on the assumed lifetime of the power project is also
Table 3
Levelized cost of energy from different options.
Nuclear Wind Solar Diesel
(SMR) (PV)
Production (kWh/year/kW) 3942 2190 1314 3942
Annualised Capital Cost (CAD/ $14,000 $620 $240 $120
kW/year)
Annual expenses (CAD/kW/year) $530 $35 $35 $1200
Total generation cost (CAD/kWh) $3.7 $0.30 $0.21 $0.33
Notes: This assumes a discount rate of 5 percent and an economic life of 20 years
for each of these. All numbers (except production) rounded off to two significant
figures.
9
Energy Policy 144 (2020) 111587
sensitive. If instead of 20 years, we assumed that the nuclear plant were
to be selling electricity for 40 years, then the generation cost would go
down to CAD 2.74/kWh for a discount rate of 5 percent, with an annual
electricity cost of around CAD 32 million. However, this would require
the mine to be operational for this longer period of time.
One factor that would affect the cost comparison is the imposition of
a carbon tax. Assuming that the cost of diesel remains the same, the
addition of a CAD 100/ton of carbon, much higher than today’s values,
will result in the cost of generation for a purely diesel system to go up
from CAD 0.33/kWh to CAD 0.40/kWh, still much lower than the gen­
eration cost of CAD 3.72/kWh for SMRs. The annual cost of the hybrid
wind plus diesel system would go up to around CAD 4.2 million as
compared to CAD 2.6 million.
There is another factor that could make a slight difference. Should
SMRs be deployed, waste heat from these plants could be used for other
purposes. But, this additional source of revenue will not be significant
enough to tilt the comparison in favour of SMRs.
This is also not an ‘apples to apples’ comparison for a different
reason. SMRs are not available for deployment currently and even the
most optimistic estimates foresee these becoming commercially avail­
able only in the mid 2020s. The cost figures that we have used for wind
and solar power are for projects that have been built in the mid 2010s.
Given the fast declines observed in the costs of renewable technologies,
the costs of wind and solar would be expected to be significantly lower
than today’s costs by the mid 2020s. Thus, their use would be even more
economical as compared to SMRs by that time frame.
Finally, one might ask how cheap SMRs would have to become in
order to be competitive with the wind-diesel hybrid. Our calculations
show that, all else being equal, the assumed capital cost of constructing
the SMR would have to decline by 96 percent before electricity from the
SMR option is the same cost as the wind-diesel hybrid.
6. Discussion
A key limitation of any such LCOE analysis is that it is a general
result, and while it can provide comparative insight, it is not applicable
to individual projects that have to take multiple site-specific and project-
specific factors into account. Therefore, our analysis cannot be used as
anything more than a rough first estimate by a potential project
developer.
A further limitation is that we have not carried out an extensive error
analysis even though a number of individual figures have significant
margins of error. For example, the Yukon Energy Corporation Energy
Resource Plan Wind Site Inventory notes a margin of error +-30% for the
capital and operating costs. Energy production is determined by many
variables including wind speed or solar irradiance, system downtime
and curtailment, and system and conversion losses. The reason for not
analyzing the implications of these variations is because it would not
affect the qualitative result about the very large difference in electricity
generation costs between SMRs and the other options.
LCOE analysis also does not account for a number of important
factors such as externalities and non-economic values, some of which we
discuss below. As such, the LCOE is one factor, among many, that must
be considered in energy planning.
LCOE analysis also implicitly assumes that projects will receive
financing. This may not always be the case. Unlike electric utilities,
mining companies cannot pass on their costs to ratepayers (electricity
consumers). This means that they would find it difficult to finance a
risky venture like constructing an SMR, whether through equity or debt.
Our analysis has neglected this challenge.
In addition to a financial disadvantage, there is a special problem
with nuclear power. For decades now, nuclear energy has been
perceived by large sections of the world’s population as a risky tech­
nology and this has affected its social acceptance (Ramana, 2011; Slovic,
1994; Weinberg, 1976). Public polls have consistently indicated low
levels of support. A 2011 poll, for example, found that only 10 percent of
S. Froese et al.
those polled in Canada expressed “strong support” for nuclear power
and only 33 percent wanted to continue to build nuclear, while the
remaining 67 percent would like to stop future nuclear builds (IPSOS,
2011). Further, only 20 percent thought “that electricity produced from
nuclear energy will be a viable long term option for countries who need
to produce it in that way” and the remaining 80 percent cosidered it
“only a limited and soon obsolete form of producing energy for the
future” (IPSOS, 2011, p. 10). Public antipathy towards nuclear power
was not limited to answering polling questions: in 2011, Bruce Power,
the company that owns Canada’s largest nuclear power plant in Ontario,
was forced by public opposition to abandon its plans to construct a
nuclear plant in Alberta (CBC, 2011).
These figures are not to be entirely attributed to the impact of the
Fukushima accident: a 2005 poll conducted for the International Atomic
Energy Agency (IAEA), whose mandate calls for the agency to “seek to
accelerate and enlarge the contribution of atomic energy to peace,
health and prosperity throughout the world”, found that only 34 percent
of those polled in Canada agreed with the statement “Nuclear is safe;
build more plants” (GlobeScan, 2005, p. 19). The majority of those
polled did not want more nuclear plants to be constructed.
There has been only limited work pertaining to the social acceptance
of SMRs and community capacity to deal with them (Hanna et al., 2016).
Nevertheless, some of the factors underlying the lack of support seen
elsewhere have also been evident in remote regions of Canada. A study
undertaken by the International Centre for Northern Governance and
Development and the Sylvia Fedoruk Canadian Centre for Nuclear
Innovation, both at the University of Saskatchewan, found that Indige­
nous peoples they surveyed from select northern communities raised a
range of questions regarding the potential impacts of SMRs, including
cost, safety, potential for environmental damage, and whether the
technology had been proven elsewhere (Coates and Landrie-Parker,
2016). While some interviewees expressed support for nuclear energy,
and the study noted general openness to discussing it as an alternative,
northerners were not interested in being an experimentation ground for
financially or operationally risky projects. More recently, in June 2019,
the Chiefs of the Anishinabek Nation, representing 40 Indigenous
communities across the province of Ontario, unanimously endorsed a
grand council resolution that stated: “SMRs and nuclear power in gen­
eral represent an unacceptable risk to our nation” and that the Anishi­
nabek Nation is “vehemently opposed to any effort to situate SMRs
within our territory” (Sudbury Star Staff, 2019).
The implication of these factors is that even if nuclear power were to
be financially viable, some mines and remote communities are unlikely
to invest in them.
7. Conclusions and policy implications
Small Modular Reactors have been proposed as a way to deal with
the challenges of nuclear power, specifically the lack of economic
competitiveness, in large part because of the high capital costs of large
nuclear plants that are constructed in most parts of the world. SMRs are
a potential alternative to large plants, with some advantages over larger
reactors: in particular, their total capital costs are expected to be smaller
than large nuclear plants. However, because they cannot benefit from
economies of scale—the primary reason the nuclear industry started
constructing larger nuclear plants in the first place—they are even less
economically viable for the electric grid. As a result, the only financially
viable options for SMRs might be in niche markets, for example, remote
mines and communities that are not otherwise served by the grid and
that are currently electrified using diesel plants with very high fuel costs.
This paper has examined the nature of this market and evaluated the
likelihood that SMRs might prove economically competitive with either
diesel based systems that are currently in use, or renewable sources of
electricity generation that might be installed, or combinations thereof.
We come up with two main results.
First, the market for electricity in remote mines and communities
10
Energy Policy 144 (2020) 111587
within Canada is quite limited and a factor of 3–7 smaller than the that
companies like Westinghouse and Babcock & Wilcox have suggested is
necessary to move ahead with their projects. This is in the best case
scenario where nearly every mine and remote community that has a
demand of 3 MW or more purchases a small modular reactor, regardless
of the cost of electricity from these, availability of financing, or non-
economic factors weighing against the construction of nuclear reactors.
Second, the cost of generating electricity using SMRs is nearly an
order of magnitude higher than the corresponding costs of generating
electricity using diesel, wind, solar, or some combination thereof.
Because of the great difference in costs, this result is robust. Modified but
reasonable assumptions about, for example, capital costs of SMRs are
unlikely to change the comparison. While we have not compared costs
for a combination of renewables and battery based storage due to many
uncertainties, we think that it is plausible to assume that such combi­
nations might well become cheaper than SMRs over the next decade or
earlier.
Finally, our results reinforce the economic benefits underlying the
already observed trend away from diesel toward adding wind, and
possibly solar energy at these remote mines and communities.
Declaration of competing interest
The authors declare that they have no known competing financial
interests or personal relationships that could have appeared to influence
the work reported in this paper.
CRediT authorship contribution statement
Sarah Froese: Methodology, Formal analysis, Data curation, Writing
- original draft, Writing - review & editing. Nadja C. Kunz: Conceptu­
alization, Methodology, Writing - original draft, Writing - review &
editing. M.V. Ramana: Conceptualization, Methodology, Formal anal­
ysis, Writing - original draft, Writing - review & editing.
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