Areva talks over 2nd N.B. reactor still early

The possibility of French nuclear giant Areva building a second reactor and developing a clean energy park in New Brunswick is still in its infancy, according to Energy Minister Jack Keir.

Keir spent several days in Florida recently talking to Areva representatives over the possibility of building a second nuclear reactor beside NB Power's Point Lepreau nuclear station.

The French company is also interested in constructing a clean energy park, that could include biomass facilities, offshore wind opportunities and solar power options.

Keir said the two sides are closing in on a letter of intent but even that means the process is still in the early stages.

"What they're pitching is a wonderful idea and a great opportunity for investment in New Brunswick, but it's early stages," Keir said in an interview.

"The next step would be to sign a letter of intent and really dig into the business case a little bit to make sure that it works."

This is the second time the New Brunswick government has entertained talks with Areva on the company's interests in expanding its nuclear network into the province.

However, the New Brunswick government opted to sign an agreement with Atomic Energy of Canada Ltd. and a consortium of partners, called Team Canada New Brunswick, in 2007 that was to build a merchant nuclear reactor in the province.

In that proposal, Team Candu New Brunswick would pay for the entire project and sell the power into the New England and New York marketplace. The provincial government would not be required to finance the reactor unless it wanted a portion of any profits.

That arrangement has faded as AECL has been marred in problems with the $1.4-billion refurbishment project at its Point Lepreau nuclear reactor.

Areva is currently building two new nuclear reactors in Finland and France. The Finland project is estimated to be three years behind schedule.

Government support

A nuclear energy expert said the merchant power plant concept that was once popular in the industry is now less appealing.

Edward Kee, a consultant with Washington-based NERA Economic Consulting, said similar merchant plants in the United States, one of which is being pitched by Areva, may not get off the drawing board without major loan guarantees by the U.S. government.

So any deal in New Brunswick, Kee said, would be difficult if the provincial government didn't ante up a similar loan guarantee to assist with their debt financing.

"Absent that kind of government guaranteed debt at lower rates, and more availability, this one looks like a pretty tough deal to do," Kee said.

The energy expert said the merchant power plant concept has lost some of its appeal in recent years for a variety of reasons. Particularly, he said, energy demand is lower because of the downturn in the economy, the possibility of legislation forcing higher costs on carbon and natural gas prices have remained low so that nuclear power may not be as competitive.

"All those factors mean a merchant, a non-rate based nuclear plant, like this one would have a lot harder time even if they could get their power down to Boston or some other part of the New England market," Kee said.

Transmission necessary

Any power plant looking to sell its electricity into the United States out of New Brunswick will need to find a transmission route. The existing international interconnection lines have contracts for their capacity and could not transmit the amount of extra power that would be coming from a new nuclear reactor.

Areva will need to line up investors for both the reactor and a transmission route, according to Kee.

"Many billions of dollars of money will be invested, probably not by Areva. They aren't really in the business of investing, they are in the business of building, selling the reactors," the energy expert said.

"So they are going to have to find the investors. The deal in New Brunswick would probably also include a transmission line to the United States, the New England market that alone could be a pretty long and difficult process to put together."

The process of lining up potential investors is a process that had already been started by Team Candu as it assessed the possibility of building its own reactor.

The province's energy minister said any New Brunswick companies could invest if they wanted.

"I think what Areva will do is put the business case together, show that the business case would work and go out looking for investors," Keir said.

"Certainly if there were folks in the province of New Brunswick that would want to get into an equity position I'm sure that could happen."

Tories blast talks

The Opposition Progressive Conservatives criticized the Liberal government's discussions with the French nuclear company.

Tory MLA Paul Robichaud, the opposition's energy critic, said on Tuesday the New Brunswick government needs to assemble a long-term energy plan before moving forward with any discussions about a second reactor.

"We have been clear all along.  We will produce a long-term energy plan for the province within six months of forming government if we are successful in the September election," Robichaud said in a news release.

"[Premier] Shawn Graham has had nine years to develop a clear plan and he has failed. It's time for him to stop this improvisation."

Before the former Progressive Conservative government called the 2006 election, the Tories called for a feasibility study to be conducted on the possibility of building a second nuclear reactor.