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Tom Heintzman: Welcome to The Sustainability Agenda, a podcast series focusing on the evolving complexities of the sustainability landscape. I’m your host, Tom Heintzman. Please join me as we explore today’s most pressing issues with special guests that will give you some new perspectives and help you make sense of what really matters.Welcome to our multi-part series on the role of electrification in the transition to clean energy. On today’s episode, we continue the discussion on nuclear power innovation and expertise to meet the rising demand for electricity. In particular, today we will explore the role of small modular reactors or SMRs and the future outlook for advanced nuclear technologies. I’m delighted to welcome my guest, Kim Lauritsen. Kim is the Senior Vice President of Enterprise Strategy and Growth at Ontario Power Generation or OPG. Kim is responsible for OPG’s corporate strategy development and new growth initiatives, including in new nuclear growth and ensuring strategic alignment across OPG’s portfolio of subsidiaries. Kim has more than 20 years of experience in the energy industry, having worked across various parts of the value chain in diverse geographies, including at Origin Energy in Australia and Shell in Europe. Kim was also a speaker at our CIBC Electrification Summit in April on our panel discussing the role of nuclear power. Good morning, Kim. Welcome back to CIBC and welcome to the show.

Kim Lauritsen: Thanks, Tom. Happy to be here.

Tom Heintzman: So Kim, let’s start at the high level. It would be great if you could start with a broad overview for our listeners of what exactly are small modular reactors or SMRs and how do they differ from OPG’s traditional nuclear facilities.

Kim Lauritsen: Sure. So small modular reactors, SMRs, they’re a really exciting evolution in nuclear technology. As the name suggests, they’re nuclear reactors, but they’re designed to be smaller, simpler to build, and more flexible than our traditional large reactors. They do use proven nuclear concepts, but in a more compact and modular package. So at OPG, we’re looking to build up to four of the GE Hitachi BWRX-300 SMR technologies. So that’s one of the technologies out there. And that’s the one that we’ve chosen for our Darlington site. And each of those produce around 300 megawatts. So the four units together will power 1.2 million homes. But within the SMR categories, there are three main types that we think about. The on-grid SMRs, those are the ones that BWRX-300s that we’re deploying at Darlington, those are designed to generate electricity for the main power grid, and that’s typically between the 150 to 300 megawatts, and ideal for replacing fossil fuel plants or using to back up renewable generation. Then another category of SMRs we have are for off-grid or remote locations and those are much smaller, often under the 10 megawatt size and they’re meant for remote communities, mining sites or industrial operations that aren’t connected to the main grid. So in this case it would be offering a clean alternative to something like diesel, what they would be using now. And then finally we have a category known as advanced or industrial SMRs. And these provide, in addition to generating electricity, they provide high temperature heat for things like industrial processes, hydrogen production, or district heating, in addition to the electricity component. And so, as I said, what sets the SMRs apart are their size and flexibility. While I mentioned that there’s a range of sizes to define SMRs, much of the industry is coalescing a little bit around that 300 megawatt sweet spot size that we’re going to be deploying at Darlington. It’s big enough to deliver meaningful amounts of power to the grid, but small enough to fit flexibly into our existing grids. And then there’s that focus on the modular design, and that means that many of the components can be built in factories and shipped to site, and that’s going to help us speed up construction and help to control the costs. Important to note that the SMRs, they’re not meant to replace the large existing reactors like what we have at our Darlington and Pickering sites or to replace renewables. They’re really part of an all hands on deck approach to meeting the growing energy needs. And so we see a future where there’s SMRs, nuclear and renewables all working together to deliver clean, reliable power to the grid.

Tom Heintzman: So Kim, I understand your second category, which is the kind of 10 to 15 megawatts where it’s off grid. For the 300s, predominantly, they’re grid connected, they predominantly provide similar power to a larger facility. So what are the advantages for the 300? Where are they appropriate and where are they not?

Kim Lauritsen: Well, they’re appropriate, as I said, you know, really useful application to replace fossil fuel plants given the relatively similar size. But, you know, why we’re building SMRs, I guess, first and foremost, is because Ontario’s electricity needs are growing rapidly and we need more reliable low carbon power to keep up. So the IESO, the Independent Electricity System Operator in Ontario, forecasts that the industrial demand in Ontario will rise by 23 terawatt hours, or almost 60% by 2035. And that’s driven by things like new electric vehicle manufacturing, supply chain growth. That’s like adding another city the size of Toronto to our grid. And that’s before we even get into, you know, we’re expecting a million more homes, which adds another 9% of demand on top of that. So SMRs are a really great fit to meet that challenge because of the flexible and scalable nature oftheir design and deployment. The smaller size and the modular design means that we can deploy them in places where large reactors wouldn’t be practical or where the grid can’t handle a huge new plant. So you can imagine, depending on where that industrial and residential demand materializes, not all parts of the grid can handle some of the larger nuclear technologies, which are up to a thousand megawatts, so two to three times the size of what we’re looking at with SMRs. And they’re also well suited to support renewables since they can provide that steady low carbon power when the wind isn’t blowing or the sun isn’t shining. So that helps with stabilizing the grid and ensuring that we have energy security across theentire grid. In terms of the build itself, for SMRs and I guess why we’re deploying this technology, at OPG we’ve developed a really strong track record for project execution through our Darlington refurbishment project. But new build nuclear is something that we haven’t done in decades. And so starting smaller with the SMRs, doing it well, repeating, bringing ourselves down the cost curve by capturing and implementing lessons learned through that process is also going to help us build investor confidence to support the build program that we have ahead of us beyond the four SMRs at Darlington, which will also include large nuclear.

Tom Heintzman: Fantastic. And Kim, in earlier episodes, we did a number of episodes on the distribution grid. And so people will understand that the grid is definitely capacity constrained and that it’s difficult to land a large nuclear reactor in many areas of the country. Kim, OPG’s chosen the GE Hitachi BWRX-300, that just rolls off the tongue, as its technology. Why was this particular technology chosen?

Kim Lauritsen: We put a lot of thought into selecting the right SMR technology for Ontario and our review process actually kicked off back in 2018. And at the time we looked at the variety of SMR options available, and we did end up choosing the GE Hitachi BWX-300 for the Darlington project. And that decision was based on several key criteria. Things like technology readiness, the ability to get the technology licensed at our Darlington site, safety criteria, environmental impact, economic benefits for Ontario, and of course, cost. So the BWRX-300 stood out because it was well advanced. It was based on proven boiling water reactor technology. So that’s a technology that already exists. The X in BWRX-300 actually stands for the 10th generation of that boiling water reactor technology, but with some modern updates. And so all of that gave us the confidence that we would be able to build it in time to meet Ontario’s growing electricity needs into the 2030s. And another big advantage around this technology is that around 80% of the project’s components and services will be sourced domestically. So that’s going to provide huge support for Ontario’s jobs and our well-developed nuclear supply chain in the province. Another 15% comes from trusted partners in Europe and Japan. So keeping the benefits close to home and ensuring that we have the expertise also to support these units for years to come through their operations. That was an important part of the consideration for us when we chose this technology.

Tom Heintzman: Kim, I’m glad you took the conversation to supply chain because that’s somewhere where I want to explore. Supply chain can be complicated. We’ve had previous episodes on natural gas and that time to get turbines is extraordinary, for instance. On the other hand, it can be an opportunity because we can build up a domestic supply chain and not only be the producers, but also be manufacturers and suppliers of goods and services along the way. I understand that more than 80 companies in Ontario’s SMR supply chain have already signed agreements with OPG to deliver the GE Hitachi BWRX-300. And now I know that the X stands for the 10th. What are some of the challenges you’re facing in our supply chain for first of a kind projects like this?

Kim Lauritsen: That’s a great question. Before I get into the challenges, because they’re important, I do want to reiterate the strong supply chain that we do have and that we feel as a result of that, really ready to take on this challenge. But with any first of a kind project like this, it always comes with unique supply chain challenges. And I’d say the top three that we would face are uncertainty, change management around the design and capacity. I’ll start with uncertainty. I guess because with a first of a kind project, you don’t have direct precedence with those components that you’re building. There can be some uncertainty around cost and quality. So to address this, we’ve put in extensive testing and validation requirements for not just the components that we need manufactured, but also the final assemblies in which those components will sit. So we’re working closely with our suppliers to standardize, also reduce the number of custom designed components, all of that to help shorten the lead times and keep us on budget. So that’s the uncertainty piece. On the change management, we won’t start building until each of the phases of this project until we’re very comfortable with the level of design, but there will be with first of a kind some elements of design iterations along the way. And we, in order to avoid that these iterations lead to supply chain disruptions or the need for rework again, trying to minimize those potential impacts, our procurement teams are collaborating early and often with the suppliers, really paying extra attention to qualifications, communications, contingency planning, to make sure that we can incorporate any required design iterations but while moving our project forward smoothly. And then finally, and this is a concern on any major project, not just a first of a kind, but does the supply chain have the capacity for the project. And Ontario is fortunate to have a vast and experienced supplier base in nuclear, so we’re starting from a really good starting point and that supply chain is already familiar with Canadian nuclear standards. So by using that strong local supply base, we’re able to reduce logistics and transportation costs and really build up a community of expertise that will support us through not just the build phase, but the ongoing operations and maintenance of these units for years to come. And as I said earlier, a really great way to strengthen the Ontario’s supply chain and role as a leader in nuclear technologies, supporting both our energy needs, but also as the industry grows externally, great opportunity to export our skill set.

Tom Heintzman: Well, that’s another great segue because that’s where I wanted to take this next. The opportunity is not just here in Ontario or Canada, but it’s also in the United States and in Europe. Is OPG particularly focused on Ontario or does it intend to export its skills and bring its supply chain elsewhere in North America or globally?

Kim Lauritsen: We are actively looking at deploying the technology more broadly than in Ontario. We feel that OPG has a lot to offer other jurisdictions in doing so. We’re committed to advancing the energy transition in Ontario, but also across Canada and globally. Our first priority is delivering reliable, clean power for Ontario. And we see this SMR technology as a great fit for that, but also with huge potential across Canada and around the world. OPG’s existing nuclear plants in Ontario are recognized among the world’s best for safety and efficiency. And our team has a great track record of delivering complex projects. Our Darlington refurbishment has been delivered on time and on budget, which is rare in the nuclear industry. Our unit three of that project was returned to service 140 days ahead of schedule. So using that experience that we’ve built up in both project delivery and operations, and then building on the expertise of our supply chain, our regulatory approach, the skilled labour that we have, our goal is to take that Canadian nuclear know-how and help others deploy SMRs, starting with the first one in the Western world here at Darlington. And by executing this project well, we’ll create a blueprint that we think will be very valuable for other provinces and countries to be able to follow. So in terms of what we’re already doing on that front, we’re already partnering with Capital Power in Alberta to assess SMRs and help them build their nuclear ecosystem. In Saskatchewan, we are supporting SaskPower as they prepare for their own SMR development. Internationally, we’re working with OSG in Poland to help them transition from coal to clean nuclear energy. And we’re also monitoring several opportunities across Europe where energy security and decarbonization are really top of mind. So building first here, I mean, we need to get it right at home first, but we’re also opening opportunities then for the skill set and the supply chain that we build in Ontario to become exporters of highly engineered components and skilled services and help replicate this technology in multiple jurisdictions that we can help as we drive down costs through not just the project delivery learning, but also joint procurement and shared expertise. So in short, I think we have a really good opportunity here to put Canada at the center of a global SMR rollout.

Tom Heintzman: Super exciting. I couldn’t be prouder of Canada’s role in this and wish you all the best. One of our last questions we usually ask our guests on the show to look out five or 10 years. So I’d ask you to look out 10 years and how do you think the role of nuclear power will have evolved? And also, what is needed today to ensure that advanced nuclear technologies can get us to where you envision they should be.

Kim Lauritsen: So looking ahead, I see nuclear playing an even bigger role in Ontario and beyond. In 10 years, our vision at OPG is, we’ll have a fleet of our four SMRs at Darlington providing 1,200 megawatts of reliable, low-carbon power to the grid. We’ll have refurbishment underway at our Pickering nuclear generating station, so following off the back of our Darlington refurbishment. And we’ll also be making progress on realizing up to 10,000 megawatts of new nuclear potential at our Wesleyville site. So huge growth potential in Ontario. And as a result of that, I see nuclear really continuing to be the sturdy backbone of the Ontario grid and Ontario’s growth and electrification. And I see our homegrown supply chain and expertise being critical to deploying similar technologies across Canada and globally, and other jurisdictions looking to our experience to help bolster their own energy security and decarbonize their grids. What’s needed to get there, as we enter that exciting area of growth, it’s also crucial that we prioritize meaningful collaboration, support and engagement with our Indigenous nations and communities. The path to cleaner, more reliable energy system, it’s got to be built on strong partnerships with Indigenous peoples. The knowledge and values and leadership that they bring are essential to our shared success. And we’re seeing that early in some of our new projects and we need to continue to move in that direction. Beyond the clean energy, the other thing that I see for the nuclear industry, if we look out in the next 10 years, is continuing to drive innovation that benefits society in other ways beyond electricity generation. And an example that I’ll give is just recently, OPG received approval from the Canadian Nuclear Safety Commission to begin producing two critical medical isotopes, Lutecium-177 and Yttrium-90, at our Darlington station. And these isotopes are used in life-saving cancer treatments and advanced therapies for diseases like prostate and liver cancer. And it’s a really great example of how nuclear power isn’t just about electricity, it’s about supporting healthcare and making a positive impact in people’s lives. And I’m confident that the nuclear industry will continue to leverage those kind of opportunities to make a positive impact. So leading the way with our first fleet of SMRs at Darlington, giving us the tools to meet the challenges of growth, decarbonization, energy security and positive social impacts, I think there’s a great future ahead for the nuclear industry in Ontario, Canada and beyond.

Tom Heintzman: Super exciting. Well, thanks, Kim, for taking the time to join the show today. And thanks to the listeners for tuning in.

Kim Lauritsen: Thanks, Tom.

Tom Heintzman: Please join us next time as we tackle some of sustainability’s biggest questions, providing you different perspectives to help you move forward. I’m your host, Tom Heintzman, and this is The Sustainability Agenda.

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Powering the future: The role of SMRs in energy diversification

Tom Heintzman

MD & Vice-Chair, Energy Transition & Sustainability

CIBC Capital Markets

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