Thursday, December 17, 2009

AECL: Buyers Wanted

So the Harper government has finally decided to officially put the commercial side of AECL up for sale.

This is a good move that actually has nothing to do with the sale of 'reactors' as the Toronto Star's headline would lead you to believe. And it has nothing to do with reactor safety as comments on other news sites would have you believe.

The nuclear power plants are owned by the utilities NB Power, Hydro-Quebec, OPG and Bruce Power. Selling AECL changes none of that.

Regulating the nuclear industry is the job of the Canadian Nuclear Safety Commission. Selling AECL won't change that either.

Chalk River is not even up for sale, it is going to remain in government hands while AECL is split into its research and commercial divisions.

So what does privatizing AECL do? It will remove the CANDU design of reactors from government hands and give it to some private company, perhaps a larger conglomerate which will be better able to market the reactor. Or perhaps someone will pick up the commercial side in order to gain the talent and sink the CANDU line of reactors altogether. Is either result a terrible thing? I don't think so. The CANDU reactor has its benefits but if the costs outweigh the benefits there is no reason to keep building them.

I'm not terribly sentimental or nationalistic about these things to be honest.


shlemazl said...

One has to wonder who would want to buy a company selling reactors that nobody's buying. Not even Canada.

Eric said...

There are other reasons to buy up AECL even without the CANDU design. There's a practical army of people, smart people, who could be applied to any number of projects including competing for service work in Canadian utilities.

Moreover, if they were bought by a more reputable company they could have their image rehabilitated from the company that can't do anything right (Pt. Lepreau, MAPLE, Chalk River, etc...) to one that is more reliable.

wilson said...

3 interested parties came forward, one in France, Bruce Power, and ? can't remember.

Bets PMSH is in Dopenhagen trying to make a sale?

Eric said...

I haven't seen the suitors yet, but I'm guessing that the France one is Areva, which wouldn't surprise me. The Bruce Power bid is probably going to be heavily backed by Cameco (which owns part of Bruce Power - and is a major uranium mining company).

I doubt that Harper will bring it up at Copenhagen, there really is no point. Harper would rather sell the company 'in-house' to a Canadian company than to another country in order to keep the nationalists happy.

The suitor I'm curious to see is Hydro-Quebec. I've mentioned them before as a potential buyer. They certainly seem to have the money to throw around.

喜喜歡 said...


shlemazl said...

No one has "come forward", i.e. nobody stated that they would bid. A few indicated they are considering, including Bruce Power, Areva and Westinghouse.

Bruce Power's ownership would create potential competition problems (Ditto for HQ). One utility shouldn't own service providers for other Canadian utilities. Not to mention that utilities should be focusing on supplying energy rather than reactor design.

Areva and Westinghouse might buy AECL but if they do it would only be to kill CANDU as they market PWRs. Not necessarily a bad thing as the design no longer makes any commercial sense anyway. Then again, why would they want to spend money in Canada if Canada isn't building any new plants?

Eric said...


I wasn't aware of any concrete offers either, but I think he meant that some companies had expressed interest in maybe buying it.

I can't think of a lot of things that AECL does that other nuclear consulting companies can't do (ie SNC-Lavalin). The only thing I can think of off the top of my head is some certain codes used to simulate reactor physics. But even there, HQ for example doesn't like AECL's codes and developed their own. Do you know of anything in particular?

Moreover, it also depends on what exactly gets sold, a lot of that technical knowledge may remain as part of AECL R&D, or it might get sold off piecemeal I would suppose.

Eric said...

喜喜歡: 你是谁?

shlemazl said...

They sell a range of services to utilities. Let's take a practical example. Say OPG wants to develop a new core design with slightly enriched fuel. They go to AECL which would be OK as things stand. However if AECL were to be owned by BP then OPG would be paying to BP for a design which BP could use themselves! Which is why it does not make any sense for a service provider to be owned by any of the utilities.

shlemazl said...

Another even more significant conflict is that both Ontario utilities are competing for the next nuclear power plant in the province. If any were to be built it's unlikely that both Bruce and Darlington would get a chance to construct the new plant. For sure Bruce Power wouldn't want to be helpful with regards to OPG's project which would kill their own chances. One more reason why BP can't own company which sells reactors.

Eric said...

Hmm... I don't actually see the conflict so much to be honest. If OPG wanted to develop a new core design or obtain other services they could go to any other company in the world and would not be required to stick with AECL/BP. (Of course, if they went to other companies they would want to sell pressurized reactors)

I would agree with you if there was some service that *only* AECL could provide and that no other company could.

I didn't think BP was competing with OPG for the new Darlington reactors, I thought that was a completely OPG thing? Far as I knew at least.

Moreover, the level of integration between OPG and BP is already ridiculous, BP runs the BNGS reactors but they are owned by OPG and leased to BP. OPG leases reactors to its competitors.

Perhaps given these concerns its more likely that an external company (ie AREVA) buys AECL with the agreement that they can build a pressurized reactor at Darlington.

shlemazl said...

I was talking about making changes to the current core design. Say CNSC were to require utilities to use slightly enriched fuel for safety reasons. That would require changes to the current design and normally you would go to the company which designed the reactor in the first place. Which means that Bruce would have monopoly over services that OPG is forced to use because OPG operates an existing CANDU fleet.

BP is competing with OPG for a new nuclear power plant because it's highly unlikely two will be built in Ontario. It's either OPG at Darlington (current front runner) or Bruce Power at Bruce. Both have done environmental assessments but only one will likely go forward - if at all.

Eric said...

Yeah, I can see that hypothetical situation would definitely put OPG/BP into a conflict of interest if AECL was acquired by BP. But I doubt that the CNSC would force them to make core changes as drastic as that. If they did, it'd probably be easier just to scrap the whole fleet and start from scratch. I mean, they still aren't requiring Pickering A to adhere to EQ requirements right?

As well, if BP really wanted AECL I'm sure they could strike a deal concerning the intellectual property regarding CANDU designs.

Didn't BP drop their plans to build Bruce C reactors during the summer to focus on refurbishment? I was only aware of the Darlington environmental assessments still being 'in play' at all. I know that Bruce has had its eyes on Alberta and Saskatchewan as potential sites for nuclear power plants though.

Eric said...

In any case, we'll find out eventually if anyone will bid for them eh? Then we'll be able to speculate on the impact it will have once we know who is bidding.

shlemazl said...

But I doubt CNSC would require them to make changes as drastic as that

It did.

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