OPG secures government equity financing for SMR project

Canada Growth Fund Inc - a CAD15 billion arm's-length investment vehicle designed to attract private capital to build Canada's clean economy - has committed to invest up to CAD2 billion in the project, while Building Ontario Fund - a Crown agency with a mandate to catalyse investment in revenue-generating infrastructure projects across Ontario, backed by CAD8 billion in funding from the province - will invest CAD1 billion. Canada Growth Fund will acquire 15% ownership in the project, and Building Ontario Fund 7.5%. Ontario Power Generation (OPG) will continue to be the majority owner and operator.

The Province of Ontario on 8 May announced its final investment decision to give the green light to OPG for construction of what is expected to be the first operating commercial small modular reactor (SMR) in any G7 country. The plan is to eventually have four of GE Vernova Hitachi Nuclear Energy's BWRX-300 SMRs at the site, delivering up to 1,200 MW of reliable, affordable, and low-carbon electricity -  enough to power 1.2 million homes, according to OPG - with a total projected cost of CAD20.9 billion.

Canada Growth Fund and Building Ontario Fund said they are leveraging their unique investment mandates and "bringing forward innovative financial arrangements to temporarily share certain risks that currently limit private sector interest today". This will pave the way to spur private sector and Indigenous investment in the project over time, they said.

Last month, the Darlington New Nuclear Project (DNNP) was named as one of the first projects to be reviewed by the Major Projects Office, set up by the federal government to help fast-track major projects.

_{Mark Carney and Doug Ford announced the funding deals during a visit to the Darlington Nuclear Generating Station (Image: Doug Ford/X)}

Announcing the investments alongside Ontario Premier Doug Ford, Canadian Prime Minister Mark Carney said the project would create thousands of high-paying careers and power hundreds of thousands of homes in Ontario with clean energy. "This is a generational investment that will build lasting security, prosperity, and opportunities," he said.

Ford described the investment as a down payment on Ontario's nuclear energy future. "We're protecting Ontario by supporting good-paying, long-term jobs for Ontario workers and building the energy infrastructure - including both SMRs and new, large-scale nuclear – needed to make Ontario an energy superpower," he said.

Provided conditions are satisfied, Canada Growth Fund (CGF) and Building Ontario Fund's capital will be made available to OPG in two tranches. The first tranche will comprise initial capital funding for the first unit, referred to as SMR 1; the second tranche of additional capital to fund the next three SMRs will be made available once certain project milestones have been met.

OPG has said it expects to complete construction of SMR 1 by the end of the decade and connect it to the grid by the end of 2030. Construction on SMRs 2-4 is expected to be completed in the mid-2030s.

"As a first-of-its-kind project, DNNP has a higher risk profile that limits access to traditional financing. In line with their mandates, CGF and BOF are investing at a stage where the Project is exposed to certain construction and technological risks," OPG, Canada Growth Fund and Building Ontario Fund (BOF) said. The funds' investments aim to de-risk the Darlington project "and advance it to a point where private sector participation can be efficiently catalysed in this essential energy infrastructure asset".

"DNNP represents a compelling opportunity for CGF and BOF to invest in a large-scale rate-regulated asset with rates subject to oversight and approval by the Ontario Energy Board," they said, adding that Canada Growth Fund and Building Ontario Fund will benefit from market-based investment governance, facilitating future participation from private investors.

Yannick Beaudoin, President and CEO of Canada Growth Fund Investment Management Inc, said there is "significant potential" for these first-of-a-kind SMRs to be replicated across Canada and globally. "We look forward to building upon this financing model to attract further interest from private investors committed to developing low-carbon energy infrastructure in Ontario and across Canada," he said.

Site progress

Since receiving the go-ahead from the provincial government in May, OPG has marked several milestones at the Darlington site where early preparation activities began in 2022.

The components of the project's tunnel boring machine, named Harriet Brooks after Canada's first female nuclear physicist, arrived on site in July, ready for assembly in early 2026. The 6.97-metre-width machine will be used to bore and line a 3.4-kilometre-long tunnel for the project's condenser cooling water system.

_{One of the components for the basemat module (Image: OPG)}

The first assemblies that will make up the Basemat module - the foundation of the reactor building - are being delivered to site. The completed Basemat will eventually be craned into position at the bottom of the reactor building shaft, 35 metres deep.

The on-site pre-assembly building, which will support the final assembly of reactor building structural components for the first SMR unit, is complete, as is the fabrication building, where final assembly of modular building components will take place. Foundation work for the radiation waste building and control and service buildings has also been completed.

Excavation work is continuing on the reactor building shaft, forebay shaft, and the condenser cooling water launch shaft, while site grading for three additional SMR units has now been completed.