Robin Manley

Vice President, New Nuclear Development

Ontario Power Generation

November 10, 2021

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Ep 338: Robin Manley - Vice President, New Nuclear Development, Ontario Power Generation
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Bret Kugelmass
We are here today on Titans of Nuclear with Robin Manley, who is the Vice President of New Nuclear Development at Ontario Power Generation, Robin. Welcome to Titans of Nuclear.

Robin Manley
Thanks very much, Bret. I've got to say, I'm very thrilled to be called a Titan.

Bret Kugelmass
Yes, well wait till the end of the conversation. You don't get the lapel until we're done.

Robin Manley
That's very cool and I certainly look forward to talking with you today. And hopefully we have an interesting conversation for your listeners and watchers.

Bret Kugelmass
Yeah, I'm super excited. I mean, obviously OPG has just this incredible reputation worldwide as a nuclear thought leader. The stuff that you guys are doing is just so impressive and so forward thinking on. And you're the guy who's really kind of leading a lot of these efforts. But before we get to today's work, we've got to learn about you. Who are you? Where did you grow up? And how did you get into the energy space?

Robin Manley
Okay, well, I think like a lot of people, I didn't necessarily have a career path in mind that kind of went, Oh, yeah, I want to develop new nuclear reactor technology when I'm an adult. I did physics in undergrad university - astrophysics, black holes, computer simulations of supermassive black holes at center of galaxies. So that's a really good way to get a job. Very realistic, related to the real world. So having realized that that wasn't going to work out, I went to England and I had the great fortune of getting a job with a consulting engineering company that worked in the nuclear space there, going to talk to local county councils and going to public inquiries and doing research projects and that kind of thing. So got a grounding in nuclear in the UK, then came back to Canada, applied for a job at Ontario Hydro as it was then called - now OPG - and I ended up in the radiation protection business, health physics, so looking after workers' safety, protecting them from radiation in nuclear power plants. I did that for 20 years.

Bret Kugelmass
And before we move on from that, what are the main points of concern when it comes to worker safety? Where are they expected to get dose from?

Robin Manley
Well, nuclear power plants, by the very fission process and neutron activation process, generate radiation either directly from the reactor core, which we shield against and we don't let people get in there, but also through the various heat transport systems and various kinds of systems that are required to operate a nuclear power plants depending on the design. There are either fission or activation products that get generated. They move through the system and you end up with either fluids or solid radioactive material, also contamination on protective clothing used to protect the workers. So you have to have ways of monitoring for that, detecting it, measuring how much there is, making sure that you don't release it to the environment, making sure that workers don't inhale it or ingest it. And so the radiation protection people have a very thorough and I'd say very successful program. In North America, we've done a fabulous job over the last decades of protecting our workers from any radiation dose which would be harmful.

Bret Kugelmass
And is there a common - because now we've got so much such great operating experience across all of these different reactors across the world - is it usually the same place a hot spot might emerge on like, the elbow of a pipe leading to the steam generator? Is there like one or two places that we know, just from operational experience, that's where we've got to watch out for?

Robin Manley
Different reactor designs will have specifics about them. My specialty was in the CANDU reactors, because that's where I worked. There are some design concentrators that you - like IX columns and filters - you know are going to build up and get contaminated. There are some natural concentrators, like you say, like at the bottom of vessels or elbows where things will tend to accumulate. So you can use those kind of conceptually. But the fact is that radiation protection professionals have to be always on the lookout for something that's going to surprise them, because things do. And so that's why you always survey. You never assume that the field is the same as it was the last time you were there. You always survey and verify.

Bret Kugelmass
And what are they using to survey? Are there special instruments that they like- I don't know, what do you just put something on a pole and just wave it ahead of wherever they're walking?

Robin Manley
Well, I was saying that I was in radiation protection for 20 years, but I have not been for the last 11, so I am not the subject matter expert on this. But over the decades, we've gone from having a radiation detector on a stick for remote monitoring to very sophisticated remote monitoring tools, robots that can go right up close and personal and measure it, send it back electronically to you, telescoping instrumentation, instrumentation that you leave in the field that that can monitor live time for you and give you continuous coverage. So there are all sorts of things that have been developed. Again, this is all in place when I left the field. Maybe more advanced even than that now.

Bret Kugelmass
Cool. Cool. Yeah, it's just great to hear about- one of the things that I've loved about interviewing so many people in the nuclear sector is that there's actually quite a lot of differentiation. Nuclear isn't just nuclear. There are all these subfields within it and each one of them have their own really amazing stories and intricacies and technologies and processes and learnings and chemistry. It's all so amazing, so it's great to kind of see- but you're not so uncommon. People do kind of jump from one area to another one once they're in the industry, so it's just great to kind of see where people came from to see where they're going next. So why don't you tell us, what came after your 20 year stint in health physics?

Robin Manley
Having done just about every job there was to do in the radiation protection business at OPG, someone came along and said to me, Hey, how about you come and be our licensing manager? Which is to say the person who's responsible for interacting between the plant manager and the regulator, which in Canada is called the Canadian Nuclear Safety Commission, or the CNSC. Like in other countries, you get some sort of regulatory license, the regulators have inspections, they issue you findings, you have to address them, sometimes-

Bret Kugelmass
And do they stay on site in Canada? I know in the US they have someone physically on site. Is that true in Canada as well?

Robin Manley
Yep. All the nuclear power plants in Canada have CNSC inspectors who are called resident inspectors. They're there, not 24-seven, but they're permanently stationed at the plant and they will come in. Even off-hours they'll sometimes come in and watch special evolutions if there's some particular thing of interest to them or whatever the circumstance.

Bret Kugelmass
And what's the general feeling? Is it- I could imagine if I was - let's just say forget nuclear or something - but if I was like in the airplane business and FAA had someone in my factory that would just kind of like pop in and look at stuff, I would be- I'd be like a little on edge. Is it- what's the working- as you as like their guide almost, what's the working relationship like between a CNSC representative and the rest of the plant staff?

Robin Manley
It's mostly good. Like any other relationship, there are times when the regulator - as their mandate, right, as what they need to do - are intrusive and you wish they wouldn't, right? But that's their job, right? And they're looking after public safety. By bringing an independent perspective, they will challenge and find things. It's like any kind of groupthink kind of scenario. You gain benefits by having diversity of perspective and so the regulator, in my experience, has many times helped us get better. Yeah, there are times when they make you go do a bunch of busy work that proves to be fruitless because they didn't find anything. It was exactly like you said. You kind of go, well- but nonetheless, you can now show the public that regulator that came in, they made me jump through three concentric, burning hoops of fire to satisfy them that I was meeting all the good safety standards and all the regulatory requirements protecting the public and the environment. And you don't have to take my opinion, you can ask the regulator.

Bret Kugelmass
It's interesting. I've got a mixed perspective on it. Because I think, yeah, obviously, what you're saying, having that diversity of thought and also having an outside participant can really yield some great value. But I'm just worried about the situation where it's like, okay, like an electrician on-site, maybe the inspector goes up to him and says, What's that circuit breaker for? And then the guy opens it up and forgets that, Oh no, I was actually supposed to fill out this paperwork before I opened it up. And now I opened it up and I accidentally tripped the circuit or something. I just made that up, obviously, but I'd be worried about that kind of stuff happening too.

Robin Manley
Well, I can't speak to any specifics. I can't think of an occasion where that happened. But, clearly, the operator, operating company, the staff, the maintainers who are doing the work that maybe the inspector is inspecting are expected to follow all of their correct safety protocols, work protection, operating manuals, etc., etc., get appropriate authorizations before they close or open any breakers. And hopefully we would always have the correct independent verification in the field of any of those kinds of operations so that no one person can make a mistake that would have a consequential effect. Does a regulator sometimes observe something that- someone does something wrong? Sure. It happens. But to your first question, I mean generally speaking, I think we have a good respectful relationship with our regulator. And I personally, after years - years - of working in that field, thought it was valuable and enjoyed the job.

Bret Kugelmass
Cool. Awesome. Okay, so what came next for you?

Robin Manley
While I was in the licensing business, at some point OPG started to look at small modular reactors as something that we might be interested in deploying in the future. We weren't at the point of having made any kind of decisions on that. But we were looking at it and we were asking ourselves, So is this licensable? Is this design ready to go? What would be involved? Can it meet regulatory requirements? All those kinds of things. So they brought me in as the licensing guide to kind of give an opinion on that. I had an opportunity to go to Vienna one time on an IAEA sponsored sort of learning mission, I guess it was, where the US NRC and the Canadian Nuclear Safety Commission sort of collaborated and they wanted an experienced operator come along as well. And we had a visit in Vienna from a group of African nations who were interested in small modular reactors and they were sending their regulators to the IAEA to see what was involved and to have an opportunity to discuss with two experienced nuclear regulators from Canada and the US and ourselves as an operator. Learned a lot about SMRs for that, because that was what they were interested in. They weren't interested in putting in an AP1000 or some great big reactor. They would look for something that had a smaller capital cost and smaller footprint, smaller electricity grid needs. So I spent a week doing that and then, I guess, just progressively over time got more and more involved in in looking at SMRs. And then the person who was responsible for new nuclear at the time at OPG, Heather Ferguson, said, Hey, come over and be my new nuclear development person and take over this project opportunity. That happened in April 2019.

Bret Kugelmass
What exactly was the mandate, this opportunity? What was it?

Robin Manley
Well, until the end of 2018, we had what we kind of called a watching brief, which is to say, look at what's going on, keep up to speed on it, participate in Canada's SMR roadmap, and sort of tell us when things have advanced to the point where we should go into it in more depth than just watching. So in early 2019, we got the mandate from our then CFO - about to become CEO - Ken Hartwick, to do more than just watch. To start looking at the opportunity. Go figure out what would what it take. What are some options, some technology options. Start to give us a give us a sense of whether this is doable. OPG- I should say at that point and maybe for some of your listeners here - we operate two nuclear power stations, Darlington and Pickering. Darlington has four CANDU reactors. Pickering has six operating ones. Two that are shut down permanently. We also own the Bruce power site, which is operated by Bruce Power, where there are eight CANDU reactors up there. We have a large footprint in Ontario. We also have a portfolio of hydroelectric stations, a little bit of solar, and we even have some hydro plants in the United States. And now we have some gas plants, although we didn't at that point.

Bret Kugelmass
So when everyone turns on their lights in all of Ontario, you are responsible for what happens pretty much?

Robin Manley
Not all of it, but maybe 60% or so. And we're the low cost generator. I gotta throw that in there. So we have a suite of plants and we have experience with major projects. In our hydro fleet, we've recently successfully done some major projects on schedule, on budget. And we had, at that point, started our Darlington refurbishment project. We were in the process of basically rebuilding the first of the Darlington reactors. And so we had experience in doing projects well. We also had - I gotta say this - we also have at our Darlington site the only approved environmental assessment and CNSC site preparation license for new nuclear in Canada.

Bret Kugelmass
What does that include? If you don't know what reactor goes there yet, how could- what's on the site license?

Robin Manley
It was a bit of a generic license. In the US, it'd be kind of roughly equivalent to an early site permit. So you have a fleet. You have experience operating plants very well. You have like top-rated plants. You've got experience with major projects. You're doing a major nuclear rebuild. And you've got a license and an EA. So given all those things, Ken basically said to us, Go figure out what the options are. And so in 2019, we began a process - which we are still in now - where we've systematically worked our way, by first scanning the field, what's out there. And if anyone has ever gone and looked at all the nuclear development companies in the world, you can see that there are a lot.

Bret Kugelmass
Yes, yes. And yes, I have.

Robin Manley
And I would say, even personally - this is Robin speaking - there are too many. And we need some consolidation of that.

Bret Kugelmass
Interesting. Interesting. I'm gonna push back on you at some point on that, but please continue.

Robin Manley
We looked at 150 different SMR designs. Everything from two PhD students with a supercomputer to a big multinational with massive experience in the nuclear industry designed and produced many plants, And everything in between. We looked at micro reactors, everything from lead-cooled reactors all the way to a reactor that might not actually be called an SMR. And we didn't ignore the big plants either, because we've looked at them as well and we previously decided that we didn't have the right marketplace, the right electricity need at the time in Ontario to say, Let's go build a gigawatt class plant. So we settled on something of around 300 megawatts electric in size, a ballpark figure. We wanted something that was going to be available on the timeline that made sense to us. When we were - this is back in 2019 - when we were doing our electricity, both energy and capacity forecasts - important to recognize they're not the same thing, right - when we were doing their forecasts of those, we were noticing that there's a capacity dip in the forecast that will happen in the middle, the late half of the 2020s because our Pickering station is going to shut down permanently. It's reached its end of life and we'll be closing it. That'll take 3,000 megawatts off the market. We don't-

Bret Kugelmass
Wow, that's a lot of megawatts.

Robin Manley
We don't need 3,000, because there is some extra capacity at the moment, but we need some. And we also want to be - again, this is 2019 - we wanted to be looking ahead going, What are we going to need in the future? So maybe we start with an SMR, the whole point of them being modular, the ability to build more of them at rapid pace. And we scanned that and we came down to some simple criteria. Are you interested in Canada? Are there geopolitical considerations that would exclude you? Is it the right size? Does it seem to have the right technological readiness level that it could be construction license application by 2022, deployed by 2028? And we use those kinds of criteria to say, Let's get down to 10 options. We went out to those 10 and we said, Show me. Show me what you got. Show me what you propose. Don't make up new stuff. Just tell me what you got. We did a review of that, got down to six. And then we entered in 2020 into a due diligence process where we did much more-if you think of a car inspection, first, we did that the beauty check. Do I like the car? Is it a car? No, I don't need a minivan. Okay, no, I don't need a sports car. Okay, so we screened those out, we got down to the cars. And now it's like, Okay, let's drive the car. Let's read some magazines about the car. You know, that kind of stuff. And we got down to six and now it's like, Okay, now let's talk a little bit more seriously about all the features in the car. We're going to check it against my list of what I want, ask them a whole whack of questions, spend some quality time with the car dealer. And kind of went through that process with those six. And then by the fall of 2020, we had come down to three.

Bret Kugelmass
Okay, that's what I want to hear about. What were the filtering criteria that brought it from six to three? What did you like about the three cars or didn't like about three cars that didn't make it?

Robin Manley
Price, shedule, simplicity, readiness. Those were some of the key ones. So if it looked like, you know what, they just can't get there from here. It's great idea. It's just the TRL is too far away - TLR or whatever it is. Or, you know what, we look at the price. And this is the price before everything's factored in. This is the- it's almost like the opposite of sticker price. Instead of bargaining people down, fact is when you're doing this kind of project, you have to take their price and then you have to add your stuff on top. So you do that and you end up with a number that you just kind of, you know what, I can't make that work-

Bret Kugelmass
When you get their price, what do you do to verify it? Because a lot of these companies coming in, they're saying that they're going to be the nuclear OEM, right? They're not saying that they're going to be the full EPC developer, right?

Robin Manley
Well, at that stage, there were certain things we did. And at this stage, there are other things we're doing. So depending on the stage we were at, there was a different amount of in-depth scrutiny. Now it's like, at this stage we're at now, it's like, go through everything line item by line item.

Bret Kugelmass
Got it. Got it. And then, but just to clarify on that point. These three that you've- and are you allowed to say which three are left?

Bret Kugelmass
Yeah, yeah.

Bret Kugelmass
So walk us- we'll go through each one in detail maybe, but first, just tell us which three they are.

Robin Manley
In the fall of 2020, we decided to work specifically with Terrestrial Energy and their integrated molten salt reactor, which is a company based in Oakville, Ontario, Canada. And we're working with GE Hitachi on their BWRX-300 - and, of course, everybody knows GE. This is their 10th iteration of their boiling water design and is basically a simplified version of their ESBWR. And we're working with X-energy, another US company, that has what's called the Xe-100. And that's a high temperature gas TRISO fuel reactor that is- it's kind of based in part on pebble bed reactors and other high temperature gas reactors that have been built or designed elsewhere and is basically four times an 80-megawatt kind of plant.

Bret Kugelmass
And do all three have essentially the same business model? Or is there- forget the technology, just business model. Like who is responsible for what? And what is that business model? Are they essentially just- is it like an IP license, but then a developer has to go off and actually figure out how to do the procurement to put it all together? Or are they saying that they are going to literally show up on site and deliver the nuclear island no matter what it takes?

Robin Manley
Hey, you finally asked the question that I can't answer.

Bret Kugelmass
Okay.

Robin Manley
And by that, I mean that we do have NDAs and that kind of stuff. So some of it's commercially sensitive, so we're gonna have to dodge a few things. So how about I, instead, tell you what we are kind of thinking is in our model.

Bret Kugelmass
Perfect.

Robin Manley
So as a- like any other company and jurisdiction that is thinking of making a big investment, you're looking for a return on your investment. What that return on investment could look like could vary and you have to go into this kind of thing - or at least we maybe don't have to, but we have chosen to go into this kind of thing - with some thoughts in mind, but also a willingness to discuss the business development opportunity. This is not- we've consciously not done an RFI process where we've written down our 27 criteria and said, Price me out every single thing and I'm just gonna go and get the best combination of price and product. That is not what we've done. Instead, it's been, Let's have a discussion about what makes a good business opportunity for us, a good business opportunity for them. And we also have in mind that it isn't just two players. I mean, maybe one of the developers brings along partners, maybe they don't. Maybe we bring along the partners in terms of the constructor, architect, engineer, and other subs. What we sort of have in mind, generally speaking, without getting into specifics, generally speaking, is, Hey, we want to- because we're going first. OPG has decided we are willing to go first, subject to the board approving decision. But new nuclear is a market with risk. There have been major new nuclear projects around the Western world in the last decade or so that haven't been entirely successful in terms of cost and schedule. And we are determined to be successful on cost and schedule. But because we're seemingly willing to take the risk and go first on a product that no one else has built, we will be making an investment in that and we expect some return on that. Now, how exactly that return on investment happens, that's subject of detailed discussions with developers, so I can't get into it. But also, we want to have some supply chain opportunities in Ontario. What would that look like in terms of how much of the plant components can be manufactured in Canada, so that we can sell parts abroad? Maybe if it's a Canadian supplier of the reactor, maybe all of it can be manufactured here, I don't know. Details to be determined. If it's American supplier, obviously the US -suppliers, vendors are gonna want to supply their product to US companies as well. They want to have localization in the US, totally get that. There's no way you're going to get all of it in Canada. I totally get that. But what kind of- how can you structure these kinds of opportunities, so that there's a sort of a deal that everybody's happy with.

Bret Kugelmass
And why does OPG care about the supply chain? Wouldn't that be more of like a Canadian government thing? They care because they want more jobs? Why does that matter to OPG's business model?

Robin Manley
For sure, it matters to the Canadian federal government, but energy is actually a provincial matter in Canada, so it's provincial jurisdiction. Our province, the Province of Ontario, happens to be the single shareholder of Ontario Power Generation.

Bret Kugelmass
Okay, now I understand better.

Robin Manley
And hey, economic development matters to every politician: jobs, taxes.

Bret Kugelmass
Now I get it. Alright, that's perfect. And then, just to talk economics for a second, what does a megawatt-hour of nuclear go for on the Canadian market these days?

Robin Manley
Oh, you would have to ask a question that I can't remember the answer to. It's in the 60 something bucks an hour range? Don't quote me on that, I just don't carry that around. But somewhere in there.

Bret Kugelmass
And does OPG have- you were talking about returns. Do you have IRR targets for investments? Even beyond nuclear. Is there like a mandate, Hey, we have to- everything that we build has to deliver 10% IRR or something?

Robin Manley
You know what, I'm not gonna be that specific. But for sure. What happens for us, the Ontario marketplace is I'm sure unique. It's kind of a mixture of different things and OPG - but only OPG - has our electricity rates regulated by the Ontario Electricity Board, which is a construct of the government created to, as part of an open market process that is not entirely open-ended. Some people bid into it, others get a rate-regulated return, it's some PPAs. It's a hodgepodge of different things. And I'm not an expert. But we have a regulated rate of return where we have to make a case, a rate case to the regulator, the financial regulator and say, Here's what we propose as our expenditures over the next period, that we say we will spend prudently and in return. We will deliver so much electricity on different years, such and such in such a different way. We'll invest this kind of capital, blah, blah, blah. Here's our operating expenses. And they go through a whole public hearing process to determine whether or not that is a fair expenditure, whether that's an appropriate amount of electricity we're going to produce for that amount of spend. And intervenors get an opportunity to question and challenge all of this. And it's- I mean, I'm no expert, but it seems to me that this is a an interesting way of making sure that the public has input to what we do and also that the public gets a fair price.

Bret Kugelmass
Is OPG allowed to pursue international business opportunities? I was thinking like, so let's say that you guys build one to 10 of the SMRs in Ontario. They get everything up and running, but you're the operators of these plants. Can- these plant designers are going to want to sell abroad. Could OPG kind of use that operational experience to have an international business model where they operate power plants around the world? Is that possible according to your mandate, or no?

Robin Manley
Again, moving into territory that I'm not an expert in, but I'm going to, I'm just going to say that we we have an interest in being an operator in other jurisdictions outside of Ontario. And exactly how that business model would be structured is outside of my scope here. But we have an interest in it. And we do own and operate through a subsidiary - I think it's called Cube - we own and operate a series of hydroelectric plants in the United States. So we clearly are allowed to operate outside of Ontario and I guess it's really just a question of, What would that look like in nuclear space, which might be different.

Bret Kugelmass
I was just thinking of ways that we could kind of massage the economics if we needed to. Let's say the first couple plants can't satisfy that $65 megawatt-hour or whatever it is, price point. Maybe you kind of use them almost as like a loss leader for future business opportunities or something.

Robin Manley
Let me say that that 60 whatever that I'm promising not to be quoted on here, that is not what we are aiming at as a price for SMRs. To be realistic here, what we are aiming at is other non- or low-emitting GHG options. In Ontario, what we foresee is an increasing need for electrification: electrification of home heating, of transportation sector. The energy grid in Ontario is 90 something percent GHG-free.

Bret Kugelmass
Yeah, amazing.

Robin Manley
Dominated by hydro, nuclear, and there's some wind and solar. And we run gas plants only when we have to. We have no coal. Closing coal and replacing it with nuclear units coming back online a decade or so ago was a huge climate change success. We've demonstrated this can be done.

Bret Kugelmass
If you guys were a country, you'd be the best country.

Robin Manley
Just about. France is pretty damn good, too. So we know that nuclear has a contribution to make. And so we've been forecasting 20 years, 30 years into the future, kind of going, Well, there's not a lot we can do in the grid. But there's a lot you can do in transportation, industry, home heating. But the way you do it is you need to stop people using natural gas to heat their homes. You need to stop them from using gasoline in their cars. And the only way you can do that is if you produce clean electricity at a good rate and you have the right means of getting it to people. In other parts of our OPG business,' were in the electrification business and EV chargers for cars. We've got this joint project on an electric ferry and we're looking at hydrogen. We're looking at all sorts of different means that we can contribute to fighting climate change. But all of them require us to produce more electricity at lower or zero GHGs. When you kind of forecast what that looks like, there's no one tool. It would be unrealistic to say, Let's just build a great rack of nuclear stations and nothing else. That's not gonna work. You've got to have some renewables in there for sure. You're going to need this mix of different sources. Any jurisdiction that relies too much on one thing gets into trouble. All you need is a single point of failure, boom, the whole thing goes down, because you've got only got one tool in the toolbox. So in Ontario, we've been very successful. We've got lots of different energy sources. We think that's the right way to proceed. And so we're looking at SMRs as feeling part of that electricity demand in the future. And basically, the concept is you build the first one and then you build more of them, having proven the first one - presumably proven that you did it on schedule, on budget - coming in at a price. And to get back to my point there, the price that we're sort of aiming at is, what do we think that comparable - relatively apples to apples as much as you can do it - what do we think that comparable cost would be for similar energy plus capacity of wind plus batteries or solar plus batteries? And that means you really have to over-build your wind or overbuild your solar by like a factor of five or seven or something? Because they don't produce 95% of the time, not like a nuclear plant with capacity factor of 90%. Their capacity factor is like 15 or 17% or something like that. So you've got to overbuild the capacity and you've got to put storage in that's long enough. It can't just be four hours, because you have to move the peak. More than four hours. Middle of the night. The wind's not blowing in the middle of the night, you got nothing, right, so you have to have enough battery to take you all the way through those low periods. When you factor in the cost of overbuilding the solar panels or the wind turbines and you factor in the cost of the batteries that you need, and you look at the lifespan of the different things, you look at the lifespan of nuclear and what nuclear is gonna cost. And you do these calculations for both of them, then you can kind of go, That's the number you've got to aim at.

Bret Kugelmass
And what is that number, or at least a range? You don't have to give me the exact number, but just in general. Are we talking like $100-120 a megawatt-hour? Are we talking like $200 a megawatt-hour?

Robin Manley
We're not- it's sort of in the 120-ish kind of range, but it's not gonna be an exact number.

Bret Kugelmass
Yeah, don't give anything proprietary, but that's what I've seen elsewhere, too, when people start talking about comparing apples to apples. And it's actually a lot worse than other places, because they don't have a reliable grid that has so much clean energy already on it. So for them to create the same network benefit, it could be 200 plus, 250 plus in some places.

Robin Manley
You also have to factor in the price of carbon, like if you've got a carbon tax, that factors into the equation. It's a complex calculation for sure. And as I say, I'm not going to try and pretend to have an exact number.

Bret Kugelmass
For a second, just coming back to the three kinds that you've down selected to, how much comes into play like the license-ability? And I noticed none of those three are CANDUs and I'm wondering, does the CNSC issue an opinion that you guys can fall back on to see how licensable any of these technologies are? And has the CNSC ever licensed a non-CANDU, or non-heavy water technology?

Robin Manley
Okay, several questions in there. The only power reactors in Canada are CANDU reactors, but the CNSC has licensed research reactors at Chalk River Labs and some universities. There are like Slowpoke reactors, there's NRX, NRU, probably something else that I can't think of the name of. And so the CNSC's regulations and regulatory processes are considered to be broad enough and flexible enough to allow it to regulate other designs of reactors. And they themselves, from the president of the CNSC through the staff have been very clear publicly in many, many forums that they are open to receiving license applications for different designs. But there's no barrier to licensing those designs, except that we have to prove that they're safe to operate and protect the public in the environment.

Bret Kugelmass
But it probably does give the GE reactor an edge, just because there's more historical precedent for water-based reactors and understanding the systems in water-based reactors over really like, newer, advanced stuff, like the Terrestrial or the X-energy. You don't have to comment, but that's what I'm thinking.

Robin Manley
I wouldn't necessarily say it gives them an edge, because on the other hand, you could say about the advanced reactors that they would say that they have passive safety features or even inherent safety features. So there's things on both sides.

Bret Kugelmass
Well, I mean, listen, I think all these reactors are definitely safe enough. And I hate even talking about it, because it makes people think that they're dangerous to begin with, but it's like, the industry has just come so far and the risk is so low that, I'm sure that they're all great reactors. I was just thinking about like, from the regulators perspective, who they have to staff up internally. You might say that you've got this passive safety thing, but if the regulator doesn't have any graphite TRISO experts on staff, they've got to go hire some for the next three years or something, right?

Robin Manley
Yes. I think it's fair to say that the CNSC recognizes that they have- when an actual license application comes forward for a new design, that they're going to have to make sure that they have the right capacity and expertise. I don't want to speak for the regulator, but my experience with them is that they recognize the reality and they go and take the measures that they need to take in order to gain sufficient confidence, right. And they've been- just as they've said that they're open to licensing other designs equally well, they say that, Hey, it's the operator's, the licensee's accountability to bring them an adequate license application. That's my job, to bring them a good license application.

Bret Kugelmass
So what's next? When do you downselect? When do you choose out of these three?

Robin Manley
We're in the final stages of our internal review right now, where we have asked for various kinds of materials, bounding safety case analyses, costs, schedule, work breakdown structure, materials with respect to long-term waste disposal, indigenous community engagement, supply chain, all those kinds of things and a big raft more. We've looked at all those materials. There are a few things still coming in till the end of October, then we make our summary roll-up of all of this to our executive team. And the plan is that our executive is going to go to our board in November, going to make a recommendation to the board, then the board gets to do its thing. Let's assume the board says yes, then the idea is that we would go to our shareholder, the province, and through some sort of process, the province would either say yes or no. And if they say, Yes, I'm going to assume they say yes, then we do a couple things. We come up with an announcement, we've decided we're going to work with technology company number two, and we would, in the spring we would commence our first phase of what we call site preparation activities. We have this land. We've got to clear some vegetation. We have to put in some infrastructure - roads, services, construction power, whatever it may be - so we would do some of those site preparation activities. Meanwhile, we would be working with them to advance their site specific design. They would be working on their detailed construction design. That's at various stages at the moment, so they'd be advancing that. We will be working with them on preparation of a construction license application to the CNSC, which we would then submit in the second half of 2022. And we would also be getting a more confident price and schedule. Obviously, we've done a lot of work on that. But if you're familiar with cost estimating, which is not my area either, but there are things called Class 5, Class 4, Class 3, etc., estimates get progressively better. And so the idea is we would be advancing from a Class 5 estimate to a Class 4 onwards over time, so that we would go back to our board of directors and sort of show them, Okay, we said we'd get this far for this price on the schedule. What's our scheduled performance indicator? What's our cost performance indicator? And if the project metrics are going well, then we'd be seeking approval to go on to the next phase.

Bret Kugelmass
And how much how many- how much resources is allocated in each phase? When you make this decision, does that mean you've secured like $50 million to pursue early licensing activities? Or what does that look like?

Robin Manley
I'm not gonna be that specific, sorry. But let me just say that we're not asking for full construction capital cost at this point. We're gonna go progressively through some phases, but it's a substantial amount of money and a substantial project and engineering team, for sure.

Bret Kugelmass
And once you make this decision, does this preclude other SMR opportunities for OPG? Is it like, Hey, we've done this, we're now going to focus, because we only have so many internal resources? Or are you guys gonna kind of keep your eyes open and if something else interesting comes along, you'd pursue it as well?

Robin Manley
Actually, I was going to interject earlier on, so I missed the opportunity. When I said that we're working with these three, these are the three that we have spent the most effort on. But our policy until now has been the door remains open that some better opportunity could come on, because we haven't picked one. So there have been always opportunities for someone else to come forward and say, Hey, what about our opportunity, right? I would speculate - and that is really all it is - I would speculate that most of our focus will turn to the one that we plan to put at our Darlington site, which is a site that's big enough for us to put several SMRs there.

Bret Kugelmass
You beat me to my next question.

Robin Manley
Could there be more SMRs there in the future? Possibly. But you have to make sure that you've got support of your board, your shareholders, the stakeholders, indigenous communities. You've got to have a degree of acceptance of what you're doing at every stage of this process. We're not- right now we're targeting one plant of about 300 megawatts. And we're not closing the door to the fact that there could be other designs in Ontario in the future. You or your listeners may have heard Canadians like Paul Thompson in New Brunswick or someone else from one of the other companies in Canada talk about three streams of SMRs in Canada. We've got Stream 1, Stream 1, and Stream 3. Stream 1 was the "ready now" or "ready soon" SMRs that we're thinking for Darlington. Stream 2 is the "ready in the mid- or early 2030s," which is sort of advanced reactors with some- either breeder or burners, basically right. So ARC and Moltex are two technologies that New Brunswick Power is are working on in New Brunswick. And then there's Stream 3, which is the microreactors. So could OPG get involved in some other advanced reactors down the road? Maybe. And we do have an interest in a microreactor through Global First Power, which is a joint venture between ourselves and Ultra Safe Nuclear Corporation. USNC, which is based in the US, has a micro modular reactor, five megawatts electric, 15 megawatts thermal, which is also a TRISO high temperature gas reactor, a different design than X-energy's. But GFP plans to deploy one of those at the Canadian National Lab's Chalk River Site and use that as a commercial demonstration project for interested parties in the mining sector or remote communities not connected to the electricity grid for whom a 300-megawatt reactor would be way too big. We think there's a market for these microreactors. Certainly, there are lots of developers working on them. So we're interested in that one, as well, for GFP. But I think that a lot of our focus will turn to this first of a kind at Darlington.

Bret Kugelmass
And what are the major milestones along the way? I guess, let me ask first, what would be the target date to get power on the grid from this SMR? And then what are some of the key milestones along the way?

Robin Manley
The date that we've spoken to is an aspirational target. It's like, Let's go to the moon. And so when President Kennedy said that, he probably didn't have a specific date in mind the first day he said it. It was probably within few years, I don't know the history. But it's the same kind of idea that, sort of, let's say end of 2028-ish. But we have not written that in our calendar and said, Hey, it's coming online on January 1, 2029. So that's a kind of aspirational target. And the key kind of milestones along the way are, first off, it's the decision on the technology partner. Approval of our board. Approval of the shareholder. Commencement of site preparation in early 2022. Site preparation license submission in late 2022. Receipt of a construction license from the CNSC, sort of the end of 2024, but that's not a firm schedule at all. It's really- I mean, yes, the CNSC has a role, but it's up to us to provide them with a good product. And then, nominally, construction start in 2025. Commissioning would be sort of beginning of 2028. Those are the kind of main milestones. There are a whole bunch of other ones. You have to complete your design engineering and construction engineering to a sufficient level that you can actually start construction, because there are plenty of cases where nuclear projects have failed, because they only got 35% of design complete before they started construction and having to do a whole bunch of rework in it just pushed the cost and schedule, so we don't want to fall into that trap.

Bret Kugelmass
One thing that bugs me - maybe you can just comment on it - is that's a pretty- so you call that aspirational. I say that's a long time to wait to get a new reactor online. What- just kind of looking back to US history in the 60 is, they were able to spin up a first-of-a-kind LWR in three years. Isn't the advantage of the small modular reactors supposed to be that we can do things quicker? And why aren't we able to somehow realize that in an expedited either licensing or construction schedule? Like I want to see something by 2025. Isn't that the promise of SMRs, that they can present a simplified safety case, get it through regulators in under a couple of years, and then build it in under a couple of years, just like a natural gas plant is built in under a couple of years?

Robin Manley
Can I ask you that question and you answer instead? Hey, seriously, that's a really, really profound question. Everything else you asked me is kind of like, easy, right? But as an operator of nuclear power plants, I have personal experience of, things do take a while to get through the licensing process. I don't know it in the US, so I don't profess to know what your schedules are realistically like. In Canada, as I say, we have already an environmental assessment for our Darlington site, so that's several years of advance. If you are a Greenfield site, you're starting from scratch. And I'm just being realistic here. I don't mean to be negative, but just being realistic. There's an expectation in Canada these days that you have prior engagement with the indigenous peoples on whose typically treaty and traditional territory lands you are on. Because the whole of Canada is on the original lands of other peoples for whom folks like me are settlers. We have to respect the need to engage with them and see what works for them, what they're interested in, are there opportunities, business opportunities, jobs, economic development, what have you. You need to do some work upfront. And that's just now accepted best practice. That was not the case in Canada in the 60s and 70s when we were planning the first plants. I don't know about the US. But in Canada, that was not in place, no one did that. The licensing regime was different then. And, I mean, I've joked with nuclear safety analysts, Hey, you guys designed the first reactors with a slide rule. Why does it take so long now you have supercomputers? And the answer I got was, Well, we've learned a few things since then. Fact is that probabilistic safety assessment and deterministic safety analysis are advanced so far beyond what they were then. And the expectations of what you have to deliver to a regulator to prove your case. I'm just talking off the top of my head.

Bret Kugelmass
I know, I know. And listen, everything you're saying is perfectly logical. It's just so frustrating for me, because I get that for the large scale reactors, or for just the old style reactors. The whole point of having a passive safety system-

Robin Manley
Okay, so if I put myself in the regulator shoes - I'm not a regulator, but if I put myself in their shoes - they say, Okay, the developer says it has inherent safety features, but they're unique. They've never been built before. How do I know it's gonna actually work?

Bret Kugelmass
Okay. That's good pushback.

Robin Manley
I've heard regulators say that maybe the licensing period will be shorter in the future. But for the first one, it might be longer, because you don't know that it actually works the way you say it does.

Bret Kugelmass
Oh, my god.

Robin Manley
Or maybe we'll have to have some hold points, some sort of inspection points, if you will, in the license, the first go around. I'll tell you that my thinking is that, as the first-of-a-kind person, you push the regulator as hard as you can. You try and get the licensing period as short as possible. You try and do those things. But you know that it's going to be challenging. And you know that you are going to solve some problems for the next guy to come along. For example, if we're looking at OPG versus Saskatchewan, Saskatchewan supposedly might want to build the same reactor we built. Let's just say maybe they do. I will have solved their licensing problems for them the first time around. I will have convinced the regulator of the safety of the plant. The regulator will be able to see the plant, inspect the plant, know that is operating safely, and will be able - should they agree, should they feel confident - they will at least have the opportunity to say this is not a first-of-a-kind build anymore. I licensed it before, I already understand how these safety systems work. The safety analysis is practically the same. Yeah, the geology is different, the weather is different. But most of the safety analysis is the same, internal events the same. And therefore, I don't have to review every single thing again. I can just say, Yeah, all that safety analysis over there. It's fine. I've got my new site specific stuff here, I've got to look at that. And therefore I can have a shorter licensing period the second go around.

Bret Kugelmass
My response to that would be - I know we're just playing hypotheticals here, but this is fun and I think you've made excellent arguments. My response to that would be, let's say I'm a company like X-energy. I've got the pebble bed, the TRISO pebble fuel. The whole point of going to that instead of having a light water reactor was that they can show that the entirety of the safety system is that pebble. And the regulator shouldn't have purview over anything else to do with the facility. You don't need to look at the turban performance. You don't need to look at your valve performance. You don't need to look at your pipes. Because the worst case scenario that happens is all of the radionuclides stay within that pebble and we can prove that mathematically under every single possible circumstance. That's what I thought the whole advantage of switching core technologies was, so you can have a simplified safety case that relied on just a couple physical elements that are very easy to deterministically prove, would never pose a threat to the public. What am I missing there?

Robin Manley
Well, I don't want to come across as negative towards something that I'm trying to build, okay? So don't don't get me wrong in what I'm saying here. I'm just having a conversation. I'm also not going to be specific about X-energy. But let's just say, as a regulator, that you have to show up at a public hearing, which is in Canada, and you have to look at the commissioners up there, in front of the people who are worried about safety. And you, as the regulator have to say, I have looked at the analysis of the fuel - whatever kind of fuel, it is not necessarily X-energy fuel, anybody's fuel - I've looked at the analysis around the fuel, up and down, back and forward. And I've applied all the correct regulatory requirements and all codes and standards. And those codes have been verified and validated that the company has a quality program. I understand the inspection provisions for that field, that it isn't just that it goes in and comes out, but that there are mechanisms for the fuel to be inspected on whatever the periodicity that are required under your PIP program. That we have evidence of fuel reliability, because it's been tested under the right amount of neutron bombardment, the right temperature conditions, the right, you know, is there potential for corrosion or whatever. Other things can happen to fuel, because lots of things can happen to fuel. And I've likewise applied the appropriate standard to the inspectability around the reactor, core vessel, whatever form that is in. And I know that the shutdown systems work, because I've looked at whatever it is and I know that they operate quick enough. And I've looked at the batteries that are necessary to provide post-accident monitoring. I know how long they'll last for, et cetera, et cetera, et cetera. And those regulators have to - I've watched them do it - they have to be able to say, I have looked at all of those things. And they have to be able to answer questions that the commissioners will give them, so that the commissioners can look the member of the public in the eye and say, I trust this analyst at the regulator. It's clear that this analyst knows what they're talking about. They've looked at all this stuff. It's not just that operator over there. My own staff, we're independent of the operator, have scrutinized all these things. And so understanding that regulatory process and understanding that some members of the public aren't going to buy it anyway-

Bret Kugelmass
Right, exactly.

Robin Manley
-but the majority of the public, I believe, feels safer by knowing that the regulator has done their job.

Bret Kugelmass
Okay. Yeah, I'd say it's a challenge.

Robin Manley
It is, but that's why it's fun.

Bret Kugelmass
Yes, yes. And I can't tell you how glad I am that there are people like you in this universe that are willing to take on this challenge.

Robin Manley
Well, I gotta say, I'm very appreciative of the opportunity that my company gave me. Because I've sometimes said it's the best job in the company. Who else gets to build the first new nuclear plant in more than 30 years? Certainly has been an extremely cool job. I've been doing it for two and a half years now. And I'm really looking forward to having an opportunity for us to go public - assuming our board and province agrees - ability to go public and say who we've decided to progress to the next stage of the project with.

Bret Kugelmass
I can't wait. Robin Manley, everybody.

Robin Manley
Thank you very much.

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