AtkinsRéalis subsidiary Candu Energy Inc. said the deal marks a new era in the construction of large nuclear reactors and was the first step in its strategy to sell more Candu reactors around the world. AtkinsRealis headquarters are seen in Montreal, Nov. 10, 2023.Christinne Muschi/The Canadian Press
Montreal-based AtkinsRéalis Group Inc. ATRL-T has won a joint contract to build two nuclear reactors in Romania – the first new Candu reactors to be built in the world since 2007.
Announcing the deal Friday, AtkinsRéalis subsidiary Candu Energy Inc. said it marks a new era in the construction of large nuclear reactors and was the first step in its strategy to sell more Candu reactors around the world.
Optimism that reactors could play a significant role in the energy transition has helped launch something of a comeback for nuclear power, which had fallen into gradual decline over the past few decades. Friday’s joint venture underscores how global efforts to reduce greenhouse gas emissions have breathed new life into the technology’s future.
It follows a recent string of other announcements signalling momentum in nuclear’s revival, including technology giants Microsoft, Google, Amazon and Oracle saying recently they’re increasing their exposure to nuclear energy as a way to meet the electricity needs of data centre activity such as cloud computing and artificial intelligence.
Ontario also announced plans in 2023 to build Canada’s first new large-scale nuclear plant in three decades. And earlier this year Alberta company Capital Power Corp. said it had teamed up with Ontario Power Generation with hopes to build the Western province’s first nuclear power reactor by 2035.
Small modular reactors are also being eyed in Ontario, Saskatchewan and New Brunswick, though no SMRs are fully designed, nor licensed for construction, by the Canadian Nuclear Safety Commission.
Candu reactors, on the other hand, were introduced in the 1970s. The Candu 6 design was built at stations in Quebec and New Brunswick and exported to Romania, Argentina, China and South Korea.
The Romanian joint venture will see Candu Energy team up with Italian company Ansaldo Nucleare, Sargent & Lundy and Fluor Corp. (both headquartered in the United States) to build two new reactors at the Cernavoda Nuclear Generating Station in Romania, allowing the country to almost double its production of nuclear-powered electricity.
The Canadian government will loan $3-billion to Romania’s nuclear power operator to finance the deal – funds that will be directed exclusively to Canadian providers of goods and services working on the project. Other funds supporting the Romanian nuclear program include a financing line of up to €2-billion by Italian financial group SACE and a loan of more than US$57-million from the Export-Import Bank of the United States.
The joint venture contract had been widely rumoured for weeks, and AtkinsRéalis executives have been talking about Romania as a near-term market opportunity for its nuclear business for even longer.
“Bottom line: This significant new build contract solidifies the ‘nuclear renaissance’ dynamic,” National Bank analyst Maxim Sytchev said in a research note. It has been a quiet decade for nuclear since the 2011 Fukushima accident in Japan, but now, heightened discussions about decarbonization, growing demand for reliable baseline power, and achieving energy independence have greatly renewed interest in the sector, he said.
Portland, Ore.-based NuScale Power, a modular reactor maker, and Lynchburg, Va.-based BMX Technologies Inc., a supplier of nuclear components and fuel, are among the publicly traded companies that have seen their shares climb significantly over the past two years. AtkinsRéalis shares have roughly tripled in value over the same time.
At an estimated cost per Romanian reactor of $8-billion, the contract could be worth between $2.4-billion and $4.8-billion in future revenue for AtkinsRéalis and earnings before interest and taxes of between $300-million and $600-million cumulatively, according to Mr. Sytchev. The company currently has a nuclear work backlog of $3-billion.
AtkinsRéalis chief executive Ian Edwards has reshaped the engineering company by selling oil and gas assets and pivoting toward a simplified business model centred on engineering services and consulting work, while riskier fixed-price construction contracts that have historically sucked cash are wound down.
The Montreal-based company, previously known as SNC-Lavalin, changed its name in 2023.
AtkinsRéalis is the sole commercial licensee of Candu technology, and Mr. Edwards said Friday that the joint venture was “game changing” for his company and Romania.
“We believe AtkinsRéalis is well positioned to win future work given the company is the exclusive licensee of the Candu reactor technology,” RBC Capital Markets analyst Sabahat Khan said in a note.
AtkinsRéalis estimates that countries will need 1,000 new nuclear reactors by 2050, according to information from its most recent investor day. Assuming the company’s Candu solution nabs 5 per cent of that business (there are six large-scale reactor technologies globally, including Candu), it pegs the market potential at $750-billion.
The company said in an e-mail that it also sees opportunities for 19 life-extension projects for existing Candu reactors in the next 10 years – a market potentially worth about $15-billion.