Canada's Nuclear Energy Strategy Focuses on Project Financing and Risk Sharing

The Canadian federal government recently unveiled a new nuclear energy strategy, explicitly committing to advancing new nuclear power projects nationwide, strengthening domestic supply chains, expanding uranium resources and nuclear fuel supply, and continuing to support nuclear technology innovation in fission and fusion. The strategy also states that nuclear deployment requires more modern financing tools, more efficient regulatory processes, and closer collaboration among governments, Indigenous communities, and industry.

The goal of this strategy is to serve Canada's economic, social, and climate objectives through nuclear energy projects, enhancing national energy security while creating jobs and fostering innovation. As the strategic direction becomes increasingly clear, how to translate policy goals into projects that are financeable and ready for construction has become the key question for the next phase.

A new study commissioned by the Canadian Nuclear Association (CNA), titled "Financing Nuclear Deployment in Canada," analyzes this issue. Drawing on international experience and focusing on Ontario, Saskatchewan, New Brunswick, and Alberta, the study aims to identify the essential conditions for attracting capital, controlling customer costs, and ensuring successful project delivery.

The study notes that nuclear projects require massive capital investment before entering service, with development and construction timelines typically spanning 10 to 15 years. Once completed, nuclear plants can operate reliably for 60 to 80 years or longer, with relatively low and predictable operating costs. For this reason, the cost of capital is one of the core factors affecting the overall economics of nuclear projects.

During the construction period, financing interest continues to accrue. The higher the project risk, schedule risk, and market risk, the higher the returns investors demand. The study argues that a financing framework must address not only "whether capital is available" but also "whether the cost of capital is affordable." Well-designed policy and market mechanisms can reduce risk premiums, lower financing costs, and ease the burden on electricity consumers over the full project lifecycle.

Electricity systems vary significantly across Canadian provinces. Some provinces rely on crown utilities operating in regulated markets; Canada also has privately owned nuclear plants; and Alberta operates under a more market-based electricity mechanism. Accordingly, the study does not propose a single national financing model, but rather considers regulatory mechanisms, long-term power purchase agreements, and other market arrangements as viable options. The key is whether the chosen structure can provide predictable revenue, support early-stage project development, and clearly define how construction, delay, completion, and market risks will be addressed.

The study also emphasizes that international experience shows risks do not disappear through contractual arrangements. If too much risk is transferred to suppliers, it can drive up bids, weaken counterparties' ability to perform, and ultimately jeopardize project delivery. A more sensible approach is to allocate risks to the parties best able to manage them, while establishing incentive mechanisms that align owners, suppliers, and contractors around the shared goal of delivering projects on schedule and on budget.

Government participation is a common feature of the nuclear projects examined in the study. Depending on regional and project-specific conditions, governments can participate by providing policy certainty, supporting early-stage development, establishing regulated cost recovery mechanisms, arranging long-term revenue support, implementing tax measures, offering loans or loan guarantees, and making direct investments.

The study argues that this does not mean governments should assume all project risks. Rather, support should target risks that private investors or individual project participants cannot reasonably bear, and should be designed with the goal of lowering financing costs and strengthening accountability.

The report recommends that Canada maintain long-term policy certainty, improve the efficiency and predictability of regulatory processes, ensure continued corporate access to federal investment tax credits and public financing institution support, and provide additional assistance for first-of-a-kind demonstration projects and first nuclear projects in each province. The study also notes that Indigenous equity participation is both an important financing channel and a means of generating long-term economic benefits through project partnerships.

Canada's new nuclear energy strategy sets the direction for future nuclear construction. The CNA's financing study further proposes that the next phase should focus on designing a financing framework that attracts investment, allocates risk appropriately, and ensures project delivery, laying the foundation for Canada to secure reliable and affordable low-carbon electricity over the long term.