Welcome to episode 279 of the Energy Talks podcast. I'm energy and climate journalist, Markham Hislop. Today, March 1st, the government of Canada announced $50,000,000 of federal funding for preliminary work on a potentially huge Bruce Power nuclear project in Southern Ontario. This is in addition to the 2023 plan by the Ontario government to procure 2,000 megawatts of new electricity generation capacity from renewables, including wind, solar, and hydro by 2030 with the potential for another 3,000 megawatts by 2034. Despite the Ford government's change of face, professor Mark Winfield of York University says that Ontario remains on these, and I quote, same high carbon, high risk, and high cost pathway of nuclear and natural gas fire generation expansion that it was on before.
I've interviewed, Mark about the Ontario electricity system a few times, but in light of recent developments, it seems like a good time for another conversation. So welcome to the interview, Mark. Hi, Mark. This okay. So we know that the the Canadian government is is eager to promote nuclear power. I mean, it's it's entered into agreements with other provinces, and it's, supported the idea publicly. It's got its budget funds in in various budgets to support this kind of work.
What are they doing in Ontario? Well, there's there's 2 things. There is this recent announcement, which is around, the notion of adding, apparently, some or around 4,800 megawatts of new capacity at Bruce. This would be on top refurbishment of 6 reactors there. It costs about 25,000,000,000.
And then they're also putting they are, through the infrastructure bank at the moment, the only investor in a proposal for a smaller reactor, 300 megawatts, at Darlington, of which there is supposed to be now 3 more. So we've moved from certainly encouragement now into the federal government actually financing the Ontario government's nuclear
ambitions? So my understanding is that the, expand the refurbishment at Bruce is going to cost somewhere around $50,000,000,000.
No. The refurbishment would be somewhere in the 20 to 25,000,000,000 range. That's for the 6 existing units. Okay. And then and then the back of envelope estimate based on the previous proposals for new builds in Ontario for 48 100 megawatts new capacity at Bruce, came out at in the $50,000,000,000 range.
So to refurbish 1, and build the other is $75,000,000,000 altogether.
That's the ballpark we're talking about for Bruce alone.
Now I'm curious about where this money comes to build these because, and I'll use Alberta as an example. So a couple of years ago, the Alberta electricity system operator did a study, and they said, okay. We're gonna get Alberta to net 0, and there are a couple of 3 pathways. Some of them had gas and carbon capture. Some of them one of them had a lot of renewables.
Couldn't go a 100% renewables, but a lot of renewables. And the point that the, Miranda Keating, Ericsson, who is the vice president I interviewed, she said, look. Of it's gonna cost us 42,000,000,000 to $55,000,000,000 in that range. 90% of it will come from the private sector, and because they're gonna be building wind and solar farms, or they're gonna be building a gas fired, power plant. It's not gonna be public money.
The public money will presumably go into things like, you know, modernizing the grid and bringing in storage, that kind of that kind of thing. So when I see a a a price tag of 75,000,000,000, I ask, how much is the taxpayer going to be expected to pick up?
That's a very good question. And keep in mind too that the the total for Ontario is over a 100,000,000,000 on nuclear. Because you have to consider the existing refurbishment at Darlington, which is supposed to cost 12 to 13,000,000,000 for 4 units, And now Pickering B, which is another 4 units, which again optimistically would be in the $10,000,000,000 to $15,000,000,000 range because it's even older than Darlington. So we're we're well past a 100,000,000,000. That's a very good question is who's going to finance this, because the past record with nuclear has not been very good.
Private capital doesn't like it because of the record of delays and cost overruns that we've seen in both with the original nuclear construction in the 70s 80s and then with the sort of renaissance in the late 2000 in Europe and the US, but sometimes only 4 projects. Private capital looks at it and says, there's a whole lot better places we can put capital. Even in an energy transition context, there's a lot better places we can put capital. Say the the it's very striking. So far, the only actual investor in the new build at Darlington is the Canada Infrastructure Bank, which is the government of Canada.
Well, it's interesting that, in the recent memory, the only nuclear projects that appear to have come in I don't know about on schedule, but on budget sort of, are in China, and I think there were a couple in Russia that did. And I'm not sure that, a market economy and a democracy like Canada should look to Russia and China as guidelines for whether or not these particular projects will be on schedule and on budget. Because if we look at other big projects, the trans mountain expansion pipeline, for example, went from, you know, around 10,000,000,000, 12,000,000,000, and I think it it's gonna end up around 35,000,000,000. That no. That was built essentially by the federal government, but the coastal coastal gas link pipeline, started out around 8 or 10,000,000,000 and wound up at 30,000,000,000, and that was entirely privately financed.
So it seems like every time there's a big project of this kind, cost overruns are just baked into baked into the cake.
And, indeed, the track record with nuclear projects is is around 2.5 times the original cost estimates, both in Canada and in in other in other jurisdictions where where there is some notion of transparency and honesty in the accounting, which would be UK, France, the United States, Finland. You know, that has been the record. And and part of the problem would make things even worse in this case is that any new builds especially are going to involve basically prototypical technologies, that they're they don't exist anywhere else at this stage so far as we understand with what's being thought about. You know, certainly the SMR they supposed SMRs are not that small of a 100 megawatts at Darlington don't exist. These these would be the these would be the prototypes.
So the risks are even bigger. You're not using a known technology. These would be technologies that are unknown to the regulator. So the risk just piles on. So I would think if you're private capital, you're going to be looking for different places to make your investment.
And we kind of saw this during the Obama period in the United States with the the sort of Recovery and Reconstruction Act sort of post 2,008, the Obama administration shoveled 1,000,000,000 in tax expenditures and and subsidies and everything else at the nuclear industry in the United States. In the end, they got one project with 2 reactors, the Vogtle project in Georgia. So that tells you that even if you pile on the subsidies, private capital doesn't seem interested. In the energy space, there's better places to put your money.
Yeah. You know, I in the particularly in in the American context, the Americans are quite happy to derisk early stage, technologies that that they you know, to have the government pay for that derisking until private capital concludes that the risk is low enough that it will then pick come in and and and provide financing. So here but here, this is not new tech well, I guess the SMRs are considered new technology.
These these would be new reactor designs. These are not candies. Right. So these are these are these are things that only exist as as some people put it as PowerPoints, as opposed to anyone having actually built them and got them to operate and found out how much it really might cost to build 1. So is there an argument to be made? And and
I'll just play devil's advocate here for a moment. Given the American track record of of funding the derisking of new technologies and the benefits that have flown flow to, to the US economy and they're building over decades of an innovation economy that really has stood them in in good stead despite the fact that China is now kicking their butt, in clean energy technology, but that's risk for another conversation. The fact that the where I'm getting going with this is is there an argument for the federal government, in partnership with the Ontario government, to step in here, pay the money, derisk SMR technology on the chance that it will actually be successful and then something that Canada can pick up and run with.
It's a terribly expensive and risky, derisking. And in effect, that's what the governments of Canada and Ontario did in the 19 fifties and the 19 sixties with CANDU. And the notion was the world was going to beat a path to our door And and by Kanduznion, the only people who bought them were Ceausescu and military juntas in South Korea and and Argentina. And and there were massive bribery scandals, if you may recall, from the 19 seventies involving AECL about that. There were some sales to China too.
So, you know, we kinda tried this before. And at least in that case, the technology that was being underwritten at least was Canadian and was at least gonna be, you know, designed, built, supply chained in Canada. At the moment, there are no viable Canadian designs. It's it's worth talking I mean, what was talked about what's being talked about for Darlington is is a is a, it's a US design and Japanese design. I mean, we're not we're not derisking a domestic industry.
I mean, we tried that once in this sector. So again, I'm left with as a head scratcher on this one, it's not like the reactors which would likely be built in these places are going to be Canadian designed and Canadian built. This is just part of what makes this bizarre in terms of where we're going with this.
My understanding is I interviewed one of the vice presidents at OPG, Ontario Power and Gas, which is building an SMR and hopes to have it done, fingers crossed, in 202028, but maybe 2032. We'll we'll see how that turns up. We'll see. But the if I remember correctly, it was Hitachi Energy that was Yeah. That was building it.
So this is Japanese technology, and, essentially, does that mean that if the federal I mean, it looks like there's gonna be government money involved here. There there there just is. And we basically we we get a power plant, assuming that it ever works, but nothing else? No supply chains, no expertise?
That seems to be what we're doing here is we're buying an offshore technology, which doesn't actually exist. There are no there isn't even a prototype of the reactor design that they're talking about. It's a type that has never been seen by the Canadian regulator, the CNSC. So, yeah, I think that's that seems to be what we're looking at is that that we're buying an offshore technology that that doesn't do I mean, as I say, historically, there was it didn't work out, but there was a a an economic rationale behind the Canada, Ontario strategy in the 19 sixties seventies fifties around CANDU because the whole idea was you were building a Canadian design, Canadian built reactor, Canadian supply chain for which there would then because we demonstrate it works so well at Pickering and Darlington and Bruce that that the world would beat a path to our door. It doesn't work that way.
But but, you know, that at least there was a kind of an economic rationale there for that investment as as an industrial strategy. But here, that doesn't seem to be the case at all, that we're buying a completely offshore technology. We're helping somebody else sell reactors. So, yeah, this this seems to be part of what is so puzzling about all of this is that the rationale that was there in the first go round, now 70 years ago, even that's not there anymore.
There's a a higher level issue here, and and now you and I have talked about, in the past, the lack of energy planning in Ontario. I mean, they're just stuff gets pulled off the shelf and put into a press release and again becomes a project and but there's no plan, no strategy, there's no public input, there's there's nothing you you can point to and say, oh, this is what the government's doing on energy. This is how it's it's going to, you know, for instance, how how we're gonna pivot from fossil fuels to, to clean energy, to clean electricity, and we're gonna double or triple our power grid over, you know, 20, 30 years, and the kind of things that other jurisdictions are grappling with. There's none of that in Ontario. Okay.
So fair enough, but the question then becomes, what's the federal government doing? Because the federal government has actually talked about industrial strategy and industrial policy. And by that, they mean, you know, building these hubs of around new technology, like hydrogen in in the Edmonton area, where you attract you attract, anchor, companies that that are gonna build hydrogen plants in the case of Edmonton, but then also the supply chains and also the expertise, and it's not unlike what, you know, they did it in, with CANDU in Ontario back in the, you know, 50, sixties, and seventies. It was in a we understand industrial well, we used to understand industrial policy, but now industrial policy. I asked natural resources minister Jonathan Wilkinson this at a press conference.
This is what is Canada's industrial policy? He said it has 3 components. It's got its, carbon tax, regulations, and subsidies. I said, boy, that sure doesn't sound like the inflation reduction act to me. It doesn't sound like what China did.
It doesn't sound like what the the the, European, new green deal. It doesn't sound like any of those. It just sounds like a bunch of programs, and that's essentially what we've done in with at the what the federal government has done. It has pots of money that it hopes proponents will come forward and and put in applications, and then they will shovel taxpayer door dollars out the back door to those project and keep their fingers crossed that some of them, actually stick to the wall. And so we've got lack of planning at, in Ontario.
We've got the lack of any kind of coherent industrial strategy and policy in on in Ottawa, but we do have lot lot big pots of money, like the infrastructure bank and the green fund and and so on. That just sounds like a recipe for disaster.
It's a recipe for for an awful lot of of yeah. A lot of public money going out the door and an awful lot of debt being built up and a lot of fiscal capacity being burned up in the process, without much certainty about outcomes. And in some cases, I mean, I've I've heard elsewhere that there there needs to be a much better screening of of what what actually the money is going into both from an economic perspective, but also from a sustainability perspective. I mean, some of that is sorting itself out, particularly the hydrogen stuff. It's just turning out to be uneconomic except in certain specific applications.
The problem with nuclear, especially the this dimension of this, is is that, it's unique in the sense that that it carries with it these enormous legacy costs. It's not just a question of, well, it didn't work. It's like the sprung greenhouse in Newfoundland. Well, it didn't work, and we got an empty building now. This is something which carries with an enormous legacy cost that stretch over millennia.
So this one is one around which the bar probably should be a whole lot higher, because the risks of success or even in some cases, success, say, nothing of failure, are quite different or qualitatively different from other technologies where you just are kinda walking. Well, it didn't work. And, yeah, that was a risk we took because we were taking risks. This one carries with it unusually significant legacy costs and risks that we need to be very sensitive to.
Within the last couple of months, I've done quite a number of interviews with experts around power grids. Gerhard Schlage of actually of Hitachi Energy would be 1 and, did one yesterday with an engineer oh, actually this morning, who, Burns and McDonnell, the engineers out of the US, and and they're installing battery utility scale battery projects on, you know, on grids around the US. And then we've looked at China and how it's it's built up. It's scaled up its solar panel module manufacturing to the point we're now, you know, like, 12¢ a watt compared to 40¢ a watt for the US. I mean, you just can't get energy that cheap.
My my point here is that it's become obvious, I think, that we're looking at a variable energy generation coupled with a reengineered, modernized grid and some of these other technologies like microgrids and virtual power plants and and so on. And that seems to me to be the future of of electricity systems. That'll be the bulk of it. Yes. There will always be some hydro and some and some nuclear and some geothermal and but, really, the the heart of the thing is going to be variable energy with with a a rebuilt grid that can accommodate them.
Canada missed the memo. We see missed. Yeah. No. No. Nobody is doing this. I mean, I get it in in hydro provinces, you know, like Quebec and and Manitoba and British Columbia. I mean, you've got something nobody else has got. Why wouldn't you double down on that? But in in places like Alberta and Ontario, I just I just don't see it.
And it seems to be that they're looking for technologies that they can just that are drop in replacements for what they have so that you can continue with this vertically integrated hub and spoke kind of system without having to do the hard work that the Americans are doing, the Chinese are doing, the Europeans are doing, and and redoing your grid to make it more efficient and lower cost. They just wanna do whatever, you know, the the easiest thing. That's, I that's kind of what it what it's looking like at this point.
I I would not disagree at all. I think that's very much what's going on. I mean, you can look at what's happening in Ontario around nuclear and gas as as a triumph of an incumbent, Ontario Power Generation, because they own all these assets. And although there have been very interesting discussions about distributed resources, and we've talked about this too, you know, and and Ontario in some ways is particularly well positioned because we have a network of local distribution utilities who who want to be DER aggregators and distribution level market operators. We have an unusually well set up institutional and in fact, some to some degree, great configuration of actors who are engaged distribution level who want to do this, and they are stuck in what is termed the regulatory sandbox that that sure.
You can play around with this, but there's no way we're letting this become a significant asset in the system. And yet in Alberta, Ontario, Saskatchewan, Maritimes, this may well make a whole lot of sense. It's where these sort of converging technological revolutions come with storage, renewables, grid integration, and, you know, what used to be called smart grids. I think there's we need a better term for that now. This is where this comes into play.
And it also you know, particularly then, if you're gonna have fleets of parked electric vehicles, which are basically fleets of high capacity storage assets in the systems as well. I mean, these are this point that the modelers make to me about this, you know, the it's it's also the loads are becoming more dynamic. You know, and and EVs are the classic example of that, that that they're gonna you know, they can be both storage and they can be load and but they also were are highly variable, as you say, but flexible in other ways. That would seem to be the pathway to follow, which also avoids a lot of these very high risk, you know, big capital, big centralized assets, which, again, Ontario's nuclear program is like the the the poster child of poster childs at the moment. But Canadian Utilities don't seem interested because it is a threat to the underlying business model of of what are basically vertically integrated utilities.
Let's talk about incumbents for a minute because you you you brought this up in other interviews that I've done with you. And I wrote a column, that just, published today in which I argued that Wednesday's announcement from the Alberta government that it would, I mean, it it ended the 7 month moratorium on wind and solar development, and, essentially, that was the hard moratorium that was it was done under the authority of the regulator ordered by the government. And now they have so many bizarre rules that it is in fact a soft moratorium. You you're not saying you can't do it, but you've made it so difficult that nobody's gonna do it. It's impossible.
Yeah. So and I argued in the column that the problem this is illustrates a bigger problem of the, Danielle Smith and her UCP government is they are the they are the champions of incumbents. They will protect the the big utilities in Alberta. They will protect the big oil and gas companies in Alberta. They will protect the big petrochemical industries, and it seems like the Ford government is exactly like that, and the Mo government in Saskatchewan will will protect SaskPower and its coal assets and its gas gas assets.
They don't want change to come in and disrupt what is, from their point of view, a workable a workable system. Never never mind that change is coming anyway, and they can't stop it. That's that is the fundamental problem. So if you look at BC and Quebec, which are the 2 provinces that are leading the energy transition and and the expansion of electricity, they're hydro provinces and their governments made them. Their government sent policy directions to the Crown Corporation and said, you will do an this.
You will generate enough clean electricity, and you will upgrade your transmission and distribution enough that we can we can adopt electric vehicles, we can sell, we can put in heat pumps, We can do it in, you know, electric industrial processes and on and on. And and then the crowns went away, and now they have plans and they're then they're beginning to to to look at it. In the other places where the government refused to do that and protects the incumbents, now we have a mess like we have in Ontario.
No. No. This is this is a defense of the incumbents and a triumph of the incumbents in many ways in in both Alberta and Ontario. You've got governments that are that are extremely receptive to to the incumbent actors. And in Ontario, there's there's other examples of that as well in in other unrelated sectors.
It's it's part of the governance model that you're dealing with here. And and, you know, they're they're not interested in in pathways that that would chow I mean, they don't listen to the voice. They listen to the incumbents fundamentally is is the governance model here, is that they listen to the already dominant actors and reinforce their position. With the forward government, we see this across a whole bunch of across health care, across land use planning and developments. All you know, it's a very, very consistent pattern in terms of how they approach things.
The problem is that it's not one that is necessarily very conducive to to change or due to innovation. Quite the opposite. In some ways, it's it's designed to say it's it's a policy model designed to protect incumbents. Even though at times I'm not sure with the Ford government anyway. I'm not entirely sure they realize that. With miss Smith, I I'm not sure either, but but that's certainly the consequence.
I I can confirm that she hasn't got a clue, but, you know, risk for another conversation.
Yeah. Yeah. No. I think I think in both cases, these are governments which are sort of almost instinctively receptive to these kinds of voices, who they perceive as authoritative and powerful. But that does create this in a in a changing world, that becomes very, very problematic in the sense of their unwillingness to embrace the possibility of change or different pathways.
Now ice I'm sitting on the West Coast of Canada on Vancouver Island, and I'm, so I'm watching what the the NDP government here does with its crown corporation, BC Hydro, which is finally, they're getting it to move, but we do a lot of most of our work in Alberta and somewhat in Saskatchewan. So those are I'm very familiar with those. We're doing a little work in Ontario, and and so I know, you know, roughly what you're what you're going through. But you're you're based in Ontario at in Toronto at York University. And my hypothesis here, Mark, for why we have the scenario that you and I have just discussed for the last 5 minutes or so of of the power of incumbents to impede change and innovation.
And a lot of it comes from the fact that Canada is such a very insular country. Like, I am I you know, I say this all the time out of the 4 or 500, interviews that I do every year. Half of them are with international experts, and and and then it's very deliberate. I wanna know what Americans think. I wanna know what Europeans think.
I wanna know what Asians think. And once you get outside of Canada, and you look at what other, what what other policy changes are there, what regulators are doing, what private capital is doing, it's a different world. It is just Canada is just this sleepy little black water that is at least a decade behind and maybe more, and we're having we're having debates and conversations about issues that, frankly, the were the the rest of the world has moved on. You know, any of the country countries that are trying to lead the the energy transition or play that are players in the energy transition, they've resolved these issues at the national level and subnational level long, long time ago, and they're embarking on strategies and and attracting investment and building industry and doing all the things that need to be done. And you come to Canada, and it's like, holy how I I don't know how we but our elites don't look outside our boundaries and aren't plugged in to the extent that others are, and we just don't have the leadership.
We at the in the business level, at the political level, on all sorts of anyway, I this is a favorite rant of mine, and I'm gonna stop now and get you to respond, but that's kinda my take on it.
There is there is a strong element of that, which I think you're right. It has in some ways become more more prevalent. It may be partially a function of the living next to the giant, which also is is tending to look more and more inwards. But we've we've also have a history of of relative energy security and abundance, which is also a factor in Canada's case, that this this has not been a problem historically and has been seen potentially as as a source of economic advantage, both in terms of our ability to provide energy cheaply, but also to extract and export energy resources. And that's a very, very deeply rooted economic paradigm in Canadian history.
One, you know, Harold Innes and others would understand very, very well.
The staple thesis.
I I Exactly. This is these are just state these are just staples along the chain. And the problem is exactly as Innes and others have pointed out, and Mel Watkins later on and others and Brendan Hawley these days, you know, that this this tends to produce a relatively non innovative economy to begin with. But then we are, I think, becoming particular with governments like the Smith government in Alberta, Moe, mister Ford, you know, even more inwardly looking and and less outward looking in terms of innovation. And so that that just reinforces the the the double down on on the incumbents and the existing pathways.
And that that adds to the adds to the challenges, and makes innovation or changing pathways becomes very, very difficult in that kind of context. We're in a kind of, in some ways, institutional and innovative retreat at this stage, that the incumbents are becoming more powerful than ever. And the the new entrants are being pushed out.
I'll I'll illustrate the argument I'm gonna make by pointing to my interview with Gerhard Schlage, who is a veteran power sector player and now runs Hitachi's global, I forget what what sec what department he's in. Doesn't matter. Power sector expert. And his point was that the changes that are coming, there are so many new power sector technologies. We've got artificial intelligence.
We've got grid enhancing in tech, technology, so you can put more power down a a a line. We've we've got distributed energy resources, virtual power plants, batteries. It is and literally powers power grids around the world are being transformed in real time by these technologies, and plenty more are coming. Plenty more are coming. Like you mentioned, EVs as a storage capacity, so vehicle to grid integration is is gonna be a big thing in in the in the not too distant future.
And the problem becomes, I think, that we are outside of all of that innovation. And I have this conversation in in, Alberta all the time. You know, they go, we're literally at the point where where people's politicians and industry leaders will get up and say, well, you know, the sun doesn't shine and the wind doesn't blow all the time, and and and none of this will work. And if you talk to Gerhard Schlage, he'd say, well, okay. That's because you haven't reengineered your grid to accommodate variable resources.
And if you did this long laundry list of things, if you invested in your grid and you did what you were supposed to do, it would all work just fine. And it would be low cost and reliable and flexible and all of these other things that you need it to be in the 21st century. And the conversation around this is starkingly backward in Canada. It's just astounding how stunted our thinking is in this area, and I guess, okay, we've talked about why that is, but what do we do going forward to change that?
Well, this is this is this is the challenge. I mean, that that that all of the things that you just talked about around grid innovation, I mean, we we have these I talked about it was converging mutually supportive technological revolutions around renewables, grid management, storage, going on. But Canada, in effect, seems to kind of choose to insulate itself from that because it, of course, it threatens the incumbents. And we restrict it to you know what are literally referred to as regulatory sandboxes at least in Ontario and Ontario seems to be part of another project which is actually looking at this and strange enough. Ontario seems furthest down the pipe than any other jurisdiction in Canada at the moment, at least at the Ontario Energy Board hosts a space in which there are official conversations about these kinds of things and where they might be going.
But they're emphatically restricted to the sandbox, not not the not not commercial scale deployment. And that I think is is where we're going to have to move is is around facilitating integration of these kinds of technologies. Some of it may happen on its own. It sort of has a momentum of its own as things evolve. But we're going to have to think about how we approach regulation market entry in these sectors, particularly we do anticipate energy electricity demand is going to go up.
Whether that needs to go up through centralized assets like the kind that Ontario apparently is going to spend a $100,000,000,000 on is a is a completely different question. And it may be that we can facilitate that to some degree. It may be it happens on its own, particularly as the costs of trying to to to cover those kinds of centralized investments start to be reflected in in in grid costs, you know, you may start to see people defecting on their own anyway. The problem is that
If Mark, if I can interrupt, and I'm I apologize for this. I tried very hard not to interrupt my guest. Yeah. No. It's But I have an anecdote here that is directly relatable to related to what you're saying.
The Alberta electricity system operator, AESO, undertook a study and they went out to their stakeholders and they published this study in 2022. And what I remember most about reading that report was the palpable fear that emanated from those pages that big industrial operators and commercial operators were going to self generate and disconnect from the grid, and the rest of the the the folks on the grid, we're gonna have to pay much higher transmission fees and distribution fees. And that seems to be about where we're at. It is instead of planning to fix it and and accommodate, you know, all of those kind of things. And so that I think that just illustrates your your point.
Yeah. No. No. You will have people simply self generate behind the meter because the costs around grid of trying to do this through big centralized we I mean, Ontario has already subsidized its electricity rates to the tune of $7,000,000,000 a year out of general revenues. There's a, you know, there's a limit to how much you can do that, and obviously, it's a cost in terms of the things that that $7,000,000,000 could have gone on otherwise.
So that that is the concern is that there's concerns about grid defection. There are concerns about erosion of bulk grid demand and the stranding of assets. But the the answer to that, I don't think, is to build more massive strandable assets, which is effectively what Ontario is proposing to do. You know, the the appropriate answer is is, well, you're you're gonna have to make it so that it makes sense to remain connected to the grid from a reliable but also from an integration and sharing kind of perspective in a more network kind of sense. Because, yes, those who can defect and self generate and the technologies are enabling more and more of that, are gonna do that.
I I think that's that I mean, that's that's a very significant risk because either either they move, which in some case they can't do because they're tied to the resource, or they they self generate and insulate themselves from the grid costs. And there's pick on the scale, the kind of cost being talked about in Ontario, which ultimately is number has been talked around. It's $400,000,000,000. You know, there's there's a limit to how much governments can subsidize those kinds of costs and try and hide them, which is what the government's doing at the moment.
Here are some here are some costs that popped up recently on my radar. So I mentioned before the, the Chinese solar panel, manufacturers are selling for 12¢ a watt. But over the next 3 years, the amount of, solar installed is predicted to be to double, and that would you would then see a reduction, thanks to Wright's law. You would see a reduction in the cost per unit. And then in 18 months after that so now we're talking, like, 5 years, basically.
Then you see another reduction doubling and and reduction. So the the odds are pretty good that we're gonna see a sub 10¢ a watt module in the not too distant future. So the point here is that generating, clean electricity is getting cheaper and cheaper and cheaper, and you can you know, any factory, any paper plant, pulp and paper plant can stick, solar panels on their property and on their buildings, and there's nothing the government can do about it. Then on top of that, storage used to be not that, you know, not that long ago, it was a $100100 a kilowatt hour, sorry, megawatt hour, and now is they were talking about in $2,074.56. And then we're gonna see it drop further, and then we're gonna see some new chemistries like like, sodium ion and zinc ion and and the solid state and so on that that improve energy density.
My point that I'm getting to is that the self generation by the companies that are big enough and can afford it is getting easier and easier and easier by the month, not by the year, by the month. And it only seems to me inevitable that, eventually, the cost will drop low enough, and it'll be easy enough that we will see significant grid defection if we keep going down the road that we're going on as we just discussed.
Yeah. No. I mean, I I think that's that's gonna happen in in different ways. And keeping in mind, storage is not just batteries, especially if you're stationary. It can be all kinds of different things.
But, yeah, you know, the the the opportunities are there that they do. There is there is a technological revolute or as I say, multiple mutually reinforcing technological revolutions going on here, which are going to facilitate those kinds of pathways. And particularly if if grid electricity becomes more and more expensive because we're trying to make $100,000,000,000 investments in centralized technologies, and that's the optimistic financial estimate. It just reinforces that pathway. But, you know, the downside being these risks of of very large asset stranding as as the world moves on.
And those who can can get off the grid get off the grid. I mean, this was all stuff we talked about in the 19 seventies, but but now seems to be technologically much more feasible than than when Amory Lovins talked about this 50 years ago. You know, that was a pipe dream. Now this is very, very doable. You know, we have the technology on the renewable side, the storage side, and the grid management integration sides or system integration system sides to be able to do that.
And and people will realize this, and and that is the direction they may well go.
Once again, science fiction leads the way, and reality catches up eventually. Look, Mark, this has been fascinating and as always, and, we look forward to more, conversations in the future. I'm officially depressed now. I'm gonna have to go and and, do something to cheer myself up because, on the one hand, you know, I think we're gonna we'll muddle through it, which is the Canadian way, but it's gonna cost us a lot of money, and we're gonna make a lot of mistakes along the way that we don't have to, that are foreseeable and that that we, you know, we could do we have we have other other options. So thank you very much for this.
Always appreciate it.
Great. Well, thank you, Mark. I'm very very nice talking to you.