Canada Growth Fund and Building Ontario Fund Invest in a Major Ontario SMR Project
In a rapidly changing and uncertain world, Canada’s new government is focused on what we can control. We are protecting our communities and our country. We are building our economy with major projects and millions more homes. We are empowering Canadians with lower costs and new opportunities to help you get ahead. We cannot control what other nations do, but we can control what we choose to build – and we are building Canada strong.
Canada’s new government is moving decisively to build major nation-building projects that create high-paying careers, reduce emissions, and grow our economy.
To that end, the government launched the Major Projects Office to cut red tape and fast-track major nation-building projects. Last month, the Prime Minister, Mark Carney, announced the first wave of projects referred to the Major Projects Office for review. One of these projects is the Darlington New Nuclear Project (DNNP) in Bowmanville, Ontario – a catalyst for new jobs, industrial growth, and our clean-energy future that will put Canada at the forefront of global nuclear innovation.
Today, the Prime Minister announced that the Canada Growth Fund will invest $2 billion to support the construction and operation of the four small modular reactors (SMRs) at the DNNP. This project will make Canada the first G7 country to bring SMR technology online and drive $500 million annually into Ontario’s nuclear supply chain. Once complete, Darlington’s first of four SMRs will provide reliable, affordable, clean power to 300,000 homes, while sustaining 3,700 jobs annually, including 18,000 during construction, over the next 65 years.
Prime Minister Carney was joined by the Premier of Ontario, Doug Ford, who announced that the Government of Ontario will invest $1 billion in this project through the Building Ontario Fund. Ontario Power Generation remains the majority owner and operator of the DNNP, with the Canada Growth Fund and the Building Ontario Fund acquiring meaningful minority stakes in the project, representing 15% and 7.5% ownership, respectively.
This investment will strengthen Ontario’s power grid and represents the kind of nation-building projects that defines Canada’s new economic approach. Together, the Government of Canada and the Government of Ontario are demonstrating Canada’s ability to meet the highest standards in developing world-class assets efficiently, cost-effectively, and competitively.
By unleashing private investment, advancing energy security, and strengthening the industrial base that will power the clean-energy transition, we are building Canada strong.
Quotes
“The Darlington New Nuclear Project will create thousands of high-paying careers and power hundreds of thousands of Ontario homes with clean energy. This is a generational investment that will build lasting security, prosperity, and opportunities. We’re building big things to build Canada Strong.”
“Today’s investment to support the first SMRs in the G7 is a downpayment on Ontario’s nuclear energy future. We’re protecting Ontario by supporting good-paying, long-term jobs for Ontario workers and building the energy infrastructure – including both SMRs and new, large-scale nuclear – needed to make Ontario an energy superpower.”
“Capitalising on big opportunities requires thinking big, acting fast, and making the kinds of generational investments that provide a means to achieve our ambitions – creating jobs, growing our economy, and reducing emissions while lowering long-term energy costs. The Darlington New Nuclear Project will stimulate demand for clean energy technologies and green construction jobs as the first initiative of its kind among G7 countries. By supporting Canadian ingenuity and innovation, we are helping pave the way for the use of this technology not only here in Canada but around the world.”
“The financing we’re providing to the Darlington New Nuclear Project will pave the way for a future where Canadian energy fuels our economy at home and provides export opportunities for Canadian expertise. By uniting government, industry, and Indigenous partners, we are not only creating thousands of good jobs in Ontario, but building out affordable, reliable power that Canadians can depend on.”
“This is one of many milestones to come for major projects like Darlington – projects that hold transformative power to turbocharge and connect our economy, diversify our products and markets, and create hundreds of thousands of high-paying careers. Through the Major Projects Office, we will be moving these projects faster and more efficiently, building one Canadian economy together.”
Quick facts
- The DNNP will be the first grid-scale SMR in the G7.
- Earlier this year, the Government of Ontario approved Ontario Power Generation to move forward with construction of its first of four rate-regulated SMRs as part of this project.
- At its full potential of four SMRs, the DNNP will provide 1,200 megawatts of clean, reliable electricity – enough to power about 1.2 million homes (more than the number of households in the Greater Toronto Area) – while reducing carbon emissions by an average of up to 2.3 million tonnes annually between 2029 and 2050.
- As part of its mission, the Major Projects Office:
- collaborates with key partners – including project proponents, Indigenous Peoples, investors, and all levels of government – to facilitate the development of major projects that will benefit Canada.
- works to identify and advance nation-building projects, including through the Building Canada Act.
- acts as a single window for project proponents into the federal regulatory process to simplify and accelerate project approvals.
- The Canada Growth Fund was established in 2022 to ensure Canada continues to be a leading destination for investment and to drive innovation across new and traditional sectors of Canada’s industrial base. To date, it has built a diverse and impactful portfolio – with 16 portfolio companies representing a total commitment of $4.75 billion.
- The Canada Growth Fund is a $15 billion arm’s length public investment vehicle launched by the federal government to attract private capital and invest in Canadian projects and businesses. It makes strategic investments to help Canada meet the following national economic and climate policy goals:
- Reduce emissions and achieve Canada’s climate targets.
- Accelerate the deployment of key technologies, such as clean electricity.
- Scale-up companies that will create jobs and drive productivity and clean growth across new and traditional sectors of Canada’s industrial base.
- Encourage the retention of intellectual property in Canada.
- Capitalise on Canada’s abundance of natural resources and strengthen critical supply chains to secure Canada’s future economic and environmental well-being.
Associated links
The Canada Growth Fund and Building Ontario Fund also announced an innovative equity investment in world-leading Ontario Power Generation SMR project:
Canada Growth Fund Inc. (CGF) and Building Ontario Fund (BOF) today announced an equity commitment agreement to finance the Small Modular Reactors (SMR) project to be constructed at the Darlington New Nuclear Project (the DNNP or the Project), which will be majority owned and operated by Ontario Power Generation Inc. (OPG). Through this agreement, CGF and BOF have committed to invest up to $2 billion and $1 billion, respectively, each taking minority ownership positions in the Project.
The DNNP will see the construction of four grid-scale commercial SMRs – a first among G7 nations – that, when completed, are expected to deliver up to 1,200 MW of reliable, affordable, and low-carbon electricity, enough to power 1.2 million homes. CGF and BOF are investing in this world-leading energy infrastructure project to de-risk the construction and operation of the first SMRs. Leveraging their unique investment mandates, both organizations are bringing forward innovative financial arrangements to temporarily share certain risks that currently limit private sector interest today. As a result, this transaction is paving the way to spur private sector and Indigenous investment in the DNNP over time.
The investment will also reinforce Canada’s robust nuclear supply chain, inject hundreds of millions of dollars into Ontario’s industrial supply chain, contribute to the resilience of Canada’s low-carbon electricity grid, and foster a new generation of Canadian nuclear expertise.
Transaction details and public benefits
- OPG remains the majority owner and operator of the DNNP, with CGF and BOF acquiring meaningful minority stakes in the Project, representing 15% and 7.5% ownership, respectively.
- CGF’s and BOF’s capital will be made available, subject to the satisfaction of conditions, to OPG in two tranches: 1) initial capital funding of SMR 1; and 2) additional capital to fund SMRs 2–4 once the Project meets certain milestones.
- OPG expects to complete construction of SMR 1 by the end of the decade and connect it to the grid by the end of 2030. Construction on SMRs 2-4 is expected to be completed in the mid-2030s.
- As a first-of-its-kind project, DNNP has a higher risk profile that limits access to traditional financing. In line with their mandates, CGF and BOF are investing at a stage where the Project is exposed to certain construction and technological risks.
- CGF and BOF investments aim to de-risk DNNP and advance it to a point where private sector participation can be efficiently catalyzed in this essential energy infrastructure asset.
- DNNP represents a compelling opportunity for CGF and BOF to invest in a large-scale rate-regulated asset with rates subject to oversight and approval by the Ontario Energy Board.
- According to the Conference Board of Canada, DNNP will create up to 18,000 Canadian jobs annually through the construction phase, while adding $38.5B to Canada’s GDP over the next 65 years.
- The current estimate to construct four SMR units at DNNP is $20.9B, including interest, escalation, and contingency.
- CGF and BOF will benefit from market-based investment governance, facilitating future participation from private investors.
- During project development OPG continues to build respectful, collaborative relationships with the communities of the Williams Treaties First Nations, advancing conversations at the pace set by the Nations.
Quotes“Through this novel financing arrangement, Canada Growth Fund is pleased to support these first-of-a-kind small modular nuclear reactors with significant potential to be replicated across Canada and globally,” said Yannick Beaudoin, President and CEO of Canada Growth Fund Investment Management Inc. ("CGFIM"). “We look forward to building upon this financing model to attract further interest from private investors committed to developing low-carbon energy infrastructure in Ontario and across Canada.”
“We are delighted to bring PSP Investments’ rigorous investment process, depth of expertise, operational excellence and arm’s length governance model to the execution of CGF’s mandate,” said Deborah K. Orida, President and Chief Executive Officer of PSP Investments. “With today’s announcement, CGFIM continues to position CGF as a leading investor in the Canadian ecosystem, with a keen focus on unlocking important projects, improving Canada’s investment climate, and contributing to PSP’s foresight on the evolution of the energy sector.”
“This is a watershed moment for Building Ontario Fund and demonstrates our catalytic role in financing large-scale infrastructure projects,” said Michael Fedchyshyn, CEO of Building Ontario Fund. “The transaction opens new investment opportunities in the province’s energy sector and will boost competitiveness, drive job creation, and support innovation across the industrial base.”
“The Darlington New Nuclear Project will help meet growing demand for low-carbon energy, and provide significant economic benefits for Ontarians and Canadians, creating jobs and securing contracts across the province’s robust nuclear supply chain,” said Nicolle Butcher, OPG President and CEO. “Other Canadian provinces and global jurisdictions are seeking our expertise to deploy SMRs as a solution for their energy security needs, making this project a platform for further growth.”
About the Canada Growth Fund
Canada Growth Fund (CGF) is a $15 billion arm’s-length investment vehicle designed to attract private capital to build Canada’s clean economy. It uses investment instruments that absorb certain risks to catalyze private investment in low-carbon projects, technologies, businesses, and supply chains. Visit www.cgf-fcc.ca for more information. For CGF’s Media relations, contact mediacgf@cgf-fcc.ca.
About Canada Growth Fund Investment Management
In Budget 2023, the Government of Canada appointed PSP Investments, through a wholly owned subsidiary, to act as the asset manager for CGF. Canada Growth Fund Investment Management Inc. serves as the independent and exclusive asset manager for CGF.
About Building Ontario Fund
Building Ontario Fund (BOF) is a board-governed Crown agency with a mandate to catalyze investment in revenue-generating infrastructure projects across Ontario. Backed by $8 billion in funding from the province, BOF supports transformative projects in five priority sectors: affordable and student housing, long-term care, energy, transportation, and municipal and community infrastructure. Through innovative financing and partnerships with institutional investors and Indigenous communities, BOF helps unlock private capital to deliver high-impact infrastructure. Established under the Building Ontario Fund Act, 2024, BOF is building a stronger, more resilient province for today and future generations. Learn more at buildingonfund.ca and follow us on LinkedIn @buildingontariofund.
About Ontario Power Generation
As Ontario’s largest and one of North America’s most diverse electricity generators, OPG invests in local economies and employs thousands of people across Ontario. OPG and its family of companies are advancing the development of new low-carbon technologies, refurbishment projects and electrification initiatives to power the growing demands of a clean economy. Learn more about how the company is delivering these initiatives while prioritizing people, partnerships and strong communities at opg.com.
Advisors
Blake, Cassels & Graydon LLP acted as legal advisors to CGF and CGFIM in connection with CGF’s investment.
McCarthy Tétrault LLP acted as legal advisors to BOF in connection with BOF’s investment.
Torys LLP acted as legal advisor to OPG in connection with this transaction.
RBC Capital Markets acted as financial advisor to CGF, CGFIM and BOF in connection with CGF’s and BOF’s investments.
CIBC World Markets Inc. acted as financial advisor to OPG in connection with this transaction.
PSP Investments’ Conflict of Interest Policy
PSP Investments has established a policy to address the risk of any real, potential or perceived conflicts of interest in the context of the services provided by CGFIM to CGF, requiring PSP Investments and CGF to disclose where they have overlapping investments.
At the time of the approval of the transaction, PSP Investments held (i) ownership stakes in each of GE Vernova Inc. and Hitachi, Ltd., the ultimate parent companies of the technology developer in respect of the DNNP, of approximately 0.01% and less than 0.2%, respectively, held through various portfolios in the context of its ordinary course public market activities, including through externally managed portfolios over which PSP Investments has no investment discretion and (ii) an ownership stake in AECON Group Inc., the ultimate parent company of the constructor in respect of the DNNP, of less than 0.5% held through a private fund where PSP Investments has no management discretion. In each instance, PSP Investments’ investment carries no governance or decision-making ability.
The foregoing is being disclosed in accordance with PSP Investments' Conflicts of Interest Policy.
Alright, it's been a while since I covered the Canada Growth Fund which PSP Investments oversees and this is a major deal worth covering.
The transaction details and public benefits in the Canada Growth Fund press release above are telling, they basically lay it all out and explain the nature and scope of the project and why the Canada Growth Fund is teaming up with the Building Ontario Fund to fund this major project which is a greenfield project and carries its own unique risks and opportunities.
As stated above, OPG remains the majority owner and operator of the DNNP, with CGF and BOF acquiring meaningful minority stakes in the Project, representing 15% and 7.5% ownership, respectively.
This is a major milestone for Canada because if this project goes well, it will "reinforce Canada’s robust nuclear supply chain, inject hundreds of millions of dollars into Ontario’s industrial supply chain, contribute to the resilience of Canada’s low-carbon electricity grid, and foster a new generation of Canadian nuclear expertise."
I would also invite you to read this National Post article, What are small modular reactors? Why Carney and Ford just pledged $3B for a mini nuclear plant.
There are risks but if you ask me, nuclear energy is the future and it's the only reliable clean source of energy in a world where AI is sucking up a lot more energy and we need to decarbonize to attain net zero by 2050.
A small governance note, the Canada Growth Fund operates independently from governments but it was set up by the federal government and that $15 billion earmarked for investments in clean energy and other technologies is taxpayer money. So, you bet they have a channel to government representatives and are in constant contact with them when it comes to major investments like this one.
It would be the same if the BDC or EDC and not PSP was asked to handle the Canada Growth Fund but the government has no say in PSP's investments, it has more of a say in the BDC and EDC's operations.
It can be confusing but let me just make it crystal clear, the federal government funded the CGF and has more influence on it than it does over PSP Investments which manages the CGF.
In any case, this is a major investment in Canada's energy future which is why I highlighted what Energy and Natural Resources Minister Timothy Hodgson noted above.
SMRs are the future of energy, let's all hope this project turns out to be a major success.
Learn more about small modular reactors and this project on OPG's website here.
Below, Prime Minister Mark Carney and Premier Doug Ford hold a news conference in Bowmanville, Ont. to announce a joint investment in the Darlington New Nuclear Project. The federal government will invest $2 billion and the Ontario government $1 billion to support the construction and functioning of four small modular reactors which, once operational, will provide clean power to 300,000 households.
Also, small modular nuclear reactors are being touted as a key piece of the future of clean energy and construction is now underway in Ontario on the first of its kind in the G7. For The National, CBC’s Susan Ormiston breaks down what’s behind the hype and why some say Canada should proceed with caution.
No doubt, there are risks and costs will probably be a lot higher once finalized but this is the future of energy and it will provide power to Ontario for decades to come so let's embrace it and stop the nonsensical comments that wind, solar and battery storage are the way to ensure a low carbon future.
Lastly, Canada has a few immediate economic problems, like tariffs and a potential recession. But there are also some long-standing structural problems, like our poor productivity and the erosion of business investment.
National Bank Chief Economist Stéfane Marion has highlighted the decimation of investment by Canadian business and the sharp divergence with the U.S. He talks to host Amanda Lang about what happened to manufacturing and why Canada needs a red tape czar.
Great discussion with my former colleague Stefane Marion, take the time to listen to it.
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