Ontario Needs Larger Nuclear Plant: Citi
Why It Matters
Bruce C positions TC Energy as a key player in Ontario’s long‑term energy security, offering a high‑margin, inflation‑shielded revenue stream that could unlock significant shareholder value.
Key Takeaways
- •TC Energy holds 48% stake in Bruce Power expansion.
- •Bruce C project could cost $60 bn, TC’s share ~$7‑8 bn.
- •Regulators require 4.8 GW nuclear from Bruce to meet demand.
- •Financing targets 70‑80% debt, backed by government guarantees.
- •Analysts lift TC price target to $95, citing undervalued midstream.
Summary
The discussion centers on TC Energy’s involvement in Ontario’s largest nuclear build‑out, the Bruce C project, which aims to add 4.8 GW of capacity to the province’s grid. TC Energy currently owns just over 48% of Bruce Power and would shoulder roughly $7‑8 bn of the estimated $60 bn Canadian cost, while partners and financing structures absorb the remainder.
Spiro Dunis of Citi Research highlighted that regulators expect 18 GW of new nuclear by 2050, with Bruce C accounting for a quarter of that requirement. The project is expected to be financed at 70‑80% debt, leveraging government backing, long‑term contracts and potential tax credits to lower the effective cost to TC Energy.
Dunis noted that TC Energy’s meticulous approach includes a Class‑2 engineering study and lump‑sum turnkey contracts to mitigate cost overruns, alongside 40‑year income contracts that are rare in the midstream sector. A concurrent $1.13 bn component replacement program will reset the operating clock of existing units to 2064, extending the asset’s life to 100 years.
Analysts view the nuclear asset as undervalued, prompting a price‑target increase to $95 and suggesting upside in TC Energy’s midstream business. The project’s scale, financing certainty, and role in energy security could reshape the company’s risk profile and attract investors seeking stable, inflation‑protected returns.
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