The High Cost of Coal-Fired Power as a Bridge to Nuclear

To: Saskatchewan electricity planners

From: Brett Dolter

Date: July 23, 2026

Re: The High Cost of Coal-Fired Power as a Bridge to Nuclear

The province of Saskatchewan is proposing to extend the life of its coal-fired power plants beyond their regulated retirement dates until its small modular nuclear reactors (SMRs) come on line.

This would mean missing Canada’s 2030 goal to eliminate coal-fired electricity generation, and adding 116 to 119 more megatonnes (Mt) in greenhouse gas emissions between 2030 and 2050, than using a mix of natural gas and renewables. A coal-to-SMR scenario would also be more costly for Saskatchewan ratepayers.

SaskPower, the Crown generation and transmission utility, was ordered last year to ditch its planned coal phase-out “beyond 2030 and out as far as 2050” and instead refurbish its three aging plants.

I have calculated the electricity rate impacts and resulting emissions of this plan using the refurbishing cost and the timeline for building SMRs from an internal SaskPower briefing note made public in May. Allowing coal-fired plants to operate beyond 2029 would cost $30.2 billion over the next 20 years (in inflation-adjusted dollars). The cumulative cost rises to $46.4 billion were carbon pricing applied under the same values contained in Ottawa’s recent Memorandum of Understanding with Alberta.

I compare this coal transition plan to two other scenarios which the province of Saskatchewan could instead pursue. In the first scenario, SaskPower retires all three coal plants by 2030 and builds four 370-megawatt natural gas combined cycle power plants, 1,200 MW of wind, and 300 MW of solar capacity. The natural gas plants provide dispatchable supply that is comparable to the existing coal-fired plants. Matching this dispatchable capacity with wind and solar capacity reduces the amount of natural gas SaskPower must purchase, which reduces CO2 equivalent emissions and exposure to carbon pricing. This scenario has a cumulative cost of $17.5 billion without carbon pricing and $21.6 billion with carbon pricing applied. Cumulative emissions from this scenario are 40 Mt, a reduction of 119 Mt relative to the SaskPower scenario. Ratepayers save between $608 million to $1.2 billion per year on average from 2030 to 2050.

In the second scenario, SaskPower builds six 250-MW natural gas simple cycle power plants, 1500 MW of wind capacity, and 600 MW of solar capacity. Simple cycle power plants can ramp up and down quickly to respond to changes in load and the supply of wind and solar. They are less fuel efficient but allow higher levels of renewables to be integrated on the Saskatchewan grid, which again reduces natural gas usage and CO2e emissions.

This scenario has a cumulative 2030 to 2050 cost of $15.6 billion without carbon pricing and $20.1 billion with carbon pricing applied. It leads to cumulative emissions of 43 Mt CO2e, which is a reduction of 116 Mt CO2e relative to the coal-to-SMR plan. Ratepayers save between $696 million to $1.1 billion per year on average from 2030 to 2050.

The Saskatchewan coal-to-SMR plan is the highest cost option for SaskPower to pursue. This conclusion is robust under different cost and natural gas price scenarios, and whether carbon pricing is applied to coal-fired and gas-fired electricity. SaskPower could achieve lower-cost power and reduce Saskatchewan’s cumulative CO2e emissions by adhering to the federal coal-fired regulations and phasing out coal before 2030.

As an important caveat, the scenarios involving natural gas plants and renewables are not compliant with the existing federal Clean Electricity Regulations. To address this situation, Canada and Saskatchewan could reach a broader electricity agreement that achieves CO2 emission reductions of 116 to 119 Mt if SaskPower is allowed to operate new gas plants at a relaxed intensity constraint of 150 tonnes per gigawatt-hour rather than the current 65 tonnes. This relaxed constraint would allow SaskPower to build out natural gas power plants without carbon capture and storage, as long as these plants were paired with investments in equivalent or greater wind and solar generation.

In short, a broad compromise can be reached that generates real emissions reductions while keeping Saskatchewan electricity rates low. This strategy also allows Saskatchewan to take a more cautious approach to building out SMRs or large-scale nuclear power plants, creating real option value for SaskPower in the short and medium-term.

While the coal-to-SMR scenario could be a bridge too far for the federal government, a gas plus renewables scenario would provide a cost-effective, cleaner bridge to a net-zero electricity future in Saskatchewan.

Brett Dolter is an Associate Professor of Economics at the University of Regina specializing in in climate and energy policy research.

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The views expressed here are those of the author. The C.D. Howe Institute does not take corporate positions on policy matters.