The federal and Ontario governments have announced loan guarantees supporting approximately $715 million in financing that will allow the Williams Treaties First Nations to acquire a minority ownership stake in a small modular reactor project at Darlington, east of Toronto.

The agreement involves seven First Nations purchasing an equity position in one of the Darlington small modular reactors being developed by Ontario Power Generation.

Under the arrangement, the financing is backed through two government programs. Half of the guarantee comes from Ottawa’s Indigenous Loan Guarantee Program, while the remainder is provided through Ontario’s Indigenous Opportunities Financing Program. Ontario’s program provides financial guarantees on loans and bonds to support Indigenous participation in major infrastructure and resource projects. The province has said such investments are expected to generate returns that exceed debt-servicing costs over the long term.

The Darlington project has been central to Canada’s small modular reactor strategy since Ottawa released its SMR Action Plan in 2020. Federal officials have identified the technology as a key component of the country’s net-zero emissions agenda, saying it could provide non-emitting electricity for homes, businesses, industry and remote communities while supporting economic growth.

In 2022, the Canada Infrastructure Bank committed up to $970 million toward development and construction work on the Darlington reactor. The project has been positioned by governments as a demonstration site for future small modular reactor deployment across the country.

If the project performs as expected, investment returns could be used to service the debt, allowing the First Nations to build equity while retaining ownership benefits. In that scenario, taxpayers would not be expected to bear any costs associated with the guarantees.

However, if the project experiences significant cost overruns, delays or lower-than-expected revenues, the First Nations could face difficulty servicing the debt. Should repayment obligations not be met, the loan guarantees could be triggered, requiring Ottawa and Ontario to cover some or all of the outstanding balance, depending on the terms of the agreements.

In the event of project cancellation or severe financial underperformance, taxpayers could ultimately be responsible for losses covered under the guarantees.

Neither government has released detailed financing documents outlining the precise structure of the guarantees, including whether they cover the full financing amount or only a portion.

If the full $715 million financing package is guaranteed, taxpayer exposure could reach that level. If only part of the financing is covered, the potential liability would be lower. The exact allocation of risk between

governments, lenders and the participating First Nations has not been publicly disclosed.

The announcement reflects a broader shift toward Indigenous equity participation in major energy and infrastructure projects, rather than traditional benefit agreements alone. Supporters say the model creates long-term revenue opportunities and meaningful ownership. Critics, meanwhile, question the extent to which governments should assume financial risk on behalf of investors.

From a financial perspective, the deal gives the First Nations a chance to acquire a significant ownership stake with substantially less risk than a conventional investor would typically assume. The remaining question is how much of that risk has been transferred to taxpayers. That information will likely only become clear if the financing agreements are made public.