Determining whether SA should invest in new nuclear energy could be one of the most controversial decisions for the government as it finalises plans for the energy mix of the future.
Despite criticism that the cost of building new nuclear power stations could not be justified compared with lower-cost options such as renewable energy and gas, mineral resources & energy minister Gwede Mantashe said in his budget speech that the department (DMRE) would issue a request for proposals for procurement of 2,500MW of nuclear energy before the end of the year.
These plans stand in contrast to energy planning proposals published on Thursday by the Presidential Climate Commission (PCC), which do not include any new coal or nuclear energy.
These proposals were drafted in response to Mantashe’s request to help inform the review of the Integrated Resources Plan (IRP) 2019.
The IRP 2019, which guides procurement of new generation capacity up to 2030, does not explicitly include new nuclear energy as part of the capacity to be added over this period.
It states only that the department should start preparing for a nuclear build programme to the extent of 2,500MW “at a pace and scale that the country can afford”.
According to the PCC, all the models it reviewed to draft proposals for the revised IRP showed that a least-cost energy model would be made up of investment in variable renewable energy sources (wind and solar), storage (batteries and pumped hydro) and peaking support. None of the models build new coal or nuclear.
In a technical report that supports its electricity planning recommendations, the PCC said nuclear power was reliable and stable and had a small carbon footprint, but the plants took 12 to 15 years to build.
The technical report also noted that the cost of nuclear was a disadvantage compared with an energy mix dominated by wind and solar, and supported by battery storage and gas power for peaking support.
“Nuclear is expensive to build, with an estimated cost of capital of R212,000/kW ($12,500/kW),” the technical report states.
It puts the levelised cost of energy from nuclear at R2.23-R3.47 per kilowatt hour, compared with wind and solar with upper band costs of 85c-70c per kilowatt hour.
However, according to SA Nuclear Energy Corporation (Necsa) chair Dave Nicholls, a 2019 analysis of 34 nuclear projects around the world showed that while some projects (less than 15%) cost more than $5,500 (about R107,000/kW) — and some up to $12,000/kW (about R234,000/kW) — to build, the majority of projects came in at below $5,500 and some even below $3,500/kW (about R68,000/kW).
The 2,500MW of new nuclear energy that the DMRE wants to procure “would be a good start”, said Nicholls. But he said that the government should consider adding much more nuclear capacity.
The cost for two large units, to deliver about 2,500MW, would be roughly $12bn to $15bn, he said.
Princess Mthombeni, a nuclear power advocate and founder of Africa4Nuclear, told Business Day that the only way to know exactly how much a nuclear energy project would cost would be to issue the request for proposals. She referred to Egypt’s nuclear build project being built by Russia’s Rosatom and partly funded with a loan from Russia. This project is expected to cost about $30bn and is planned to have four 1,200MW reactors.
“When it comes to nuclear, every project should be treated differently. We will only know how much a project will cost once we receive proposals from different countries,” said Mthombeni.
Vendor loans
Nicholls said SA could procure units from Russia, China or South Korea through agreements which would see these vendor countries offer funding for the projects at “very favourable rates” and repayment terms.
“The current loans being provided by vendor countries to most of the export projects have [real] interest rates of below 3%,” said Nicholls.
He said nuclear power offered a competitive option for a just energy transition as it could directly replace SA’s 40,000MW coal-fired fleet.
“[Nuclear] could provide a direct replacement (on the current sites) of the existing coal-fired plants. Unlike the dispersed renewable plants, it would also avoid the requirement to restructure the grid system by placing the nuclear power stations on the present grid locations,” he said.
Energy analyst and EE Business Intelligence MD Chris Yelland agreed with PCC proposals that SA should not invest in new nuclear energy.
Business Day reported last week that, according to Yelland, SA’s energy mix in 2035 is likely to include battery storage and 65,000MW to 70,000MW of variable wind and solar power.
“The energy mix will be quite variable. What we will need is flexible generation that can be ramped up and down quickly [to augment supply from variable generation]. What we don’t need is steady nuclear power of such a minute quantity that it will be useless to SA.”
He also said SA did not have the necessary skills or a construction environment that was conducive to building large new nuclear power stations.
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