Everyone agrees that we are currently in the midst of an electricity crisis in South Africa. Various proposals have been put forward offering solutions to the crisis since 1997 when it became clear that unless new capacity was soon built, we would face severe electricity shortages within the following decade.
Proponents of nuclear power have argued that it offers a relatively low cost, clean solution. I am not opposed to nuclear. In fact I have previously suggested that nuclear may form part of the energy mix in South Africa. In 2006 I wrote an opinion piece and concluded by saying, “When decisions are made concerning future sources of electric power, facts, not fear, should be the basis for appraising the nuclear industry’s place in electricity generation.”
The following year I concluded an opinion editorial by saying, “The government has invited a number of international companies, including France’s Areva group, arguably the world’s foremost energy expert on nuclear plants, to bid on building SA’s new nuclear plant. But why limit international companies to construction of the new plant? Surely SA could benefit from the wealth of international experience in the building, owning, financing and day-to-day running of nuclear plants, as well as the ability to accurately predict future demand for energy? Competition in every aspect of generation and delivery will provide SA consumers with the best service and energy prices in the future”. Since then it has become obvious that having competing power companies build, own and operate electricity generation plants in SA will provide the best solution to SA’s current crisis and long-term energy security.
My point on nuclear power was simply that it should not be summarily dismissed as a potential source of energy and independent power producers (IPPs) should be invited to enter the market. These were not groundbreaking ideas. We already had nuclear from Koeberg and the 1998 Energy White Paper stated, “To ensure the success of the electricity supply industry as a whole, various developments will have to be considered by government over time, namely: giving customers the right to choose their electricity supplier; introducing competition into the industry, especially the generation sector; permitting open, nondiscriminatory access to the transmission system; encouraging private sector participation in the industry”.
What has happened since 2006/2007? Not much. We have not built any new power plants and we still have not allowed IPPs to enter the “market”. To be clear, nuclear is not a panacea for SAs energy woes. For instance, it will take approximately 12-14 years before we could commission a nuclear plant i.e. 2026-2028. This means that it cannot be considered to be part of our short-to-medium term solution. But if Medupi is anything to go by we will be lucky to commission the next nuclear station by 2030.
Proponents of nuclear over other energy sources have also argued that nuclear is cheaper. Indeed nuclear fuel costs are low, as are variable running costs. But who can predict what the “relative cost” of suitable nuclear fuel will be in 50-60 years’ time? Nuclear power stations are also more expensive to build as compared to say, coal-fired plants, and there are significant expenses involved with de-commissioning a nuclear station that must be factored into its overall cost.
We also cannot tie ourselves to yet another large capital intensive project like Medupi, based on the promise of “economies of scale”, given the uncertain world we live in and the uncertainty associated with SA’s future power demand. Such strategies have not delivered the expected benefits.
Professor Anton Eberhard stated that “Risks can be minimised through investments in a diverse portfolio of modular, less capital-intensive technologies, such as gas and renewables, that can be deployed rapidly and flexibly to meet changing demand patterns.” This is exactly the solution we need in this crisis given the uncertain future we face.
Any future policies should enable the development of gas solutions. There is a strong possibly that there is gas in the Karoo and companies should be exploring ways to extract it. Professor Philip Lloyd summed up the situation on the possibility of gas in the Karoo succinctly, “we should not be dithering”. But this should not be a political decision. If competing companies want to explore for gas they should be allowed to do so. Similarly if private companies want to build nuclear power plants, as they are currently doing in the United States, then that is their risk to take. The role of government is to regulate to ensure that the companies adhere to the rules for safe operation.
SA should create a policy environment that provides the right economic incentives to attract companies to utilise and develop these resources and to allow energy companies unconstrained access to the grid, which requires an independent transmission system and market operator. With the right economic environment a multitude of IPPs will compete to deliver energy to our growing economy.
Source: This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.