Finance Minister Trevor Manuel, called on last month in Parliament to explain a R1,8-billion advance this year to the Pebble Bed Modular Reactor (PBMR), reached for Aesop’s Fables to explain the situation. “Somebody has to bell the cat,” he said.
Some web research and input from my colleagues tells me the phrase comes from a group of mice who formed a committee to work out what to do about a marauding cat.
The committee came up with the sound idea of tying a bell around the cat’s neck and was very satisfied with its decision until a wise granny mouse asked: “Who’ll be the one to volunteer to go and bell the kitty?”
In the case of the PBMR the answer appears — at least for now — to be the taxpayer.
Manuel was responding to a question from the Independent Democrats’ Lance Greyling, who asked: “Where are the other investors that we have been hearing about for more than a decade? Is the lack of investors now forcing us to use an extra R1,8-billion to fund an experiment that has cost our country more than R3-billion already?”
Manuel said the truth of the matter is that nowhere in the world is safe nuclear technology available. “If you want it, part of what you have to work with are the designs of nuclear engineers, but a lot of it is untested.”
He said a prototype would have to be built, but “if you want to prototype, somebody has to pay for it. We are advised that progress in this area in South Africa is quite unpreceÂdented in the world.
“We don’t want to take any risks, but I think we understand that we can’t rely on fossil fuels in perpetuity. Some changes at the scale of the low-cost electricity that we have become accustomed to in this country — something at that scale — will need to be done.
“A few wind farms and so on are not going to generate it. Somebody has to bell the cat and that’s what this process is about.”
In essence it requires about ÂR16-billion to build a demonstration plant and associated fuel facility to prove that PBMR technology works at scale.
Government’s position until now, as articulated by the national treasury, has been that it will provide matching finance to the PBMR.
Given the high-risk nature of the investment this makes eminent sense. If your idea is as good as you tell us it is, convince other (hopefully foreign) investors who have experience in the sector to stump up cash.
The PBMR has a heavyweight investor in the form of Westinghouse, which holds 15%. Westinghouse, in turn, is 51% owned by Toshiba. Both are said to be interested in the project, but we are yet to see the colour of their money.
The PBMR company is in the process of finalising its investors based on their historic contributions to the project and their appetite for further investment. It is therefore unable to provide details, but one senses from speaking to the company that the majority investor is likely to be the state through the department of public enterprises and the Industrial Development Corporation.
Even Eskom, a partner in the PBMR, will be scaling down its investment. “Eskom has made no contributions since 2004 and, given our focus on core business, will not be adding to our shareholding in future,” says the utility’s Steve Lennon. “As such our shareholding is defined by our historical contribution — which will be diluted down to a figure of less than 5% over time.
“Eskom remains committed to the project and we are working in partnership with the PBMR company on the demonstration unit,” Lennon says.
There should be little doubt though that, if the PBMR was available today as a commercial product, it would be seen as seriously sexy by many in the energy sector.
Nuclear power is enjoying a resurgence of interest globally as concerns about greenhouse gas emissions move to centre stage. The PBMR technology offers numerous potential advantages over conventional nuclear power, being both inherently safer and more flexible.
These mini-nukes can be built where they are needed, meaning that power is not wasted by sending it long Âdistance. Several power plants can be joined in tandem and major energy users, such as Sasol and BHP Billiton, could have their own plants.
Unlike conventional coal-fired 4 500MW power stations now under development, which take about 10 years to plan and build, the PBMR offers the potential for its relatively small 165MW units to be constructed within as short a time as 24 months.
Even some prominent environmentalists now concede that nuclear might be the least-bad alternative in a globally warming world. But a strong lobby continues to campaign against all nuclear power, even contesting figures that show that nuclear is essentially a green technology, emitting little or no greenhouse gas.
South Africa’s own draft nuclear energy policy calls for nukes to contribute 30% of the country’s energy needs by 2030.
SA Nuclear Energy Corporation (Necsa) head Rob Adam says Eskom intends building 20 000MW of nuclear capacity by 2025. “Whether that amount is made up of Pressure Water Reactors [PWRs] or PBMRs is not really relevant.”
Adam says the idea is that a large PWR programme will be supplemented by a PBMR programme that will run in tandem with it.
The public enterprises department’s Vimla Maistry says Eskom is purchasing both new generation PWR and PBMR technology. “The current plan includes 20 000MW of nuclear plant of which 4 000MW will be PBMR.”
Maistry says the target handover date for the PBMR to supply electricity to Eskom is 2014.
It has been speculated that Sasol might become an investor in the PBMR project. Sasol spokesperson Johann van Rheede says the company “is considering a number of alternatives for the reduction of its greenhouse gas footprint”.
“The PBMR offers a potential source of non-carbon energy for power geneÂration and process applications and is therefore one of the alternatives being considered. Our discussions in this regard are of an exploratory nature as the technology is in an early stage of commercialisation.”
The PBMR has completed a set of tests of its technology and is setting up facilities to test other parts of its process, but only in 2014, when its development plant is complete, will its technology have been tested at scale.
China is, in the meantime, developing its own PBMR facility and has a 3MW research reactor in Beijing. PBMR insiders say the South African technology is superior and is the world’s recognised market leader. They say China is unlikely to be a real competitor as it will have its hands full supplying its domestic market with these reactors.
Necsa’s Adam says a risk the PBMR project faces is that many potential international clients might have committed themselves to conventional nuclear plants by the time the PBMR is commercially available.
Critics say government appears too ready to fund nuclear research and development rather than renewables, such as solar power. The argument is at least in part neutralised by Eskom setting aside R2-billion to subsidise the introduction of solar water heaters.
Insufficient market capacity on the part of the domestic solar industry rather than funding might be the real inhibitor in this market.
The PBMR reactors are expected to be sold after 2014 at a cost of $3-million per megawatt installed or about R3,5-billion per plant. The cost of a solar tower that can produce 100MW, now under consideration by Eskom, is estimated by one analyst to be R4,5-billion.
PBMR spokesperson Tom Ferreira says the company has been commissioning key parts of its technology from companies such as Mitsubishi and now has considerable confidence in its projected numbers.
There will be few insiders, though, who would not know that ambitious projects such as these can take up to twice as long to complete and cost three times as much as initially projected.
This year’s expenditure on the PBMR and its 750 staff will be not too much short of 1% of this year’s national budget. I have canvassed a range of opinion on the subject and no one suggested the country could not afford this level of expenditure, although some would want the money to go into energy conservation programmes and renewables rather than nuclear energy.
The upside potential is for South Africa to become a major commercial player internationally in the provision of nuclear power. The potential downside is that it all takes much longer to come to market than anticipated, that unanticipated problems occur and that, as is often the case with ambitious projects, it all costs much more than expected.
Other investors might step up to the plate. But in the meantime government has made it clear that it intends the country to become a major nuclear player and the taxpayer will bell the cat.