/ 24 September 2008

Nuclear or bust?

A final decision on whether South Africa will extend its nuclear power capacity is expected within the month, if not sooner.

Eskom’s decision on which internationally led consortium will win the contract to build an additional nuclear power station is expected within the month or next month, at the latest, according to Tseliso Maqubela, chief director for nuclear energy at the Department of Minerals and Energy.

”I expect [the decision] this month and that is the expectation of the industry as well,” Maqubela told the Mail & Guardian last Tuesday.

Speculation by insiders, however, is that Eskom’s board met on Wednesday to finalise its decision and that a public announcement would follow shortly.

Eskom would not comment on the status of the bid.

Eskom is currently evaluating bids for the Nuclear-1 pressurised water reactor (PWR) power station from a consortium led by Areva of France and a consortium led by Westinghouse of the United States.

Insiders place Areva as the likely winner, but Eskom’s turn towards nuclear has been heavily criticised by environmentalists who believe that more emphasis should be placed on renewable energy sources, such as hydro, wind and solar power.

Eskom’s head of corporate services, Dr Steve Lennon, acknowledges that perhaps not enough research into renewable energy has been undertaken, but argues that, given energy constraints on the country, competitive commercial solutions need to be found.

Eskom, amid its huge capital expansion programme, is planning a concentrated solar power (CSP) plant or solar thermal plant, at Upington in the Northern Cape. While feasibility studies for the project were completed at the end of last year, no decision on the project’s fate has been announced.

The plant will entail an array of mirrors focusing sunlight onto a receiver on top of a tower. This contains molten salt that acts as a heat exchange medium, which drives turbines to generate electricity.

Lennon said that a decision on the project will come towards the end of this year.

Lennon said, however, that the projected cost estimates for the plant have increased from the initial R2-billion to R6-billion for the 100MW plant.

This is chiefly because of rising steel prices, one of the main inputs into the plant.

He pointed out that while a business case for the plant is in place, Eskom is looking for ways to finance the plant given the company’s ”heavily capitalised” position at present.

”The upfront capital is steep and the cost escalations are hurting us,” he said. He admitted that not enough research into renewables is being done, but said that nuclear power is the best large-scale commercial CO2-negative technology that is commercially available.

Lennon said, however, that should the CSP plant succeed, Eskom would consider rolling it out on a larger scale, as there is ”huge potential for solar thermal power”.

These comments coincide with a visit to South Africa of Bertrand Barré, chairperson of the International Nuclear Energy Academy, who also happens to be the scientific adviser to the chairperson of the Areva-led consortium.

Barré told the M&G that it is not a question of nuclear versus renewable energy. Given global energy constraints, all carbon-mitigating power options should be explored.

He pointed out that the cost breakdowns of building nuclear and renewable power supplies are both capital-intensive, while fuel costs are negligible.

Barré said that using broad international price averages, building a nuclear power station could cost as much as R28 575/kW.

With the Nuclear-1 planned with around 3400MW of capacity, this could bring the cost to as much as R95-billion (or R28-million/MW) The planned coalfire station, Medupi, will cost R80-billion and provide upwards of 4 200MW at about R20-million/MW. While the Upington project, should it go ahead, needs around R60-million/MW.

Barré said that with the increase in demand for nuclear technology, from countries including China, there is likely to be a ”bottleneck” in supply in the short term.

This could well drive the price of nuclear energy even further and bring nuclear energy and renewable power increasingly on par, price wise.

Professor Detlev Kröger, of the University of Stellenbosch, agreed, saying that nuclear vendors are overstretched and that this could drive up costs of producing nuclear power.

But, he argued that nuclear power was the best solution for additional base-load power. Nevertheless South Africa needed ”a mix” of various power-supply options, he said.

Maqubela said that the energy-pressed status quo did not mean South Africa would go nuclear or bust.

”Vendors and the public need to know we won’t buy nuclear power at any cost,” says Maqubela.

”If the cost is prohibitive, we won’t be irresponsible about it.”

Maqubela admitted that perhaps Eskom and authorities had not paid enough attention to renewable energy.

”There has been a tendency to downplay renewables,” he said. ”We need to perhaps look at how we are championing renewables.”

He stressed, however, that demand-side management was a surefire way to ease the stress on South Africa’s power grid.

If consumers seriously conserved power, it would give authorities the breathing space to consider all the alternatives available to the country.

Anton-Louis Olivier, MD for NuPlanet — a company that has successfully begun construction on an independent mini hydro-power station at Bethlehem — argues that renewable energy cannot hope to compete with large commercial base-load projects, given the ”business as usual” management of the energy sector.

But he says smaller scale ”niche clean and renewable plants and co-generation” can ”exploit these unique conditions” in the country at present.

Speaking at a lecture hosted by the South African National Energy Association this week, Olivier argued that renewable energy is the most accessible and least competitive sector of the power market.

It provided ”all the benefits of decentralised generation” he said. With the inclusion of carbon credits as part of financing structure, as much as a third of an independent power producer’s income can be met.