The pressure is on for the government to roll out the country’s nuclear strategy and decisions are expected to be made within a year about the technologies and vendors for the country’s R300-billion expansion of nuclear capacity.
The favoured option of the draft Integrated Resource Plan (IRP) 2010 calls for the first new nuclear station to come on stream in 2023. With a lead time of at least 12 years, decisions will have to be made soon.
The IRP 2010 calls for six new nuclear stations, each with a capacity of 1600MW. The government is understood to favour a “fleet strategy”, meaning that a single vendor could supply the technology for decades to come.
Opinion remains divided on the suitability of nuclear for the country’s energy mix. Supporters say it can supply baseload power but opponents say that it continues to carry too many risks and is not preferable to renewables such as wind and solar.
Public participation in the draft IRP 2010 is winding down — the deadline for written submissions on all electricity generating technologies under consideration expires on Friday.
The implementation of the new energy policy will then begin in earnest.
The IRP proposes that nuclear energy should provide 14% of South Africa’s total electricity generating capacity by 2030. Nuclear is seen as the best replacement for coal and the way to provide most of the country’s baseload requirements when ageing coal-fired stations are decommissioned to meet South Africa’s carbon emission reduction targets.
‘Time is very tight’
The department of energy expects the IRP to be promulgated by February, after which the government’s nuclear procurement process will begin.
“Time is very tight, but it would be equally inappropriate to rush into nuclear without public participation,” said Ompi Aphane, the department’s deputy director general for electricity, nuclear and clean generation.
Public participation is taking two forms: to engage people in areas earmarked as nuclear power station sites as part of the required environmental impact assessment process and to engage stakeholders who are more generally concerned about the process of implementing nuclear power. But certain plans are already beginning to take shape. According to South Africa’s nuclear energy policy, adopted in 2008, the country will invite bids for pressurised water reactor technology (PWR).
South Africa’s lone nuclear power station, Koeberg, has pressurised water reactors. “We are going to stick to what we know, because we already have 26 years of experience with that technology,” said Tony Stott, Eskom’s nuclear spokesperson.
The department has indicated that it would prefer a fleet build option, which has the benefit of reduced long-term costs, rather than a smaller, single plant-by-plant build approach.
The choice of PWR technology means that there will be six likely countries with an interest in bidding to build South Africa’s nuclear fleet.
With the exception of China, the other bidders — France, the United States, South Korea, Russia and Japan — can supply state-of-the-art generation three reactors.
French company Areva and US-led consortium Westinghouse were invited to bid in 2008, before Eskom pulled out of the process, citing funding constraints.
Four nuclear reactors
“We will have to go back to the process when we halted it and start where we stopped,” said Rob Adam, chief executive of the Nuclear Energy Corporation of South Africa (Necsa), a state-owned enterprise responsible for nuclear research and development.
“It’s an open process. We can’t not open it to more bidders. But it will take time for anyone entering the race at this stage to reach the same level of understanding as the likes of Westinghouse,” Adam said.
But the Koreans surprised everybody in late 2009 when they won a tender to supply four nuclear reactors to the United Arab Emirates. In the process, they demonstrated that their generation three technology costs significantly less than that of their Western competitors.
“The Koreans have been developing reactors for the past 35 years. They do it in a very careful, conservative way. Their reactors are based on the Areva and Westinghouse designs and they are significantly ahead of Koeberg-era [generation two] technology,” Adam said.
The joker in the pack is China, which has developed a generation two-plus reactor which, according to Stott, is “like Koeberg, but has been modified to bring it up to accepted levels of safety”.
The Mail & Guardian reported last month that China had offered South Africa nuclear reactors in exchange for its support of China’s position on climate change.
“The Chinese believe generation three costs would be hard to control. The fleet they would offer us could include four generation two reactors to start with and then three generation three reactors once generation three costs are better known,” Adam said.
But with a life span of 40 years, it is unclear whether China’s generation two-plus reactor would be as economically viable in the long term as a generation three, with a life span of 60 years.
What is clear is that, whereas Western-manufactured reactors previously cost between $5-billion and $6-billion per megawatt capacity installed, a Korean reactor costs between $3,5-billion and $4-billion.
Assuming that Korea’s competitors would now want to propose similar capital costs in their bids to South Africa, our 10 500MW new nuclear build would cost approximately $42-billion, or R300-billion.
But the figure could be higher, because South Africa will insist on a localisation and skills transfer component to any deal.
Bidders would be reluctant to give South Africa the skills to become a nuclear competitor in the long run and would build skills transfer costs into the deal to compensate for that, Stott said.
South Africa’s existing electricity transmission system would also have to be modified and so would increase the associated costs.
A nuclear reactor would be paid off 15 to 18 years after its commission, Adam said.
There is a range of funding and ownership models open to the government, which will become clearer once the bids are in and a better idea of costs has been obtained.
One possible financing model would be for the government to partner a utility that has a strong balance sheet. The utility would help build and co-finance the plant and would share in the revenue once it is operational.
Aphane, Stott and Adam all agreed that a public-private partnership would be the most likely funding and ownership model.
However, the government is playing it cool when it comes to Eskom’s role in the bid programme, saying that there “are a few other options” being considered.
But Stott believes that Eskom’s balance sheet is in better shape today to deliver a nuclear build programme than it was in 2008.
“We have since secured government guarantees, our increased tariffs have helped and we have secured an improved credit rating,” Stott said, “while at the same time, prices of steel and certain commodities required for build programmes have come down considerably.”
Mushrooming staff needs
South Africa has a relatively small, specialised nuclear skills industry built around 26 years of experience in operating Koeberg and a decade in developing pebble bed reactor technology. It is also a world leader in the supply of radioisotope Molybdenum-99, used in medical procedures.
But with the scale of new nuclear projects envisaged in the next 20 years, highly skilled workers will mostly come from abroad in the early stages. The new nuclear build programme will require as many as 6 000 highly skilled workers in the initial phase, 100 000 more workers during construction and about 13 000 engineers, scientists, operators and support staff to operate the fleet once it is operational.
Moves are afoot to train and develop South Africa’s next generation of nuclear scientists. The South African Nuclear Human Assets and Research Programme is developing skills by supporting school students through to PhD candidates.
Meanwhile, Eskom is recruiting and training already, deploying people to Koeberg as part of a core team that can help staff the nuclear expansion programme when required.
South Africa also hopes to benefit from the localisation of nuclear component manufacturing and is considering a commercial uranium enrichment plant that would be operational by 2025.
South Africa and Namibia control more than half of the world’s total uranium reserves between them.