/ 22 July 2014

Joemat-Pettersson budgets R850m for SA nuclear expansion

Energy Minister Tina Joemat-Pettersson
Energy Minister Tina Joemat-Pettersson

The department of energy will be devoting almost R1-billion to cementing South Africa’s nuclear energy expansion ambitions.

In her budget vote speech on Monday, Energy Minister Tina Joemat-Pettersson said that R850-million had been allocated to the department and its relevant agencies to undertake further research and development into nuclear energy, especially in regard to nuclear safety matters.

“Regulations for the handling of hazardous materials, in terms of international obligations, and the development of nuclear policies and legislation to ensure the peaceful use of nuclear energy will also be pursued,” she said.

Electricity road map
Key entities in the sector include the National Nuclear Regulator, which enforces safety standards for the industry.

Joemat-Pettersson re-emphasised government’s continued support for the procurement of 9 600 megawatts (MW) of nuclear energy, as outlined in the integrated energy resource plan, the country’s 20-year electricity road map.

She promised to address all the outstanding matters relating to the nuclear building programme, including questions of localisation, financing, funding, skills development, the fuel cycle and uranium beneficiation strategies.

How South Africa will finance the expansion of nuclear energy, beyond its single atomic power station Koeberg remains key. The procurement of 9 600MW of nuclear power is expected to cost between R400-billion and R1-trillion.

State power utility Eskom, already battling cost overruns on its two new coal-fired stations, Medupi and Kusile, is in talks with government to find ways to plug its significant revenue shortfalls. It stated, as far back as 2012 in its most recent application for tariff increases, that it could not fund nuclear expansion off its own balance sheet without substantial tariff hikes.

The state in the meantime has worries of its own, including a large budget deficit and rising government debt levels.

The minister did not reveal the final details of the new Cabinet subcommittee on energy security, which will be integral to plotting the course of nuclear in the country’s energy mix. It will replace the erstwhile Cabinet body responsible for nuclear procurement – the national nuclear energy executive coordinating committee. But she said the “process is being refined and Cabinet will pronounce on this matter shortly”.

Alongside nuclear plans, the department will be turning a renewed eye on the opportunities for gas, including shale gas, in the country’s energy mix.

Gas difficulties as carrier
The lack of infrastructure, including pipelines and storage facilitates had made it difficult for gas to feature as a major energy carrier in South Africa, said Joemat-Pettersson. This was despite the discoveries of extensive reserves in the region, including in neighbouring Mozambique, and off South Africa’s west coast.

The much-anticipated gas utilisation master plan would outline the infrastructure necessary “to open up the gas market for the residential, commercial and industrial sectors”. A draft of the plan was being finalised and would be taken through the Cabinet before being opened for stakeholder consultation, Joemat-Pettersson said.

The plan’s scope includes “investigating the development of a gas- receiving and storage terminal for liquefied natural gas, and to meet the gas to liquids requirements at the Mossel Bay refinery, as well as investigating the conversion of Eskom’s diesel plants,” she said.

“The gas infrastructure development effort is accordingly premised on regional integration with Mozambique in the east, the importation of [liquefied natural gas] and the networking of various load centres for transporting and storing shale gas from the Karoo.”

In addition, the department will release the outcomes of a gas feasibility study, being completed in collaboration with Transnet, PetroSA and Eskom.

Coal still in the mix
Joemat-Pettersson said the department had “no intention of abandoning” coal, but that it was “determined to find cleaner technologies that will reduce the adverse environmental impact associated with greenhouse gas emissions from coal generation”. She emphasised the work being done on underground coal gasification and carbon capture and storage.

This year, the department would also continue to refine the Independent Systems and Market Operators Bill. The Bill, which foundered in the legislature last year, is key to overhauling the electricity sector and improving the access of independent power producers.

Once it was ready it would be submitted to legislative processes in Parliament, Joemat-Pettersson noted.