/ 8 September 2016

MPs given a negative on nuclear

Nuclear energy is 16% more expensive than the most expensive type of coal electricity production
Nuclear energy is 16% more expensive than the most expensive type of coal electricity production

“Any decision to proceed further with the nuclear build programme will only take place after the request for proposal process has been completed,” Deputy President Cyril Ramaphosa told the National Council of Provinces (NCOP) in Parliament during a question session on Wednesday afternoon.

Almost simultaneously, Energy Minister Tina Joemat-Pettersson told Parliament’s other house, the National Assembly: “As far as I’m concerned, a request for proposal will be issued on September 30 for the procurement process in which we have Cabinet approval to test the market on the procurement of nuclear.”

Both insisted that there is, as yet, no firm commitment to buy a fleet of nuclear power stations, which it is estimated will cost more than R1-trillion, despite long-standing signals of an obstinate political will to do so.

But even as these members of the executive were telling Parliament how the nuclear-build decision would unfold, a little-known parliamentary office was all but begging MPs not to let them.

“Within the range of conventional technologies considered, nuclear energy is the most expensive,” the parliamentary budget office said in a report it delivered to Parliament’s standing committee on appropriations, also on Wednesday.

Its 23-page report, Electricity Generation Technology Choice: Costs and Considerations, the office said “present the key factors that need to be considered by Members of Parliament concerned with public finances in considering technology choice”. The standing committee had requested the report.

Throughout its study, the office steered scrupulously clear of recommending or denigrating any type of electricity generation. Selection of technology is complicated, it explained, and needs to take into account everything from the carbon footprint to local industrialisation.

But nuclear fares very poorly, indeed, in the office’s analysis.

Nuclear is 16% more expensive than the most expensive type of coal electricity production, the office said, drawing on figures more current than any the department of energy has released and 67% more expensive than the most costly way of using natural gas to generate power.

Eskom, which was once excluded from the nuclear preparations, has recently claimed in a series of statements by its CEO, Brian Molefe, that nuclear generation is the cheapest way for South Africa to build additional base-load capacity.

The plans that supposedly underpin the plans to build new nuclear power stations are wildly out of date, the parliamentary budget office said. The official integrated resource plan (IRP) dates from 2010 and its 2013 update does not yet have official status — because, some have speculated, it provided an insufficiently rosy picture to justify a nuclear build.

“Using an out-of-date IRP will result in a sub-optimal mix of generation plants and higher electricity prices,” the office said, with graphs showing how electricity demand declined as prices soared and the economy stalled. Even the most pessimistic integrated resource plan projection had forecast fast-growing demand.

Overbuilding generation capacity based on mistaken assumptions can be costly, the office warned gently. And past experience shows that nuclear and hydropower projects are most prone to high cost overruns and delays — and are almost impossible to adjust once ground is broken.

“It may be prudent in situations of high uncertainty to avoid very large capital investments where the repayments of loans are certain but returns from the project are uncertain and possibly volatile,” it said.

“In pursuance of a suitable energy mix, government is determined that our investment in generation capacity should be evidence-based,” Ramaphosa told the NCOP.