For more than a decade now, poor energy reliability in South Africa has had a crippling effect on the country’s economy. The country experienced 859 hours of rolling blackouts in 2020 alone, equivalent to 10% of the year spent in darkness, according to a report by the Council for Scientific and Industrial Research (CSIR).
Eskom is indebted to the tune of R440-billion. This is equivalent to slightly less than half of the country’s annual budget. The debt-servicing costs, in addition to the now-perennial electricity supply gap, remains perhaps the single largest threat to the economy. In the 2022 budget, R21.9-billion was allocated to bailing Eskom out (again). The electricity demand-supply gap is estimated at between 4 000 megawatts and 6 000MW. A further 6 800MW are at risk because of insufficient maintenance. In April, unplanned outages of 15 000MW occurred.
Recent economic analysis shows that reliable surplus supply is correlated with economic growth. Growth-enhancing investment is unlikely to be forthcoming until South Africa credibly demonstrates that its supply shortages will be addressed.
Despite South Africa’s commitments under the Paris Agreement to lower its carbon emissions, the government continues to prioritise investment in coal-powered energy stations while failing to capitalise on recent advancements made in wind, solar and nuclear energy technologies. It is crucial that the 2019 Integrated Resource Plan (IRP) and Renewable Independent Power Producer Programme (REIPPP) be reviewed and expanded respectively to harness the potential of these advancements to provide greater long-run economic and environmental benefits for the country.
Data from the CSIR has demonstrated that “South Africa has perfect conditions to introduce a very large amount of variable renewables into the electricity system in a cost-effective way”. The remainder could be supplemented by open cycle gas turbines, essentially removing coal requirements in the medium to long term.
But South Africa remains heavily reliant on an ageing fleet of coal-power stations. Current generation capacity is roughly 58 000MW, of which 38 000MW comes from 15 coal plants, which comprises about 80% of the country’s energy mix, followed by renewables at 16% and nuclear at 5%. The capacity shortfall will probably continue to grow in the short term, increasing the risk of load-shedding.
At last year’s COP26 climate summit, a deal was struck for South Africa to receive $8.5-billion funding from the United States, United Kingdom and European Union member states to assist in the shift away from coal to a low-carbon economy. But Mineral Resources and Energy Minister Gwede Mantashe has continuously cautioned against the transition, citing energy supply issues and the country’s high unemployment rate. Eskom plans to decommission between 8 000MW and 12 000MW of coal capacity from its fleet by 2031. But decommissioning is already behind schedule. Meanwhile, the IRP outlines the government’s intention to build 1 500MW of new coal capacity by 2030, which is difficult to understand.
Building new coal plants will increase both CO2 emissions and long-term energy costs, especially given the rate at which the cost of renewables has fallen in the last decade. Despite the calls for a green economic recovery from the Covid-19 pandemic, environmental concerns have received lower priority compared to economic and political considerations. Based on the scientific evidence provided by the latest Intergovernmental Panel on Climate Change (IPCC) report, the effects climate change have started occurring at a rapid speed and temperatures are increasing at twice the global rate in sub-Saharan Africa. The burning of fossil fuels will only increase the levels of global carbon emissions. Coal can therefore only be an interim solution to the energy crisis.
Short-term measures that focus only on immediate economic recovery without addressing long-term sustainability issues will have dire effects on the climate and the economy. South Africa needs to consider alternatives that will enhance economic growth while combating climate change. One alternative is to increase investment in nuclear energy production, given some of the recent advancements made in addressing long-running safety and environmental concerns associated with the industry.
Since the early 2000s, research on nuclear power and significant technological advancements in the sector has grown. A recent study by the International Atomic Energy Agency argues that nuclear power can contribute substantially to the decarbonisation of electricity supply, helping achieve climate goals by 2050. Nuclear power is a relatively clean source of energy that is often left out of clean-energy discussions. It is also the second-largest source of low-carbon electricity in the world and removes harmful air pollutants. Steven Pinker notes in his recent book, Rationality, that burning coal kills more people across the world in a day than nuclear power has killed in the history of its existence.
South Africa operates a two-unit reactor nuclear power plant in Cape Town. While the expansion of nuclear energy has been advocated by Eskom as a means to assist South Africa achieve its climate change ambitions under the Paris Agreement, plans to extend the operation of Koeberg, which was expected to be retired in 2024, might not be viable. Koeberg has been in operation since 1984 (when nuclear was considered a low-cost option for South Africa) and is built on old technology that lacks modern safety features. Operational incidents at the station earlier this year brought to the fore discussions about Koeberg’s safety rankings and the future of South Africa’s nuclear energy production capacity.
Small modular reactors (SMRs) offer a better alternative to large power stations such as Koeberg. They are smaller-scale projects that can play a vital role in helping South Africa transition to a low-carbon economy by replacing ageing coal plants. SMR development includes land and marine water-cooled reactors and, most recently, microreactors. SMRs are a cost-effective energy production option that require less space than their older counterparts. They produce, on average, a third of the generating capacity of traditional nuclear power reactors. Unlike power plants, which take five to 16 years to build and are subject to unproductive rent-seeking, SMRs have a shorter construction time of three to five years.
The IRP recognises the role nuclear energy production can play in South Africa’s energy mix, and proposes a nuclear build programme of up to 2 500MW. But the IRP needs to take into account the risks associated with extending Koeberg, such as safety, transmission losses and rent-seeking, and instead consider the potential of SMRs.
SMRs are also well-suited for inclusion in the REIPPP, the government’s plan to bring additional megawatts into the country’s electricity system through private-sector investment in renewable energy sources. The president recently announced that the ceiling for such production will be lifted from 1MW to 100MW. SMRs are relatively small and low risk projects and their construction time is well within the prescribed REIPPP timeframes. Adding them to the energy supply mix would help to decrease the chances of load-shedding during high demand times and reduce load on other energy sources.
Both solar and wind energy are, of course, critical to diversifying the power mix, ensuring energy security, and lowering greenhouse gas emissions. South Africa’s energy requirement can be met if wind, solar and SMRs are strategically positioned. Nuclear projects are likely to receive widespread criticism. It will be necessary to have public debates, raise awareness and hold consultations to develop support from the population and to address fears related to safety and potentially negative environmental effects.