Published on Fin24: 27 June 2017
South Africa's Energy Minister, Mmamoloko Kubayi, recently attended the AtomExpo Nuclear Conference in Moscow, where she assured the Russians that South Africa is still on the nuclear train. Almost simultaneously, an inter-governmental task team led by the Deputy Energy Minister, Thembisile Majola, informed Parliament of a further delay with respect to the renewable train: dilly-dallying endangering SA's renewable programme.
The task team gave Parliament the following reasons for Eskom’s deferment in signing R58bn worth of power purchase agreements with various independent power producers (IPPs):
This apparently ‘regrettable’ energy surplus is largely due to two factors. The first is the national decline in energy demand as a result of South Africa’s stagnating economy. The second is the additional power now being generated by the four newly commissioned 800 MW units at Medupi and Kusile.
To complicate matters further, this energy surplus could balloon over the next five years as the remaining eight units at Medupi and Kusile are commissioned and brought online – adding roughly 5 400MW to the already oversupplied national grid.
This situation doesn’t bode well for IPPs, especially since South Africa’s near-term growth prospects are forecast to be lacklustre at best, and energy export opportunities into southern and Central African nations are constrained by limited transmission infrastructure and the inability or lack of willingness of these nations to pay for imported power.
Considering the fact that Eskom’s ‘strained finances’ are stalling the R59bn renewable energy programme, it makes no logical sense that the Department of Energy is even entertaining the R1trn nuclear option as part of South Africa’s energy mix.
As an outside observer, we can’t even afford a taxi fare to the train station – let alone a ticket to ride on the nuclear train.No one knows this better than the Russians … so what exactly is their motive? Will this be the ‘uranium bullet’ that facilitates their capture of South Africa’s natural gas reserves and, subsequently, its nationwide distribution?
That would be a shrewd way for a super power with expansionist ambitions to stamp its authority on the African continent and, more deviously, have the leverage to capture votes on the United Nations Security Council.
But, this ulterior motive and the Department of Energy’s grand ambitions aside, there are numerous nuclear power plant construction projects around the world that are currently in delay and/or overbudget by factors of up to three. For example:
And the Russians’ nuclear construction projects haven’t fared much better – almost all of them are in delay and have incurred disturbing cost overruns.
The underlying truth is that, despite nuclear power’s positive attributes, the construction and operation of nuclear reactors is extremely challenging for an exhaustive range of political, economic, environmental and safety reasons.
The long list of partially finished and abandoned nuclear projects across the United States, Germany, Spain, Italy, Sweden, Austria, Poland, Bulgaria, and even the Philippines and Cuba, stand as vivid testament to this truth. Billions of dollars squandered – with only dilapidated ruins to show for it.
As highlighted, nuclear projects even pose a serious challenge for nations at the forefront of nuclear power, like France and Russia, which boast extensive industry experience and skilled resources. If these nations are unable to deliver nuclear projects both on time and in budget, then South Africa would be taking a huge risk attempting the same.
The fact is, the ‘relatively straightforward’ Medupi and Kusile coal-fired power station projects have suffered massive construction delays, cost overruns and excessive usage of foreign personnel – all of which expose South Africa’s immaturity in delivering energy mega projects, as well as our constrained depth of skilled personnel with engineering degrees and diplomas.
Interestingly, the only South African energy projects that are coming online, both on time and within budget, are those undertaken by IPPs. The renewable energy projects specifically (solar and wind) have been hugely successful and should be heralded as ‘the most obvious way forward’ for a nation that has modest growth prospects in terms of population, education and economic upliftment.
Needless to say, the opportunity for corruption in one mega project is significantly more than in numerous smaller projects. From a jobs point of view, the solar and wind power projects are relatively simple which suits South Africa’s predominantly unskilled labour market.
The smaller energy projects are also likely to be widely distributed across the country rather than being centralised in specific areas, thus benefiting a much broader footprint of South Africa’s population.
Nuclear’s nemesis … renewables and distributed generation
We must also take into consideration the growing trend in power generation migration from ‘centralised generation’ to ‘distributed generation’. Centralised generation refers to the traditional model of large power stations supplying a national grid, whereas distributed generation refers to nationwide household/commercial building, rooftop solar PV and mini-wind turbines contributing to the grid.
Who knows, with the ever-falling costs of renewables coupled with the benefit of reduced transmission losses, we may find distributed generation increasingly offsetting the need for centralised generation over the next few decades.
Consider a scenario where South Africa’s peak energy demand reaches 50 GW by 2040 (currently 33 GW), with 20 GW being used from distributed generation and just 30 GW being used from centralised generation. If this is to be the case, then the Department of Energy should moderate its mega energy expansion ambitions to accommodate this very possible trend.
The last thing we need is 9.6 GW of nuclear power coming online when we don’t actually need it, potentially bankrupting the nation in the process. Or, even worse, having a fleet of partially completed and abandoned nuclear projects - the money of which could have been used to build 10 million homes all powered by rooftop solar PVs.
As energy expert Chris Yelland so succinctly pointed out in his recent article: “It’s a case of inflexible mega-projects versus smaller flexible projects. South Africa needs flexibility in an uncertain and unpredictable world, where electricity demand is difficult to predict in the years ahead, and disruptive technologies are on the horizon. Technologies such as wind, solar PV and energy storage may change the rules of the game.”
And as Professor Hartmut Winkler commented: “The global ascendancy of renewables and their particular pertinence in South African climatic conditions may even make coal and nuclear energy technologies obsolete in the distant future.”
The way forward for South Africa
Right now, the renewable energy IPP programme is South Africa’s safest bet. It offers the Department of Energy the least-risk and most affordable solution that will benefit not only the wider South African population, but also our fragile environment.
So Ms Kubayi, for the sake of our nation and its people, shelve the nuclear option indefinitely, exercise your prudence and instruct Eskom to sign the deferred power purchase agreements – before our budding, job-creating and upskilling renewable energy industry collapses entirely.
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