Nuclear: are we Russian our energy decision?

By Lauren Hermanus

The moment nuclear was raised earlier this year, as an energy investment option for South Africa, there was outcry from civil society, academia and even within government. Lauren Hermanus unpacks whether we need it, whether we can afford it, and looks at the already wild successes of our renewable energy sector.

South Africa planned a major expansion in nuclear energy in 2010 in response to a national energy security crisis, and recent reports indicate that in March this year we signed a nuclear deal with Russia. So what are the pros and cons of going nuclear?

Nuclear infrastructure delivers reliable energy without the carbon footprint of coal. One of the biggest problems, however, is that it’s really expensive. Most of the expenses are from the construction phase. And the bill will be in the region of $40-$50 billion.

In its defence, the benefit of nuclear is that operational costs, over the full lifespan of infrastructure (40-60 years, or even longer), are relatively low. Once construction is paid off – and that depends on your financing arrangements – nuclear eventually becomes a cheap option. But seeing as the initial phases can take more than a decade, those upfront costs will put serious pressure on our already fragile economy, and it’s worthy to ask whether this kind of investment will really pay off over time.

Just the bill please

If the nuclear plan goes ahead, Eskom will be managing, owning and operating South Africa’s planned nuclear infrastructure. This will be financed by loans from the Chinese Development Bank, and presumably, you, the taxpayer and electricity consumer.

A recent study by EE Publishing, written by Chris Yelland CENG estimates that the cost of nuclear energy (including construction) would even out to R1,30 per kWh. This is the cost that would need to be recuperated through electricity pricing (which also has to cover grid maintenance and upgrade, as well as municipal functions). The CSIR has just confirmed Yelland’s estimates. But it’s important to note that nuclear has often cost more than anticipated, with notable construction time and budget overruns. This means that even over a long time span, nuclear is more expensive than renewables and even coal. And, argues Anton Eberhard, a professor at UCT’s Graduate School of Business, we simply do not need it.

Renewable and reliable is the energy answer

We have an internationally praised Renewable Energy Independent Power Producer Procurement Programme (otherwise known as REIPPPP), which was designed to support environmentally sustainable growth and stimulate the renewable energy industry.

A recent study by GreenCape provides a snapshot of South Africa’s renewable energy market, reflecting the cost of wind (76c/kWh) and solar (90.4c/kWh) secured in the last REIPPPP procurement window.

Despite all the evidence in favour of renewables over nuclear, the Minister of Energy seems adamant on nuclear.

So where does all this current enthusiasm for nuclear planning come from?

Back in 2010, the Department of Energy (DoE) led the process of developing the country’s Integrated Resource Plan (IRP) 2010-2030. Its purpose is to thoroughly research and prepare for future national energy demand. This IRP included plans for new nuclear energy capacity of 9,600 MW. To break it down – at the time we thought that we needed 67,800 MW of energy capacity to keep the lights on for the whole country, and nuclear was forecasted to provide just over 14% of that capacity.

But between 2010 and 2013, our economy did not grow as expected, and as Eskom’s prices increased, we got more energy efficient and consumed less energy. So in 2013 the IRP was updated and revised, reducing the total projected energy capacity to 61,200 MW (that is 6,600 MW less than in 2010). At this point, the IRP said to delay investment in nuclear until it was clear that our need justified its cost.

But in December of 2015, despite all opposition, Minister Tina Joemat-Pettersen released a determination to procure 9,600 MW of nuclear energy capacity, in line with the IRP that is now three years out of date. To make matters worse, there has been little information about the nuclear deal coming from government, and no chance for public comment.

Russian into a decision

Mariana Thamm reported, in April of this year, that unlike REIPPPP’s open and transparent bidding process, a nuclear procurement deal has already been made behind closed doors, with Russia. This deal has already been challenged by two civil society organisations, EarthLife Africa and Southern African Faith Communities Environment Institute, in the Cape High Court.

Thamm’s investigation suggests that Ministerial actions around nuclear could also allegedly be in contravention of the Constitution, for side-stepping required public consultation processes.

Nuclear is not a small loss to bear

Large-scale investment in nuclear is risky. Zuma has publically stated that nuclear will only be pursued at a rate and scale that we can afford. But the key issue is that no one has publicly explained why precisely we need it at all. The problem is that if our economy takes another knock, or our energy consumption increases drastically, we end up paying for something that is not critical, while also having other pressing infrastructure and service delivery needs to fund.

The nuclear expansion plan is very much on the table. Eskom CEO Brian Molefe has defended the nuclear decision, saying we have 80 years (the lifespan of the investment) to recover costs. But that is 80 long years to crowd out exciting alternative technologies and local manufacturing opportunities.

The point is, if we go ahead with new nuclear procurement, we are making a decision that will affect us for the next 40 to 80 years, with great uncertainty and at great risk to the economy. At minimum, we the people, and our representatives in parliament should have the chance to fully understand and challenge the logic for this public investment and how it will fit into overall energy planning, for which the consequences will go well beyond the lifespans of all decision-makers involved.

More stories in Issue 78

Nuclear: are we Russian our energy decision?

By Lauren Hermanus

South Africa planned a major expansion in nuclear energy in 2010 in response to a national energy security crisis, and recent reports indicate that in March this year we signed a nuclear deal with Russia. So what are the pros and cons of going nuclear? Nuclear infrastructure delivers reliable energy without the carbon footprint of […]

Contributors

Lauren Hermanus

Lauren is a sustainable development specialist and Strategic Director of the Massive Small Collective, focused on urban resilience, energy innovation and equity. Her experience is in policy, strategy and programme development in both the public and private sectors. She applies Complexity Thinking to development challenges, in her approaches to understanding and addressing societal problems.

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