Scepticism over nuclear costs
• Questions about price and viability of 2,500MW nuclear power plan
The department of mineral resources & energy will issue a request for proposals to procure 2,500MW of nuclear power in March, drawing a sharp response from civil society organisations and an analyst on the cost and viability.
Given that the build time of new nuclear power facilities can range from 10 to 12 years, the power to be procured is expected to start coming online only from about 2033, said Zizamele Mbambo, the deputy directorgeneral for nuclear energy regulation and management at the department.
SA’s sole nuclear power station, Koeberg, has an installed capacity of about 1,800MW, meaning an additional 2,500MW (which is equivalent to about two-and-a-half stages of load-shedding) would more than double SA’s nuclear generation capacity.
Speaking to journalists on Tuesday, Mbambo said details of the request for proposals, including the type of nuclear technology to be procured (whether preference will be given to larger plants or small modular nuclear reactors) will be determined later.
The plants’ proposed locations also need to be determined.
“[We are] not in a position to talk about the details about what the request for proposals will contain because we have not yet started designing the request for proposals,” said Mbambo.
The department also has yet to decide on the prescribed contracting model in the request for proposals. However, it will “issue an open and transparent tender to make sure there is cost competitiveness”, he said.
Kgosientsho Ramokgopa, the electricity minister, said the tender for new nuclear power would be issued in terms of the Integrated Resources Plan (IRP) of 2019.
IRP 2019 is soon to be replaced by the updated IRP 2023, which was approved by the cabinet last week. IRP 2019 doesn’t explicitly include additional nuclear power as part of the energy procurement plan up to 2030. The document states the department should begin preparations for a nuclear build programme to the extent of 2,500MW “at a pace and scale that the country can afford”.
Energy minister Gwede Mantashe issued a ministerial determination on the procurement of 2,500MW of nuclear generation capacity in 2021, which the National Energy Regulator of SA (Nersa) agreed to subject to certain suspensive conditions.
According to Ramokgopa, the department satisfied the suspensive conditions and Nersa issued a formal concurrence for the procurement of the 2,500MW in September, enabling the request for proposals to be put to market.
Procuring the nuclear power would provide SA with “cheap, reliable” electricity, Ramokgopa said. “We know nuclear is the cheapest, safest and most reliable form of energy.”
Ramokgopa later clarified that he was referring specifically to the cost of generation. “The typical cost of generation for [utility-scale solar] is about 50c per kilowatt-hour (kWh), wind costs about 87c/kWh, dieselpowered open-cycle gas turbines cost R5.80/kWh and nuclear about 60c/kWh.”
Asked about the expected cost of building nuclear plants, Naphtali Mokgalapa, nuclear power reactor specialist at the department, said it is important to “consider the cost of nuclear holistically because the technology provides baseload power”.
Another consideration is the “benefit” nuclear power brings to SA from a “clean energy” perspective. The department has done some work to determine the “ballpark figure” for the capital cost per kilowatt.
“We found the capital cost, when you consider both conventional nuclear power plants ... and small modular reactors, ranges between $2,100/kW and $7,500/kW,” Mokgalapa said.
Chris Yelland, MD of EE Business Intelligence, said he is sceptical about the nuclear costs shared by the department and Ramokgopa.
“The overnight capital costs given by Mokgalapa are [those] you would incur if you placed an order for a new nuclear power station today, and it gets delivered tomorrow,” Yelland said. “Of course, these projects ... take 10 to 15 years to build, then you have to take into account capitalised interest during construction, which can add an additional 20%-30% to the capital costs.
“It also excludes cost and time overruns that are likely to occur over the course of large, lengthy infrastructure projects.”
The values quoted by the department are also out of step with the latest figures based on international research on energy costs, Yelland said.
Lazard, a leading investment and asset management firm, publishes annual reports on energy costs using so-called levelised cost of energy (LCOE) analysis to estimate the average cost of various forms of energy.
LCOE, said Yelland, is a calculation of what the cost would be per kWh of electricity delivered to recover the full capital and operating costs over the lifetime of a plant.
According to Lazard’s 2023 LCOE analysis, the capital cost for nuclear ranges between $8,475 and $13,925 per kilowatt.
In comparison, the capital cost of utility-scale solar PV ranges between $700/kW and $1,400/kW, and that for onshore wind from $1,025/kW to $1,700 per kilowatt.
The LCOE costs provided in the report when converted to rand per kilowatt-hour are between R2.65 and R4.16 for nuclear. For solar and wind the cost ranges between 45c/kWh and R1.42kWh.
Energy planning proposals published earlier in 2023 by the presidential climate commission in response to a request from the department to help inform the 2023 update of the IRP didn’t include new coal or nuclear.
According to the commission, all the models it reviewed showed that a least-cost energy model would comprise investment in variable renewable energy sources (wind and solar), storage (batteries and pumped hydro) and peaking support.
In a technical report that supports its electricity planning recommendations, the commission noted that the cost of nuclear is a disadvantage compared with an energy mix dominated by wind and solar, and supported by battery storage and gas power for peaking support.
Environmental groups described Tuesday’s news as “unsettling”.
Francesca de Gasparis, executive director at the Southern African Faith Communities’ Environment Institute, said the announcement was “met with disbelief by civil society”.
“All the independent modelling shows that nuclear energy is neither affordable nor needed in our energy mix now or in the future,” she said. “We know electricity baseload does not need nuclear energy and in the absence of a finalised and fully reviewed IRP 2023, today’s announcement seems to be motivated by greed, not need.”
Earthlife Africa director Makoma Lekalakala said nuclear energy wouldn’t alleviate load-shedding. “Any form of nuclear construction is likely to take 20 years or more,” she said. “We should not be fooled that this will be up and running by 2032. It has been proven all over the world that mega-infrastructure projects like these take much longer than anticipated.”