TO NUKE OR NOT TO NUKE

CityPress - - Business - DE­WALD VAN RENSBURG de­wald.vrens­burg@city­press.co.za

The case for build­ing new nu­clear re­ac­tors in South Africa is based on “far too op­ti­mistic” es­ti­mates of eco­nomic growth and elec­tric­ity de­mand, claims the En­ergy In­ten­sive Users’ Group.

At the same time, the down­grade of South Africa’s credit rat­ing by both S&P Global and Fitch Rat­ings, as well as the down­grade of Eskom’s credit rat­ing by S&P this week, will in­crease the pressure to halt or slow down the nu­clear pro­gramme.

The group’s crit­i­cism is on top of the stand­ing crit­i­cism that South Africa’s en­ergy plan­ning ar­bi­trar­ily lim­its re­new­ables that have the same ef­fect, mak­ing nu­clear seem more sen­si­ble than it is from a tech­ni­cal and eco­nomic stand­point.

Last week Fri­day was the dead­line for com­ments on the con­tentious In­te­grated Re­source Plan (IRP2016). Sev­eral highly crit­i­cal sub­mis­sions on the state’s en­ergy plan­ning were re­ceived right on dead­line, as the coun­try was reel­ing from the Cabi­net reshuf­fle.

The En­ergy In­ten­sive Users’ Group rep­re­sents 32 large in­dus­trial power users that col­lec­tively con­sume 40% of South Africa’s elec­tric­ity.

It made a sub­mis­sion that ar­gues against nu­clear, de­spite the or­gan­i­sa­tion’s de­clared “tech­nol­ogy-ag­nos­tic” stance.

On Fri­day, rat­ings agency Fitch said it ex­pected a nu­clear pro­cure­ment pro­gramme to pro­ceed “rel­a­tively quickly” un­der newly ap­pointed En­ergy Min­is­ter Mmamoloko Kubayi.

“Trea­sury, un­der its pre­vi­ous lead­er­ship, had said that Eskom could not ab­sorb the nu­clear pro­gramme with its cur­rent ap­proved guar­an­tees, so Trea­sury will likely have to sub­stan­tially in­crease guar­an­tees to Eskom,” said the Fitch state­ment an­nounc­ing its down­grade of the gov­ern­ment’s credit rat­ing to junk.

Trea­sury re­sponded with its stock line that nu­clear will be pur­sued “at a scale and pace that the coun­try can af­ford”.

S&P Global had, in its ear­lier down­grade an­nounce­ment, also put Eskom front and cen­tre with­out ex­plic­itly fac­tor­ing in nu­clear.

The 2.2% tar­iff in­crease Eskom got this year is too low and will al­most in­evitably force it to call on more of its gov­ern­ment guar­an­tees, said S&P.

Ac­cord­ing to S&P’s state­ment, other state com­pa­nies will also de­mand more guar­an­tees in the near future. It specif­i­cally men­tions SAA and San­ral as likely to need help, the lat­ter ow­ing to its in­abil­ity to col­lect e-tolls. The draft IRP2016 re­leased last year pre­sented a “base case” for future elec­tric­ity in­vest­ments that called for new nu­clear re­ac­tors by 2037. A ma­jor crit­i­cism has been that the IRP2016 puts lim­its on how much re­new­able en­ergy can be con­nected to the grid with­out pro­vid­ing any real jus­ti­fi­ca­tion for the level at which these lim­its are set. This again seems to ar­ti­fi­cially make a case for nu­clear. The En­ergy In­ten­sive Users’ Group said that the IRP2016’s fore­casts of future elec­tric­ity de­mand was plainly un­re­al­is­tic, while its es­ti­mate of what nu­clear would cost was sus­pi­ciously low. The cost es­ti­mate was ap­par­ently based on an in­ter­nal de­part­ment of en­ergy study that was not avail­able pub­li­cally, said the group’s sub­mis­sion. The cost as­sump­tions also seem­ingly don’t budget for nu­clear power sta­tions’ in­fa­mous rep­u­ta­tion for de­lays and cost over­runs, said the group. Us­ing in­cor­rect cost data would make the model “in­cor­rectly in­fer that nu­clear tech­nol­ogy is a cost-op­ti­mal so­lu­tion”.

The En­ergy In­ten­sive Users’ Group ar­gues that the IRP2016 uses ob­vi­ously overop­ti­mistic eco­nomic growth pro­jec­tions to pre­dict power de­mand – higher than those used by Trea­sury or the In­ter­na­tional Mon­e­tary Fund.

If the model uses what the group con­sid­ers a re­al­is­tic fore­cast, nu­clear falls out of the en­ergy mix.

A pro-nu­clear po­si­tion was pro­vided by the Nu­clear In­dus­try As­so­ci­a­tion of SA (Ni­asa).

Ni­asa also pleaded with gov­ern­ment to ex­plain the lim­its on re­new­ables.

“They fuel con­spir­acy the­o­ries about cor­rupt en­ergy deals,” said the group.

“[This] makes Ni­asa’s job much harder re­gard­ing ex­plain­ing the case for nu­clear to the public,” it said.

Much of the Ni­asa sub­mis­sion amounts to a crit­i­cism of the coun­try’s re­new­able pro­gramme.

It calls re­new­ables “largely use­less to our econ­omy” be­cause they gen­er­ate elec­tric­ity in­ter­mit­tently.

Ni­asa said that it was ac­tu­ally re­new­ables that were ar­ti­fi­cially pro­moted in the IRP2016 be­cause their ex­ter­nal­i­ties were not con­sid­ered. Ni­asa said that the price of re­new­ables needed to be ad­justed up­wards be­cause of green­house gases re­lated to nat­u­ral gas. Cham­pi­ons of re­new­ables gen­er­ally agree that these tech­nolo­gies need to be backed up with nat­u­ral gas gen­er­a­tors in future.

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