The Department of Mineral Resources and Energy issued a formal Request for Information on Sunday to build a 2,500-megawatt nuclear plant — but there is a twist: new ownership models are now also on the table.
The Department of Mineral Resources and Energy (DMRE) has thrown down the nuclear gauntlet, issuing a Request for Information (RFI) for a new nuclear plant, arguing that it is commencing preparations for a nuclear build programme “at a pace and scale that the country can afford because it is a no-regret option in the long term”.
“This will enable the department to gain insight into the cost of the programme, possible ownership structures, cost recovery, the end-user cost and sustainability of the programme,” the department said.
In an interview, Zizamele Mbambo, the DMRE Deputy Director-General responsible for Nuclear Energy, said the possible cost of the programme is not yet clear, and this is one of the issues the RFI will clarify.
Mbambo said it is “way too soon” to speculate about how much the programme will cost, particularly as new kinds of plants were being developed which could reduce the cost substantially.
However, it is generally accepted that currently, companies that are planning new nuclear units are indicating total costs, including escalation and financing costs, would be somewhere between $5,500/kW to $8,100/kW which would make the speculative cost somewhere between R230-billion and R260-billion.
But, Mbambo said, in respect of the ownership structure, “all options are on the table”. This includes the possibility of something called a “build, own, operate, transfer” system. BOOT systems have the advantage of not burdening the fiscus for the construction of the plant — but the disadvantage of putting more of a burden on electricity buyers.
Issuing the RFI begins a long, involved process which previously in SA has been a right, royal shit show. In 2017, the Cape High Court dealt a fatal blow to the then much more ambitious plans to build 9600MW of nuclear capacity, on the basis that government had not followed due process in making the decision to pursue nuclear power. The cost of that programme was a heart-stopping R1-trillion.
The same groups which stopped the previous process, Earthlife Africa and the Southern African Faith Communities’ Environment Institute (SAFCEI), have already notified the DMRE that they will again ask the courts to adjudicate the RFI.
But there has been a lot of water under the bridge since this case, and SA has produced a new Integrated Resource Plan (IRP) which was accepted in 2019. The new plan includes dramatically more wind and solar generation: about 20,000MW is slated.
According to long-time energy analyst, consultant and electrical engineer Chris Yelland, whether the new plan does in fact envisage more nuclear power is “a bit of smoke and mirrors”.
It does specifically indicate 1,800MW of nuclear power because the licence for SA’s existing power plant at Koeberg has to be renewed. In addition, the IRP also suggests SA would need another 2,500MW of power from another source. The famous Inga project in the Democratic Republic of the Congo on the Congo river was initially thought to be the possible source.
By issuing the IRP, the DMRE is effectively acknowledging that the project is just not going to happen very soon, if at all. The Inga project has been the subject of decades of political structural machinations.
The question now, says Yelland, is whether nuclear power is in fact the most cost-effective option, and the cost trends have been moving dramatically in favour of wind, solar, gas and battery storage over the past decade.
That will pose a problem for the current bidders, but Yelland speculates that by issuing the RFI, DMRE minister Gwede Mantashe is putting the question to both producers and the big nuclear lobby in the department and the union movement. “He is saying to them, put your money on the table — let’s see what you are offering.”
As far as locations are concerned, Malambo said these too are open for discussion. The work done on the existing sites on the Western and Eastern Cape coasts “is still relevant”, but it’s also possible new locations could be identified, which may not have to be at the coast.
“It’s important to remember, we are not yet at the procurement stage,” Mbambo said. On the other hand, the court case which brought a dramatic halt to the previous process didn’t happen at the procurement stage either.
Originally Published by Daily Maverick