Modular or not, nuclear power would be too expensive for SA
The public will inevitably pay for the debt creating nuclear power plants would cost the country
The department of mineral resources and energy’s request for information for modular nuclear plants attempts to manipulate the SA public into believing that a build-own-operate and transfer model, as well as modular nuclear construction, are less costly.
Incurring a debt is not something to rejoice about regardless of how many payments are deferred to the future. Nuclear vendors are profit-driven and SA will, whatever the ownership structure, have to “pay back the money”.
The construction of the Akkuyu nuclear power plant in Turkey by the Russian company Rosatom involved the build-own-operate model. The model allowed for localisation, as shown by Rosatom’s offer of a 49% stake in the project to local industry. However, the high skill requirements and use of vendor personnel dampened employment gains during plant construction and restricted skills transfer to the domestic industry.
The model has a bearing on the sovereignty of a country because the vendor country can withhold servicing the nuclear plants if there is conflict between the two countries. For example, work at the Akkuyu plant stopped briefly after Turkey shot down a Russian jet.
And the situation may be dire for SA due to lack of local manufacturing of nuclear spare parts.
Stating that “there will be no immediate call for funding from the state” obscures the high future repayments required, irrespective of the power purchase agreement SA can work out with the vendor. Consumers and taxpayers will bear the brunt of higher tariffs as no vendor will invest if it is to be compensated at prevailing electricity prices regulated by the National Energy Regulator of SA (Nersa).
The cost will also be borne by a shrinking consumer base following permission for mines and industry to generate electricity for their own use. Eskom is currently struggling with revenue collection, with many municipalities and communities defaulting on payments. There is, therefore, limited scope for contribution to nuclear vendor payments from open market electricity sales, even with higher tariffs. This leaves the government as the main source.
Ownership of new nuclear plants has been a contentious subject in SA, with both Eskom and the department indicated as likely owners at different times. The government’s ability to service vendor debt will be affected by the low economic growth that prevailed even before it was exacerbated by Covid-19.
Relooking the IRP due to Covid-19
Coming off an extremely low base indicates that even a prospective recovery will not take SA out of the low growth path immediately. The government also has the obligation of bailing out Eskom, which has debt reported at R441bn in March 2019 and which is still increasing. The decline in electricity demand does not help Eskom’s recovery either. Since these are long-term effects, SA will struggle to repay the vendor when they are due.
Reference to modular nuclear reactors evokes perceptions of lower-cost nuclear plants because smaller units are constructed. However, modular reactors are currently not commercially produced, hence there are no production lines to exploit economies of scale. Each unit must be custom built, thus increasing the costs of reactors.
SA also does not have a comprehensive nuclear policy to address issues such as third-party liability in the case of an accident, which constitute additional costs for build-own-operate owners or operators. Vendors have avoided the Indian nuclear sector due to the preclusion of foreign ownership as well as third-party liability falling on plant operators.
Justifying the request for information by referring to the Integrated Resource Plan 2019 (IRP) is little different from the Zuma government sticking to the outdated IRP 2010 for years so as to claim nuclear generation was needed. Economic conditions due to Covid-19 are very different from 2019, and updated projections about electricity demand and economic growth are required. These must include the committed build from renewables.
Wasteful, excess electricity generation, similar to that of the 1980s when some plants had later to be decommissioned, should be avoided. The SA public must be taken on board rather than be confined to a smoke-and-mirrors setting until a point of no return is reached.
• Maqanda, a chemistry lecturer at the University of Fort Hare, is conducting PhD research at Rhodes University on the feasibility of nuclear power generation in SA.