Pebble Bed Modular Reactor briefing & Departmental briefing on Energy & Eskom

Meeting report

Energy and Eskom: Department of Public Enterprises Presentation
Mr Chris Fourie, Deputy Director: General Energy, Department of Public Enterprises, spoke about the mandate of Eskom and the strategic role that it played in the development of the South African manufacturing industry. He mentioned that Eskom supplied 95% of the country's electricity needs and it was growing year on year. The organisational structure of the utility was vertical from generation transmission to distribution. Most of the power came from coal-powered fire stations, thus making the countries energy needs to be dependent on fossil fuels.

The bulk of electricity was used by residential consumers, followed by, in turn, industrial, and farming consumers. This led to a situation where the demand would peak in the early morning and in the evening, especially in winter. Sometimes the system would be supplemented by operating diesel-powered stations to ease the strain on the grid. He mentioned that Eskom had to apply to the National Energy Regulator of South Africa (NERSA) for an increase in budget allocation on a three- year basis, and that the approval of NERSA was necessary before tariffs could be raised. He hastened to add that the increase in the price of electricity had been below inflation rates since 1978. The average lifespan of a power station was 40 years, therefore more stations had to be built to meet the growing demand. The increase approved recently would go towards the building of new stations.

Mr Fourie touched on key performance areas like operational efficiency, the building programme, funding and governance (see attached presentation for full details).

Discussion
Dr M Mangena (AZAPO) asked the reason that the power failures were less frequent now than in the previous years.

Mr Fourie replied that the repairs that were causing power cuts during peak winter periods in the past had then been arranged for the summer months, when the demand was lower. It was impossible to do repairs in winter when those problems began. He cited the example of boiler tubes repairs, saying that these necessitated the shutting down of the system. Some of the huge electricity consumers like smelters had also shut down due to the economic recession. There was less strain on the grid. In addition, the coal stockpiles had also risen significantly.

Dr Mangena asked whether consumers were cooperative enough.

Mr Fourie said that the consumers were much more aware of the situation now, and that could be attributed to the ongoing consumer education programmes in the media.

Dr Mangena asked if Eskom had manufacturing capacity for some of the equipment that was needed for distribution, such as transformers.

Mr Fourie responded that some of the transformers were manufactured locally, while others were imported. Eskom itself did not manufacture any equipment.

Dr Mangena asked for clarity on the photo voltic power generation.

Mr Fourie admitted that he knew very little about the Photo-Voltic system but said there was some research into the establishment of solar energy farms.

Dr Mangena commented that the distribution of solar power panels would only succeed with the help of government subsidies. The German government and companies had worked together to pioneer the system successfully.

Mr Eric Baskiti, Committee Researcher, asked about the possibility of aligning the electricity pricing with the demand.

Mr Fourie replied that electricity was more expensive during the peak periods of early morning, before people went to work, and in the evening. The demand would drop during the day when most households were not tapping into the grid. The same thing happened during winter, when there was more demand, and in summer when the demand dropped. The country needed more power stations to be able to cope with the demand. The average lifespan of a coal power station was 40 years. In addition to the new ones the Eskom would need to build some more power stations to supplement those whose lifespan had come to an end.

Mr P Van Dalen (DA) asked who was responsible for application to the National Energy Regulator on tariff hikes. The municipalities that were also distributing electricity were at a disadvantage because they were not able to budget while waiting for the reply from NERSA.

Mr Fourie responded that Eskom had to comply with the regulatory environment and submit applications six months before the date stipulated. The Regulator wanted to know how much money Eskom would raise from the market to offset the tariff hikes, as the reason for the hikes was mainly to raise money for the construction of new power stations. He said that he had drafted the application while he was still working for the power utility.

Mr Van Dalen asked the reason that Eskom was using private security companies to stop the cable theft.

Mr Fourie replied that Eskom had its own people who were working together with the private security companies to eradicate cable theft.

Mr Pascal Makhaula, Khayalagunyacro Development Forum, wanted to know the reason that some electricity token retailers in Langa were charging an extra R3 for every R10 token.

Mr Fourie said that he was not aware of that, but he would certainly enquire about it.

Pebble Bed Modular Reactor (PBMR): Briefing
Mr Jako Kriek, Chief Executive Officer, Pebble Bed Modular Reactor, noted the impact of gas emissions on the atmosphere and detailed the Eskom carbon footprint. He mentioned other countries that were using nuclear energy for their electricity needs. South Africa needed to acquire sufficient nuclear skills that would address the national energy needs. He commended the universities that were working with the PBMR Project for their good efforts.

Mr Kriek explained that the PBMR would use a high temperature gas cooled reactor, because it was much safer than the existing nuclear reactor in Koeberg. PBMR, unlike Koeberg, did not need to be near a water way, and therefore it was suitable for decentralised base load. It also produced steam energy that could be used for desalination of salt water. PBMR had lower transmission costs.

Mr Kriek briefly touched on investors and corporate governance, the lessons learnt from other countries, policy intention, and the value created by the PBMR. He also went through the human resources profile of the organisation, the finances and the funding model (see attached presentation for full details)

Discussion
The Chairperson asked who was responsible for the safety audits of the PBMR

Mr Kriek replied that the International Atomic Agency was responsible for the safety audits of the PBMR.

Mr Van Dalen asked for the number of employees in the organisation.

Mr Kriek replied that the PBMR had 930 employees.

The Chairperson asked what happened to the potential Saudi Arabian partnership.

Mr Kriek replied that the Saudi Arabians were interested in building a huge R40 billion nuclear reactor, but that they had withdrawn from the partnership.

The Chairperson asked for clarity on the safety of the PBMR and whether the technology had ever been tested before.

Mr Kriek replied that the PBMR was much safer than the Koeberg nuclear rector. The PBMR could not have a terrible accident, like that which had happened several years earlier at Chernobyl, where a whole province was contaminated. Pebble fuel used coating as a seal. The Germans had been using pebble fuel for more than twenty years. South Africa had in addition to this tested technology doubled the coating to make it much safer, and tests had already been done in a simulated model.

The Chairperson asked whether, in partnering with other countries, South Africa would benefit from intellectual property rights.

Mr Kriek responded that all the co-operation with other countries was guided by the bilateral agreements that had been signed by South Africa and other countries, and confirmed that these did protect South Africa’s intellectual property rights.

The Chairperson enquired about the loyalty of the nuclear engineers who had been appointed during the former apartheid years, and who were supposed to mentor young people.

Mr Kriek said that any Apartheid-era nuclear engineers had stopped working some twenty-five years ago, but that they had had experience that was needed to groom the next generation of scientists. They were not dealing with treated uranium of the type that could be used to make nuclear bombs. PBMR used less concentrated uranium.

The Chairperson enquired about the entities that were funding the PBMR, noting that Eskom had withdrawn from funding it fully.

Mr Kriek answered that the funding model would be done in the consortium, so as to spread the risk.

Mr Van Dalen asked what would happen in case of a nuclear fallout.

Mr Kriek replied that PBMR uranium was not treated, and therefore a fallout was unlikely. Regulators had very strict requirements regarding the spent fuel. The fuel was cooled down for a number of years and stored in cascades, before it could be used again, for another 40 years. The PBMR was the fourth generation technology of nuclear energy, as compared to the one that was used in Chernobyl. Nuclear technology had evolved greatly over the years.

Mr Pascal Makhaula, Chairperson Khayalagunyacro Development Forum, asked how competent was the skills base within the PBMR.

Mr Kriek replied that a large amount of resources was spent on skills development, as the Regulator required the use of qualified skills base. Some of the employees were sent to study overseas to enhance their skills.

Ms Mercy Ranko, Human Resources manager, PBMR, added that promising employees were identified by line managers and tested psychometrically. If they qualified for management positions then they would be sent for training. Efforts were also made to identify pupils from high school level to encourage them to enter the industry.

The Chairperson urged the PBMR management also to scout for talent in rural communities.

The meeting was adjourned.