19 March 2021 - NW709
Mileham, Mr K to ask the Minister of Mineral Resources and Energy
1) Whether, with reference to the proposed new nuclear build, his department conducted any (a) feasibility studies and/or (b) business or financial case studies for new nuclear generation in the past two years; if not, why not; if so, in each case, what are the relevant details; 2) In view of the fact that the Integrated Resource Plan 2019 (IRP 2019) makes no provision for the procurement of new nuclear generation as indicated on table 5 on page 42 of the gazetted IRP, on what basis has he committed to procure 2500MW of new nuclear generation by 2024 in his Ministerial Performance Agreement; 3) Why is he prioritising nuclear power generation ahead of other generation solutions despite ESKOM’s admission that nuclear energy is neither a least-cost, nor a short-term solution to the electricity crisis in the Republic? NW828E
1. Whether, with reference to the proposed new nuclear build, his department conducted any (a) feasibility studies and/or
The Department has in the past, conducted at least 13 feasibility studies towards a framework for the realisation of the Nuclear New Build Programme. These include amongst others the International Atomic Energy Agency’s peer review expert mission on Integrated Nuclear Infrastructure Review. As result of this, a number of studies and strategies were developed to address identified issues raised for preparation toward procurement of the 9600MW nuclear programme previously. These feasibility studies provided the necessary foundation from which to prepare for the procurement of the 2500MW nuclear new build programme. Some of the relevant feasibility Studies included:
- Study on comparative analysis of Shale Gas to power versus Nuclear Power in SA
- Benchmark of Procurement Framework
- Cost of Nuclear Power
- Owner-Operator and Financing Structures
- Finance Options Models Solutions
- Economic Impact of Localisation of Nuclear New Build Programme
(b) business or financial case studies for new nuclear generation in the past two years; if not, why not; if so, in each case, what are the relevant details;
Having those relevant studies as a basis, following the IRP2019 call for the smaller capacity of 2500MW the Department sought to update its information with the latest developments in the nuclear industry by testing the market appetite for the deployment of the Nuclear New Build Programme in South Africa. In June 2020, Department went out to test the market by issuing a non-binding Request for Information (RFI) for the 2500 MW of nuclear capacity. The process of finalising the RFI assessment is underway and this will culminate to into the implementation strategy, roadmap and procurement framework.
2. In view of the fact that the Integrated Resource Plan 2019 (IRP 2019) makes no provision for the procurement of new nuclear generation as indicated on table 5 on page 42 of the gazetted IRP, on what basis has he committed to procure 2500MW of new nuclear generation by 2024 in his Ministerial Performance Agreement;
The Department has been implementing the IRP2019 since it was promulgated in 2019 to provide sustainable energy mix to address the country energy needs with various energy technologies that are being rolled out. The IRP does not pronounce on procurement. It is a plan for electricity that is based on least cost calculations and policy adjustments. There are a number of steps in the IRP development process, one of the final steps is policy adjustment. The policy adjusted decision of an approved Integrated Resource Plan of 2019, Decision 8 states: “Commence preparations for a nuclear build programme to the extent of 2500 MW at a pace and scale that the country can afford because it is a no-regret option in the long term”. The Minister’s Section 34 Determination in terms of the Electricity Regulations Act No. 4 of 2006, as amended, is where provision for procurement of electricity generation is made. The policy Decision 8 of the IRP2019 provides the basis upon which the Minister has committed to procure 2500MW of new nuclear generation by 2024 in his Ministerial Performance Agreement;
The preparations leading to the procurement in 2024 have already started taking into account:
- That the 2500 MW Nuclear Build Programme is contained in the DMRE 2020-2025 Strategic Plan and the Annual Performance Plan
- That the 2500 MW Nuclear Build Programme is contained in Policy Position 8 of the IRP 2019
- That the 2500 MW Nuclear Build Programme is contained in the Performance Agreement of the Minister.
- That the 2500 MW Nuclear Build Programme is contained in the 2019-2024 MTSF Priorities.
The preparation for nuclear power plant is long lead-time infrastructure project and takes up to about 12 years from the planning until the commission power plant to the grid to generate electricity. These preparatory activities include but are not limited to design, siting, procurement, construction and commissioning of the nuclear power station beyond 2030. Most of the baseload coal fired power plants will be decommissioned beyond 2030 and based on the long lead times for a nuclear programme, starting the process early will yield a no regret option taking into account that nuclear is a clean baseload source of power.
3. Why is he prioritising nuclear power generation ahead of other generation solutions despite ESKOM’s admission that nuclear energy is neither a least-cost, nor a short-term solution to the electricity crisis in the Republic? NW828E
The Department has a responsibility to implement the approved IRP in totality to ensure security of energy supply for the country. It is not true that nuclear is being prioritised. Since the promulgation of the initial IRP 2010-30 and the subsequent revised IRP 2019, the only other technologies to be commissioned in line with these plans have not included nuclear. We have procured more renewable energy technologies and we continue to do so and nuclear has not been one of those. Even with the section 34 determinations following the IRP 2019, Nuclear energy is being subjected to a robust public participation process prior to NERSA’s concurrence. It is therefore not true to imply that nuclear is brought in as short-term solution despite it having policy adjusted into the IRP post the modelling process. It must be noted that the IRP does not factor in a number of issues such as hidden costs including the grid costs, balancing costs, systems costs, job creation, local industry development, geopolitics, labour movement dynamics and other related aspects. In addition, the IRP modelling process used the average capital cost of nuclear projects as US$5000/kWe whilst unlike other energy sources, nuclear projects have shown to have a wide range from as low as US$2000. After testing the market, we may arrive at a cost far lower than any other energy source possible, and this is the reason why it will be prudent to move forward with procurement of nuclear power. In addition, unlike most other energy sources which have lifetimes and loans suit limited private investor positions of short-term returns, nuclear power plants have lifetimes exceeding 60 years. Koeberg is a prime example of this and has shown to be the cheapest of all energy sources currently on the grid. Even after 20 years when a nuclear plant has been paid off (due to market limitations on loan durations), the plants will continue to generate electricity at the lowest operational cost. Each energy source must be looked at for its merits, and hence a balanced energy mix of all sources is good for South Africa.