ATC140314: Report of the Portfolio Committee on Energy on the Energy Stakeholder Meeting, scheduled on 19 September 2013, dated 12 March 2014

Report of the Portfolio Committee on Energy on the Energy Stakeholder Meeting, scheduled on 19 September 2013, dated 12 March 2014

THEME: “ Nuclear energy as an option for sustainable supply of energy ”

1. Opening remarks by the Chairperson, Hon SJ Njikelana

The Chairperson appreciated the turnout and it is indicative that the Committee is on the right track. He announced the purpose of the meeting, where the aim is to look at nuclear energy as a reliable supply of energy.

The Chairperson continued to highlight that the stakeholder meetings are different to public hearings as everyone will be allowed to make inputs. The Chairperson indicated that this is a more flexible approach and allowed for diverse input. The stakeholders' common vision is to see the country attain an adequate and sustainable supply of energy. The Committee believed the Department of Energy (DOE) should be doing more about ensuring increased supply. Nuclear energy is part of the energy mix as included in the Integrated Resource Plan (IRP) 2010.

2. Presentations

2.1. Overview by the Department of Energy ( DoE )

Mr Thabang Audat , DOE Acting Chief Director: Electricity, said he will focus on the basis upon which nuclear power generation is included in the Integrated Resource Plan (IRP) 2010, where nuclear is part of SA’s energy generation mix. The IRP 2010 has allocated 9600 megawatts for nuclear by 2030 as part of the energy mix.

The IRP is a long-term plan that seeks to direct the expansion of the current fleet of power stations. The plan seeks to give SA a long term perspective and consider issues such as technical constraints, capacity, cost and affordability, and the amount of electricity that could be injected into the grid. There is a social aspect that addresses the kind of technologies that could be relied upon to generate employment opportunities at all levels. Externalities like carbon emissions are also considered.

There is a social welfare component that influences the increase in demand of electricity. DoE has services that influence growth in electricity demands; i.e. key customers such as the mines, huge factories, the services section, the airports and the communications sector. If these sectors grow steeply, they will influence the rate at which electricity demand is projected. There are social elements to it, such as education, health, safety and food production. These also influence the rate at which electricity demand grows.

The problematic areas that are taken into account when developing the IRP is that electricity is not like ordinary commodities. It cannot be stored and used when required; engineering of electricity generation had to meet the demand as and when it is required. Another challenge is that it takes years from when a decision is taken to build a power station to a point where that power station provides electricity into the grid.

Electricity is linked to other infrastructure developments. These developments should anticipate future needs, and as accurately as possible, second guess the future to make the right decisions today. Supply should be ready at the right time; the volume of the electricity generated should be ready at the time it will be used. The quality of a future power station should be as close as possible to what the reality will look like when it is required. Electricity should also be affordable and the IRP need to answer these questions for the next 20 years.

The country needed to put in place plans to meet the future demand. Currently available capacity is less than the projected demand. Medupi and Kusile power plants are expected to come on stream, but if nothing else is done to supplement these, electricity supply will, again, be a challenge. Supply will fall while demand will continue to steeply increase. Currently there is a gap between demand and what Eskom is able to dispatch. The IRP seeks to balance that gap. DoE is currently trying to manage the system under the so-called emergency response and business continuity plan.

Implementation of the IRP will ensure demand is met. The existing coal power stations are reaching a maturity point and need to be decommissioned. Coal power stations need to be linked to sufficient water provision, and the IRP should address this.

Localisation should enhance local skills and there is a need not to bring international companies to merely do the jobs. There need to be a compulsory skills element, stipulated in the contract, so that companies do not come and go without transferring skills. Skills transfer is critical and should be specified. Cost and funding are intrinsically linked to decisions made now.

2.2. Presentation by the Energy Institute (Cape Peninsula University of Technology)

Prof Phillip Lloyd, Energy Institute CPUT, said representing the views of everyone on the nuclear matter is a challenge. Stakeholders included manufacturing, construction, government, financial services, power distribution, the media, the public, education and training, and the environmental industry. All industries will have to play a role, and sustainable development will require economic, social and environmental considerations.

Manufacturing is capable of supporting an extended nuclear programme in the country. Two reactors in the country will not be sufficient, and government should be looking to establishing more. Three more plants will contribute significantly to job creation. France created over 100 000 sustainable jobs by creating a larger nuclear fleet.

Construction is ready and capable to handle anything. Effective scheduling will be required to avoid what happened during the 2010 Fifa World Cup, where the system simply did not cope with all the work that is undertaken. Skills shortages are highlighted in the case of Medupi Power Plant. As long as these challenges are recognised, something could be done about them. The Sector Education and Training Authorities (SETAs) could actually contribute as opposed to just drawing money from government. On construction, the country had adequate capacity and the industry is not limited by the number of plants. By having a fleet of reactors, civil engineering performance will improve as they moved on.

Government is well positioned and it has Presidential level oversight. Most of the governance structures that are in place, such as the National Nuclear Regulator (NNR), are reasonably effective. The support structures are in place, but clear decision making and policies are required as costs for nuclear energy build could escalate out of control. The timing is critical when it comes to environmental issues.

The financial services had adequate capacity to deal with most of the issues mentioned. There is limited experience in the country in the nuclear industry. Financial services had not shown much interest about the nuclear programmes. Government should give some guidance in terms of how it envisages involvement of private institutions in the nuclear field should it come to pass. However the financial institutions should be able to do procurement of the capital works, both internationally and locally. Uncertainty surrounds the role financial services will actually play on the programme.

Considerable investment will probably be required on transmission and distribution. This will influence the flow of electricity from the northern provinces downward to the coast. The challenge is that one could not have all sorts of renewable sources operated on a small grid. One big issue on transmission and distribution is the question of the Independent System Operator's Model . This particular question ought to be resolved and a complete rethink is necessary.

According to the Energy Institute the negative news about all the disasters such as Fukushima, overshadow all the positive aspects of nuclear use. No one died in Fukushima due to the nuclear disaster. There is a general poor understanding of the true nature of nuclear hazards.

There is a widespread rejection by the general public, but this had been overcome in some places like Sweden. Also concerning is the cost of nuclear power; this is one of the things to talk about. The concerns about safety are entirely misplaced, because most disasters resulted from hydro power which is the second most dangerous after coal. There are concerns about long-term nuclear waste but such concerns are misplaced. Nuclear is like the ash of any fire, it cools off faster when disposed off.

Prof Lloyd said some sections of the population are welcoming to nuclear power, especially in Cape Town. If one worried about carbon then nuclear is the way to go as it produced little carbon. It will also meet the need for base-power. There are high level skills in the country when it comes to education and training.

The environmental industry saw nuclear as a cash cow. Some non-governmental organisations (NGOs) already had lobby groups in place. But if the country could recognise and debate the possibility of mitigating the negative aspects then the environmental industry could be convinced into believing this is a good idea. He said 67 nuclear reactors are under construction right now in the world. In spite of Fukushima the world is moving ahead with nuclear; 14% of the global electricity came from it. Nuclear is already playing a significant part in keeping the world alight, warm and the lights switched on.

2.3. Presentation by the SA Nuclear Energy Corporation (NECSA)

Dr G.Nothnagel , NECSA Senior Manager: Radiation, said it is useless to speak of a world scenario, if the country’s readiness has not been ascertained. The world energy perspective changed after Fukushima. Nuclear safety and transparency had to be continually reinforced. New generation nuclear power plants are being programmed and constructed, and four nuclear power plants will be rejuvenated based on post-Fukushima stress tests.

Dr Nothnagel said all the countries running nuclear in the world had looked at what will happen should a similar kind of natural disaster engulf one of their reactors. How could they mitigate against the outcome similar to what happened on a very old generation reactor such as at Fukushima. Safety will cost in terms of money, but will save in terms security of mind. This could drive up costs, and ambitious timelines on planning and construction will have to become more realistic. Alongside these activities, there should be attempts to increase global governance of safe and environmental friendly energy sources. This is in line with the IRP 2010.

From the safety and energy efficiency perspective, nuclear power plants will be improved for the better. It is interesting that the developing countries are the ones picking up the banner for nuclear. Asia and the Middle East sat on oil, and yet they are opting for nuclear; this is long-term planning. South Africa’s nuclear use is far too low and that is not good. Efforts should be redoubled on this aspect of energy source. There is potential to grow human capital and the Gross Domestic Product (GDP) per capita. In the country there is a bit of everything and if that is to be enhanced, it will have positive results for the country. People are eager for training, capacity building and opportunities.

Nuclear energy as part of the base-load is a must for the vision, as it will result in reduction of carbon emissions. He described the plan as world-wise and locally tailored. Considerable work had been done on the part of government. Various initiatives had been taken; preparing for the new build will require a lot of skills. Many university programmes had been geared towards the field notably by North West University, University of Johannesburg and Wits. NIASA has harmonised the national curriculum and provided training for the industry staff.

The nuclear power option is advancing safely and surely for the better. Nuclear as base-load has remained a world-wide accepted solution to security supply of electricity, whilst kerbing green house gas (GHG) emissions. Government and the nuclear industry have made substantial investment in training and localisation preparedness, and had, thus, advanced considerably towards a viable localisation goal. Nuclear fuel cycle programme held massive promise for globalisation of aspects of nuclear power technology and job creation potential. The IRP is a wise approach to the global tendency and the local needs perspective. It encapsulated what the country is and what it could do and what it needed.

Dr Nothnagel said the Pebble Bed Modular Reactor (PBMR) in principle is a great idea. Had it been approached modestly in a phased approach, "the smaller and more conventional demo model " might have had completely different outcomes. This would have made licensing much easier. People license things they understood much better than innovation. It would have added value had it succeeded; the PBMR is low on water consumption. This is a valuable commodity in our country, and could be brought to where the energy is required. It has a potential for delocalised processed heat and a hydrogen economy. A lot of training in engineering and manufacturing came out of it.

2.4. Presentation by the Nuclear Industry Association of South Africa ( NIASA)

Ms Judi Nwokedi , NIASA board member, said the entity is a collection of high level members that include academic institutions in the country. The organisation brings together the best experts in the field of nuclear. SA is the world number one isotope producer. This is what set the country apart from other global players.

On the global outlook for energy in 2013, China counted more than 17 reactors built and 32 are in various stages of construction. The Chinese is licensing some of NIASA’s technology for the new build. Renewable energy and nuclear power are the fastest growing energy sources - each increasing by 2.5% a year. The fossil fuels will account for about 80% of energy use until about 2040. Natural gas is the fastest growing fossil fuel supported by increased supplies of shale gas. Coal will grow faster than petroleum consumption until after 2030, mostly due to China’s increased consumption of coal.

World electricity demand will grow by 20% by 2030, and nuclear energy will have to double. Worldwide, energy-related carbon dioxide emissions are projected to increase by 46% by 2040. She concurred with the point that nuclear-related energy supply will lead to reduced levels of carbon emissions. On the continent, SA is the only player in nuclear energy generation. The first natural nuclear fussion reactions occurred in Gabon so the epicentre of nuclear origins is on the African continent. An increased will and political commitment by many African countries to advance electricity generation via nuclear is noticeable. Nigeria is making progress in the introduction of nuclear power.

NIASA and NECSA had partnered with a number of countries on the continent who wanted to learn. The NNR is held in high esteem across the continent. Many countries has such nuclear regulators even though in many countries nuclear plants had not been built. In order to build power plants, a country needs such a regulator to be in place.

The four key questions that countries implementing nuclear programmes asked are about safety, affordability, procurement transparency, and whether there are measures and processes for accountability. There are questions around uranium availability, as well as about opting for nuclear when the sun and wind are free. Why not use the cheap base-load of coal and gas? What risks are there for going nuclear other than the environment and waste control? What are the financial implications of going nuclear?

The financial implications for nuclear are difficult to guess, but the implications for using nuclear are favourable to other technologies. She cited the example of the Koeberg nuclear power plant near the area from where she came. The community supported nuclear, because coal contaminated the air from morning till night. The community is not even aware that Koeberg is there. The next build of nuclear power plants will result in universal access to electricity, effectively with no carbon dioxide, no land contamination and much better than coal. Base-load is the need and is critical for an economy like SA that hoped to industrialise and become globally competitive. The energy mix had to be diverse.

The best way to find out the real cost implications will be to issue enquiry documents to various potential participants in a nuclear new build. The delays around nuclear and indecisiveness and regulatory challenges are all some of the hidden cost that resulted in cost overruns that will redefine the actual cost of the nuclear new build. What is known about the cost of capital nuclear structure is that the engineering of a power plant, from the beginning to the end, is expensive. Such information had been ascertained and could be presented to the Committee.

The reason South Korea is among the leading economies in the world today is because of the decision the country made 60 years ago, where about 200 South Koreans went to study the intricacies of the nuclear field. Nuclear provides a country and an economy with a whole differentiator; it has the power to completely take a country to a different level of knowledge. The single greatest cost to any economy is the lack of electricity.

3. Discussions

• Dr D Serfontein (Lecturer: North-West University) stated that nuclear power could indeed reduce carbon dioxide emissions, but its use had raised concerns of cost and safety. Whilst the capital cost of nuclear was double that of coal, the environmental cost was far too low. The Levelised Cost of Electricity (LCOE) from nuclear was less than coal. The worst case nuclear was better profitable than the best case coal in nominal terms.
• Mr Christopher Bellingham, Renewable Energy Engineer at juwi Renewable Energies, said there were instances where the LCOE for nuclear energy could go up to R8 per kilowatt hour, including decommissioning. The country used wind and solar energy sources that were far cheaper. If one were to take the same levelised prices for nuclear and add the economic development commitments one would experience an expensive form of electricity. If one took into consideration the tender programme that would have to be initiated, it would have to be an expanded programme in order for nuclear to be viable in the country.
• Some members of the public stated that the nuclear plans would lock the country into a high capital cost cycle that would reduce SA’s flexibility and responsiveness. The country ought to be aware of what is happening globally.
• Members of the public enquired if there is a plan to deal with the high-level cost of radioactive waste, especially as reference had been made to the life-cycle cost of nuclear.
• Members of the public questioned the procurement and bidding processes and how they would be financed.
• Members of the public opposed to nuclear questioned when they will be afforded the opportunity to present their views and the four entities who presented were pro-nuclear. Some members of the public stated that they are not satisfied at the biased and prejudiced views that had been presented. Members of the committee proposed that another engagement be scheduled to afford all citizens enough time to engage on the matter. Members of the committee pointed out that this is a continuous debate, and Members should allow citizens to engage on matters without taking sides. Members should find solutions for South Africans.
• During the coming weeks, the DoE will be holding public hearings on the revised assumptions to be included in the IRP.
• According to the DoE, for the next 20 years, of the new power plants that will come to connect to the grid, 42% of the new build will be renewable energy and 14% of electricity generated from nuclear.
• According to the DoE, SA is a heavily industrialised economy that need base load. Unless renewable energy is be able to produce base load, the country cannot look solely at renewable energy as an electricity source. Renewable energy was there to serve a particular need; mines could not wait for sun or for windy days to send people underground. The country needs a mix of energy generation. The country does not have adequate hydro resources and is reliant on other countries for this.
• Members of the public commented that the National Radioactive Waste Disposal Institute is a major concern. The Agency should be set-up from a levy on the nuclear energy produced. There is no fund at the moment as there is no staff ; and there is also no capacity to create the levy to handle waste.
• Other members of the public pointed out that nuclear power proved by far to be the safest energy source. All around the world nuclear power remain the cheapest and the cleanest form of energy.
• Members of the committee highlighted that whether people are pro or anti nuclear, they need to ensure they are part of refining the journey.
• Prof Ernst Uken , CPUT Energy Institute, cited a report prepared by Finland, a highly regarded country when it comes to the environment. That country recently took a decision to go the nuclear route and was in the process of constructing two nuclear power plants, as solar and wind could not meet the country’s electricity demand.
• Mr John Walmsley , a physicist said that SA should rid itself of coal generated energy. Secondly, the radioactive waste would be put in a highly insoluble form and would be in highly insoluble containers. These bins were safe and would protect ground water. If the radioactive waste eventually appeared in the ground water and moved slowly through the high integrity bin material, the radiation would have decayed after all those years into negligibly low levels.

• Mr Kelvin Kemm , CEO of Nuclear Africa Pty Ltd, said nuclear power had been operating for over 50 years profitably and well. In SA it had been operating for over 25 years without any impact on the environment. The evidence for safety is there.
• Since this was the first engagement with regard to nuclear energy, various other engagements will be scheduled by the Committee in future.

4. Recommendations

The Minister of Energy should:

• Ensure that more emphasis be placed on project management for the nuclear industry.
• With the various relevant stakeholders, strengthen initiatives to increase the rate of developing requisite skills for the New Nuclear Build Plan.
• Forward a plan on it is going to establish the Nuclear Radioactive Waste Disposal Institute including funding in particular.
• Ensure preparedness of various stakeholders for the procurement of the New Nuclear Build .