Tag Archives: David Nuke Mahlobo

Why the hurry with nuclear power?

BusinessDay, Energy Research Centre, UCT, 12 December, 2017.

The economic benefits of a nuclear fleet are no better than a flexible build plan, even in a future where we assumed nuclear is cheap


Energy Minister David Mahlobo reportedly wants to finalise quickly the latest iteration of our electricity plan in support of new nuclear power. The minister claims that “there’s no discussion about the need, the need is there” for nuclear power.

Yet research that we have undertaken at the Energy Research Centre supports neither a need for, nor benefits of, forcing a large nuclear fleet into our electricity system.

Modelling of all available electricity generation options continues to show that nuclear power is not the least-cost solution. Nor does the country have the ability to finance the investments required for a 9.6GW fleet of large reactors. SA currently faces an excess of capacity and will not need this power in the short to medium term.

The latest modelling shows nuclear only coming into the mix around 2040. This is a finding consistent with earlier work the centre undertook for the National Planning Commission in 2013. Current research together with economic modellers also suggests a wait-and-see approach. The rush to complete the Integrated Resource Plan (IRP) and increase the share of nuclear is suboptimal for the electricity system and for the South African economy. There is no urgency about the decision around nuclear.

When would we need nuclear power? Nuclear plants take 10 years to build and will run for decades after, but it is virtually impossible to predict demand half a century into the future. Electricity demand projections have consistently been higher than actual growth, when evaluated ex post. Smaller nuclear reactors could in future track demand more closely than those being considered for the fleet.

In the past few years, electricity demand has flattened and is even declining. The global financial crisis reduced economic demand, which is a key driver assumed in modelling electricity demand. The period of load-shedding that followed in SA further kept electricity demand low. So SA has time to carefully consider future investment needs as no new generation is needed before the late 2020s.

Does SA “need” nuclear when it is not the lowest-cost option for the country? Good policy should be informed by sound evidence. Here’s an explanation on how we cost nuclear power, in research terms.

Much of the public debate centres on “overnight capital costs”, which are the costs of construction, excluding inflation or interest. There are divergent figures on the “overnight costs” of nuclear, dependent on certain assumptions, technology choices and country of construction.

The IRP 2013 used a range of about $5,000/kW–$7,000/kW. This range was found to be consistent with literature for the types of plants SA would be considering, and was used in studies by the centre on nuclear power and bounding uncertainty, including those on costs. A more recent review by three research groups of overnight costs suggests that the upper range could be as high as $8,500/kW.

The “overnight cost” is not a very good basis for comparing the costs of electricity plant since it excludes other key components — fuel and operating costs, aggregate availability, lifetime, interest during construction, borrowing rates, system integration aspects and risk. Another measure of cost is the “levelised cost of energy”. This cost is expressed in cents per kWh, and takes into account the overnight costs and the other aspects listed above except for the system integration aspects. Risk is taken into account to a certain extent through the discount rate, but this does not fully account for the risk of over-build.

In SA, renewable energy prices have fallen rapidly, echoing global cost reduction trends. Actual average tariffs from solar photovoltaic (PV) and wind electricity generation decreased from R3.65/kWh and R1.51/kWh in 2011 respectively to R0.62/kWh in 2015, making it cheaper than electricity produced from a new-build coal-fired power plant (R1.03/kWh) as well as nuclear (R1.09/kWh), the latter figures being those published by the Department of Energy in 2016.

The measure of levelised costs can be useful for comparing the overall observed and expected energy cost from different technologies, but can be misleading when comparing technologies with very different characteristics. For example, non-dispatchable solar PV and wind do not provide the same value to the system as dispatchable generators. The actual value (and costs) to the energy system of any technology is a complex and dynamic combination of all prospective new and existing capacity and their overall ability to meet demand. Both demand and supply options change over time — over a day, week, month, year — as the structure of the overall power system evolves.

It is important to the operation of the system when supply and demand-side options produce and whether this is at the same time as demand. To fully understand the implications of the advances in energy technologies on future electricity generation in SA, a fully integrated energy systems assessment is required. An energy system model is also useful to compare different scenarios.

Our research has compared the economic effects of a nuclear fleet against a flexible, least-cost build plan. We found that the economic benefits of a nuclear fleet are no better than a flexible build plan, even in a future where we assumed nuclear is cheap. Given that the result depends on many inputs, the centre’s researchers further analysed many variants of these two scenarios and found that nuclear is not the least-cost option. A forced nuclear scenario results in electricity prices that are higher and this “would have negative impacts on growth, employment and welfare in SA”. In plain language, one has to cherry-pick a future in which nuclear power is affordable.

In a world where there is uncertainty about future demand, future technology costs and capabilities, future grids with distributed generation and storage, committing ourselves to a large investment far in advance is not prudent.

So nuclear power is not the most affordable option, by overnight costs, levelised costs or by running an energy system model. But there are factors other than cost to consider. SA would do well to invest in technologies that deliver what we really need, especially employment.

The localisation and respective job-creation potential of a nuclear fleet is low compared with other technologies, as most of the local jobs will be temporary construction jobs and a couple of thousand permanent jobs in operations and maintenance, depending on the number of nuclear plants being built. Pushing up the local content requirements for the nuclear programme is another way of increasing the cost to levels even unknown to the industry.

Over- and under-supply are both costly to the economy, and we have a poor track record in avoiding either. The “fleet” approach taken to nuclear in IRP 2010 makes the investment particularly large. A 9.6GW fleet has been estimated to cost between R322bn and R1.4-trillion. These estimates do not include cost overruns, which are common on mega-projects. Many studies do not include interest during construction, which due to long lead times of nuclear and depending on interest rates, can increase the capital cost of projects by 40%-50%.

The government is already committed to providing a R350bn debt guarantee to Eskom, and we have an unaffordable debt-to-GDP ratio (currently at 51.7%). Another R1.4-trillion in guarantees or sovereign debt would more than double our national debt, which is currently about R870bn. The Treasury is seeking to reduce debt to keep the interest paid on our national debt under control. Increasing that debt in the current economic climate seems unwise.

• Caetano, Merven and Winkler work at the University of Cape Town’s Energy Research Centre. They write in their personal capacities.

Here is the link to the article

Energy Indaba 2017

5 December, 2017

(Ed. note: This is a draft of the agenda. This Indaba is supposed to be open to the public, but it isn’t apparently. One has to be invited and “pre-approved”, the media as well. This is NOT a public consultation, it appears to be part of the drive by Messrs Zuma, Mahlobo and others to drive through a distorted IRP in order to be able to force in nuclear. This although the modelling by the DOE itself, and Eskom, and the CSIR all conclude that nuclear is not needed until 2030 or later, and even then it has to be forced in by constraining renewable energy – at a high cost to electricity consumers and stretching our debt load even more. However, don’t expect sense to prevail at the Indaba!).


SA is switched on to Mahlobo’s wheeling and dealing in nuclear bid

Anton Eberhard, Business Day, 30 November, 2017

Why do they want the nuclear deal?

President Jacob Zuma and Energy Minister David Mahlobo are so desperate to restart the process to procure a fleet of nuclear power stations that they are pressuring the Department of Energy to produce a new “policy-adjusted” electricity plan that overturns the conclusions of its own computer modellers that nuclear energy is not needed.

The outputs from the world-class Plexos model, which has been run for the department so it can publish an updated electricity Integrated Resource Plan (IRP), clearly show that the energy mix that will provide SA with an adequate, affordable and reliable electricity supply excludes nuclear energy.

Much has changed since the official IRP 2010 was published. Electricity demand is lower and the most optimistic new forecasts assume much slower increases in electricity demand, even if the economy expands more rapidly. The relative costs of power generation options have changed. The updated model incorporates the latest cost data, including actual solar and wind energy prices contracted in the Renewable Energy Independent Power Producer Procurement Programme. The costs of nuclear energy used in the model were supplied by the department…

… But even with these conservative assumptions, nuclear energy is not picked by the cost-optimising model in any scenario other than one where artificial constraints are placed on how much solar and wind energy can be built and where additional carbon budget limits are imposed. Even in this extreme scenario, nuclear energy would only be required after 2039.

Here is the full article

Department of Energy and two NGOs claim court victory

Business Day, 1 December, 2017

All sides welcome court’s indefinite postponement of urgent application in nuclear row

01 DECEMBER 2017 – 05:46 LINDA ENSOR

The Department of Energy and the two nongovernmental organisations (NGOs) that took the government to court this week for its alleged nuclear plans have claimed victory in the case, which was postponed sine die (indefinitely) in the High Court in Cape Town.

Earthlife Africa (Johannesburg) and the Southern African Faith Communities’ Environment Institute brought an urgent application for the court to order Energy Minister David Mahlobo to abide by its court ruling of April, in which the government was instructed to abide by laid-down processes before embarking on a nuclear procurement programme.

They feared that Mahlobo was rushing the finalisation of the Integrated Resource Plan to expedite nuclear procurement.

The department said in a statement after the indefinite postponement that the NGOs had no legal basis for lodging the urgent application.

“When the department lodged the explanatory affidavit, the applicants realised that their case — which was based on media reports — had no basis…

For their part, the NGOs believed Mahlobo had “capitulated” at the 11th hour, giving his assurances to the court that he would abide by the law.

The postponement of the case sine die, they said, meant that they could go back to court immediately if the minister, Eskom or the department breached their undertakings.

“We have now secured undertakings given under oath by Mahlobo, Eskom and the acting director-general of the Department of Energy.

“Importantly, the affidavits confirm that Nersa will have to agree with any determination that nuclear energy is required by SA and will have to go through its own separate and independent public participation process before it can agree,” the NGOs said.

Here is the full article

Engineers want Mahlobo to cancel ‘nukes indaba’

Sunday Times, 4 December, 2017

South Africa’s top engineering academy has urged government and Eskom to put the controversial nuclear procurement programme on hold immediately‚ and also cancel a hastily convened energy conference scheduled for next week.

The South African Academy of Engineering (SAAE) has voiced “extreme concern” over recent developments in the electricity sector and stated that‚ in its opinion‚ it was not in the best interests of South Africa‚ especially the poor‚ for government to embark on a nuclear power procurement programme at this point.

The academy‚ whose members include nearly 200 eminent engineers and related professionals‚ has also urged Energy Minister David Mahlobo to postpone a major energy indaba to be held in Midrand from December 7 to 8.

Mahlobo said the indaba would provide a platform for public participation on contentious issues like the nuclear new build programme and he also signalled his intention to release government’s long-awaited integrated resource plan (IRP) before the end of the year.

But in a statement issued by academy president Trueman Goba‚ the SAAE said the indaba should be postponed to January 2018 to allow for proper planning‚ including the release of a draft IRP by the Department of Energy to allow meaningful participation by all relevant stakeholders.

“During the past six years there have been rapid and significant changes in the energy landscape with new technologies emerging and varying (falling) prices. Therefore‚ it is essential that the IRP should be regularly updated to ensure that South Africa’s power plan remains aligned with the most recent technological and pricing trends‚ while also taking account of the medium-term need to supply sufficient electricity and to replace the aging fleet of thermal power stations‚” the SAAE said.

The academy noted that earlier this year‚ a number of organisations – including SAAE and the government’s own scientific council‚ the CSIR – raised concerns about a number of aspects of the draft IRP document.

President Jacob Zuma had also appointed three different ministers of energy in a span of two years to head one of the most important ministries of government‚ while the minister of public enterprises had appointed four new chief executives at Eskom in one year.

The academy also noted that current prices of electricity from nuclear power stations were known to be higher than from many other sources.

“Therefore‚ the Executive Committee of the SAAE requests that‚ in the interest of South Africa‚ the Department of Energy should cease to run the current ad hoc processes but rather engage with relevant research groups and industry associations in a well-planned‚ facilitated and documented process to discuss and agree on the best available input parameters for the modelling of alternative scenarios for the IRP so as to ensure that there is consensus on the assumptions.

“This could be achieved by establishing a technical forum where the various research groups and industry associations meet to discuss these issues. A new IRP can only be adopted after proper consultation in an open and transparent process.”

The Department of Public Enterprises‚ as the controlling shareholder of Eskom‚ should also be tasked to resolve the leadership and governance issues at Eskom as a matter of urgency.

Here is the full article