Tag Archives: nuclear and RE pricing

Nuclear power – unaffordable, or lowest cost energy available?

Fin24, Anthonie Cilliers, 9 November, 2017

Nuclear expert Dr Anthonie Cilliers has calculated estimates for the cost of building nuclear power in SA and believes the high costs being punted may not be accurate. 

THE persistent mentions in the media by energy experts that nuclear electricity is expensive and unaffordable has become all too frequent.

These claims can be nothing more than speculations without South Africa being able to issue request for proposals (RFPs), and in most cases I have found it baseless and echoing an ongoing narrative.

Recently we have also heard conflicting statements made by politicians and experts on the affordability of nuclear which in my view confused the public as much as it did the media. Pressure groups then like to cry foul and jump on the statement they prefer, ridiculing the other.

As an academic, I prefer to look at numbers and calculations. The result may be surprising, but as we will see, both statements could be right.

Countries like China, Russia and India are building nuclear power plants at an enormous pace at the moment, more countries are signing contracts to join them, whilst in the US, France and the UK we find costs escalating and construction even being stopped.

Of course, depending on the side of the fence you are on, you ignore the ones that don’t fit the narrative.

(Ed. note: We are probably all guilty of confirmation bias in our research and reading, I certainly am! Reading this article with a pro-RE bias, I would question some of the assumptions made in this analysis:
– Having said that the funding model is critical, one can’t then compare the IRP bid prices against Russian-funded nuclear LCOE prices. The Russian funding is assumed at 3% p.a. whereas the IPPs are presumably getting a market-rated return on their investments, perhaps 10%?
– The REIPPPP Bid Window 4 prices are lower than assumed here: PV R 0.62/kWh, Wind R 0.62/kWh, CSP R 2.02/kWh, and not PV: R 0.91/kWh, Wind: R 0.75/kWh, CSP R 1.80/kWh. See  https://www.csir.co.za/sites/default/files/Documents/Statistics%20of%20Wind%20and%20Solar%20PV%20in%20SA%20in%202016%20-%20CSIR%20-%20PUBLISHED.pdf
– The figures quoted on budget overruns are much more optimistic than what has been experienced in recent times (e.g. Olkiluotoa: Budget GBP 3.2 billion to GBP 8.5 billion, timeline: completion was going to be 2009, now 2018. https://www.ft.com/content/36bee56a-3a01-11e7-821a-6027b8a20f23 )
– The anaylsis left out some externalities, such as health and safety, insurable risks, carbon footprint, flexibility in reacting to demand changes, permanent waste disposal, etc. All these would count against nuclear except perhaps for the carbon footprint.)
The secret, as I have found, is in the funding model. I have also realised that the energy debate has very little to do with nuclear, or renewable energy, or even coal. The energy debate is a proxy debate about ideologies. One will always result in expensive energy (even the “cheap” ones) as a commodity, the other will use energy as a driver for economic growth.

To unpack this, I will use a few real-world examples (I find models to be dishonest on the best of days, designed to fit a certain narrative – but that is a personal view).

Here is the full article