National Development Plan
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Becoming proficient in executing mega-projects is one of the strongest tools in any country targeting sustainable economic growth, says Dr Anthonie Cilliers in response to the NPC's Discussion Paper on Energy.

In January 2018, the National Planning Commission of South Africa released Discussion Paper on Energy as part of the NPC Economy Series for public and stakeholder input. As part of the ongoing work of the NPC to consult and advise on the implementation of the NDP, the NPC has been working on a series of research papers on pathways out of the current economic slump.

This is the first of the series to be released for public and stakeholder input. The paper can be downloaded here.

This initiative is commendable and will go a long way in influencing policy that are rigorously scrutinised and most importantly supported by the public. It is also extremely important that the public are well informed about the various electricity generating technologies. We often take electricity for granted as coming out of a wall socket, but in a modern society, the lifeblood of an economy is electricity and entire industries often exist due to a certain technology being implemented in the country.

I believe it is in the public interest to share certain opinions on the content and qualify those opinions with facts and studies. Being a specialist in nuclear energy I will focus primarily on perceptions about the use of nuclear energy in South Africa or where nuclear technology is weighed against other energy sources in terms of cost, flexibility, environmental impact, safety and project implementation. With this information the public will be better equipped to provide feedback and comments on the discussion paper.

The discussion paper places a strong emphasis on three distinct requirements for the South African Energy sector.

“South Africa will have an energy sector that promotes:

  1. Economic growth and development through adequate investment in energy infrastructure. The sector should provide reliable and efficient energy service at competitive rates, while supporting economic growth through job creation.
  2. Social Equity through expanded access to energy at affordable tariffs and through targeted, sustainable subsidies for needy households
  3. Environmental sustainability through efforts to reduce pollution and mitigate the effects of climate change.”

From this, one would expect to see the discussion paper to rate each energy sector on supporting the achievements of these goals.

Cost of energy sources

When it comes to the cost of energy sources, the paper doesn’t do a cost comparison between the various technologies, it states that:

“A comparison of technology costs between when the NDP was adopted in 2012 and the current period provides an interesting and notable illustration of how quickly the energy sector is changing.  The costs of renewable energy sources (RES) have reduced globally as well as domestically while conventional sources have remained largely unchanged.  Specifically, solar photovoltaic (PV) and wind have been procured as part of the Renewable Energy Independent Power Producer Programme (REIPPPP) resulting in 80% cost reductions for solar PV and 60% cost reductions for wind in just four years.  This has made these technologies, in particular, the cheapest new-build technologies available in South Africa.”

 It then qualifies the statement with the following note:

“Of course, the value that these generators provide to the energy sector needs to be carefully considered as both are ‘dispatched’ by the weather and not necessarily controllable in the traditional sense (like conventional power generators are e.g. coal, nuclear, liquid fuel/natural gas fired generators).”

This is correct, when looking at the effect of intermittent, non-dispatchable energy sources has on grid level costs in selected OECD countries (selected on the basis that all of the technologies are installed in these countries) we obtain the following information:This means that for a grid with 30% wind or 30% solar PV penetration, the cost of managing and maintaining the grid rises by 34c and 64c per kWh respectively, for nuclear, coal and gas, it is 2c, 1c and 1c respectively (due to its dispatchable nature). This is not taken into account when looking at generation costs, or the Power Purchase Agreement (PPA) price. When this is done, the above statement in the paper becomes redundant as the total costs are not reflected – and much of this is passed on to the grid operator, in the South African case – Eskom, and eventually the consumed – You.

When looking at the IRP Draft update cost Levelised cost the various technologies, and adding the grid level system costs, we obtain:

We see the reality of this in territories like Denmark, Germany, Spain, Italy, California and Southern Australia with high penetration renewable energy, where electricity prices are amongst the highest in the world.

On this matter, the paper is slightly vague:

“The spatial dimension of the integrated energy planning framework and more specifically IRP (network related costs) has not been included in these processes as yet.  Although integrated generation/transmission expansion planning is possible with available tools, the problem becomes considerably large (mathematically) quite quickly and thus it may be of more value to either include a simplified representation of networks or assess network cost implications of scenarios ex-post.  Total system costs (including network costs) can then be compared on a like-for-like basis across all scenarios developed.  What is important to consider in this regard is whether network cost implications of scenario outcomes will shift overall total system costs enough to change the least-cost generation expansion planning outcomes (and overall strategic direction and policy that results).”

As shown, the demonstrated impact is large enough to render the entire least-cost calculation up to now, worthless without this addition. This appears to be the single largest flaw in relying on this development plan for energy planning.

In addition, when intermitted sources are added to the grid, and it enjoys first access to the grid – as its fuel cost is essentially zero, it causes load losses, and as a result profitability losses from the dispatchable power sources, as they recover the capital costs through operation. This invariably results in electricity price increases as we see on a typical mixed grid:

The question should then be asked, to what energy technology should these increased costs be attributed to? It should also be mentioned that these electricity price increases is most likely to hit the poorest of the poor, the hardest, as the capital to install rooftop solar PV would not be within their reach. This does not support the objective of affordable tariffs for needy households.

When looking at the reduction in the PPA price a useful correlation is with that of the capital cost of the technology. According to Eberhard and Naude, capital cost for onshore wind remained unchanged between bid window 1 to bid window 4, with solar PV coming down with 50% from bid window 1 to 3, then rising by 22% from bid window 3 to 4. The continued reduction in the PPA price through these bid windows indicates the improved credit these technologies enjoy, based on the positive perception around the use of these clean technologies.

When it comes to the cost of nuclear energy, the paper makes the following statements:

“The investment levels required for a nuclear programme at scale in South Africa will be unprecedented which requires a particular focus on this technology.“

 This statement is largely misleading as it refers to the proposed 9600MW fleet proposal as a single investment and mega-project. When recognising that such a programme will comprise of 8 reactors (or 4 2-packs), built over a period of 20 years, the picture immediately changes. It also does not require a focus on a particular technology – apart from the nuclear island (reactor and steam generators), most of the conventional plant are very similar to that of a coal fired power station, South Africa not only has a well-established and mature nuclear industry, but it boasts some of the best civil construction companies in the world.

With regards to the Advanced High Temperature Reactor:

“Considering the significant economies of scale that result from building large nuclear reactors (>1000 MW per unit), small modular reactors (SMRs) have typically been considered prohibitively expensive.”

This comment seem to be unqualified, and incorrect as a 2002 McKinsey & Company study on the levelised costs of the then PBMR indicated costs competitive with what is achieved by Koeberg currently (Koeberg being the cheapest generating unit on the South African grid today).

Supporting economic growth through job creation

In my view, probably the single most unfortunate position taken in the paper, is that of mega-projects.

“A number of lessons have been learnt in the pursuit of the Medupi and Kusile mega-projects and should be kept in mind and strictly applied when considering any possible future mega-projects.  It is appreciated that sometimes mega-projects are unavoidable and it could be argued that Medupi and Kusile were examples of this.  However, if avoidable in future, South Africa should instead opt for smaller, modular, flexible, easily manageable and scalable projects depending on strategic needs.  This is particularly pertinent in the electricity sector where one can manage the supply-demand balance with much more control via smaller, modular investment as opposed to mega-projects as has been the case for Medupi and Kusile specifically.”

When lessons learned from projects are implemented, they become better over time, this is because skills are developed – the cost overruns of first of a kind mega-projects are often referred to as “school fees”. In the civil and construction business, skills development and localisation of skills only happen when sustainable large projects are embarked on. Lessons learned, can never be to “avoid if possible”, in such a case the school fees are lost. With Medupi and Kusile, South Africa have returned to the construction of large power station after an almost two decade break. Before that South Africa easily had 5 or more similar projects running in parallel – testament to the value of sustainable large construction projects.

Taking the example of the Republic of Korea, we see construction time durations coming down from 64 months in 1995, to 47 months in 2011, construction cost went down with a staggering 37% during the construction of six units.

Recognising that South Africa has an aging fleet of coal stations, a sustainable ongoing construction process can be initiated that will provide skills development, localisation, and skills transfer from one generation to the next for years to come. Experts in the civil and construction industry would agree that this provides much needed stability where knowledge and skills can be maintained from one project to the next. Becoming proficient in executing mega-project is one of the strongest tools in any country targeting sustainable economic growth.

With regards to the research in the nuclear field, the paper states:

“South Africa’s research efforts into Small Modular Reactors (SMRs) have recently been revived via research efforts focussed on an Advanced High Temperature Reactor (AHTR) for commercialisation in the 2030s based on previous research as part of the Pebble Bed Modular Reactor (PBMR).”

This is great news and should be supported as the PBMR and now the AHTR are truly South African developed technology, that incorporates enhanced safety, improved operational flexibility and modular construction into a unique design suitable for various grid requirements.

Operational capability (flexibility)

When it comes to flexibility of various energy technologies, it is important to compare the capabilities of the various sources as all grids require a certain level of flexibility – even more so with intermittent energy sources increasing the penetration on the grid.

In this regard, the paper is silent on the flexibility of nuclear plants, however, it does state:

Gas-fired power generation will provide a flexible power generation source in the electricity sector to complement variability as the existing coal fleet decommissions over time.

This seems to be misleading as based on the maximum ramp rate of these plants, and the typical size of a unit, nuclear and coal plants remain more flexible (50MW and 80MW per minute respectively) to adapt to variability than gas plants. Due to the large capital investment, and low operating costs of these plants it remains more economical to maintain full operation than follow the load changes.

Carbon emissions and environmental impact

This then brings us to one of the most important objectives of the plan. Environmental sustainability through efforts to reduce pollution and mitigate the effects of climate change. The first point to consider is that of carbon emissions and releasing of pollution into the atmosphere.

On this topic, the paper remains completely silent when it comes to the role that nuclear energy can play in supporting these efforts. This is rather strange as together with wind, nuclear is the lowest carbon emitter of all energy sources at 12gCO2/kWh consumed.

To see the effect of this in real time, visit www.electricitymap.org an open source project depicting live energy mix and CO2 emissions of various countries around the world.

Interestingly enough, the paper chooses to promote gas as a transition technology to low carbon economy:

“Natural gas whether imported via regional pipelines or liquefied natural gas (LNG) terminals at strategic port locations should be prioritised as it could play an important role in a transition to a low-carbon economy.  It is versatile, releases fewer emissions than coal when burnt, has minimal localised air pollution impact relative to coal and can be a game-changer for use in a range of end-use sectors (not only power generation).”

With emissions of 490gCO2/kWh, this is not only an irrational statement, but to suggest that it can be used as in a “transition” to a low carbon economy also implies that the capital investment would be of a temporary nature? This while nuclear power plants operate for 60 years with the lowest carbon footprint of all.

When it comes to the environmental impact, the paper does mention the issue of nuclear waste:

“The ongoing concerns surrounding the safety of high-level and low-level nuclear waste management and storage need to be addressed sufficiently for all affected stakeholders.”

This statement is correct, policy and processes should be in place to address nuclear waste management into the future. It is however important to view the situation in the correct context.

In the 28 years of operations at Koeberg, the total spent fuel assemblies produced by the 1800MW power plant was 2345. These remain on the Koeberg site as the volumes are extremely small. In fact, if these 4-meter-long assemblies are placed upright next to one another, it would only cover 41% of a single tennis court.

What is more, should South Africa decide to reprocess the spent fuel, 96% of the fuel can be re-used inside the reactor as fuel, reducing the volume to cover only 1,64% of a tennis court. That after 24 years of operation.

Safety of energy sources

When it comes to safety concerns of energy sources, the paper is completely silent on all energy sources apart from that of nuclear:

“However, as a result of the significant impact of historical events at nuclear facilities including the more well-known Chernobyl and Three-Mile Island as well as more recent events at Fukushima, public concerns surrounding the safety of operating nuclear facilities locally and globally have been highlighted.  The ongoing concern surrounding the safety of high-level and low-level nuclear waste management and storage needs to be addressed sufficiently for all affected stakeholders.”

As a nuclear professional we have to acknowledge these accidents that has happened and continue to strive for a zero-accident scenario. That being said, all of these accidents have resulted on very few, deaths or injuries and in the case of 2 of the accidents, no deaths were reported.

The reality is that the mortality rate of nuclear energy is lower than any other energy source. It would then warrant the paper the include a section on safety concerns for all energy technologies, would it not?

When we put all of this together, we find that nuclear power, not only has the lowest carbon footprint of all, it also has the lowest physical footprint – limiting the environmental impact to a smaller area. Nuclear energy has the highest capacity factor (available electricity at all times), and the lowest mortality rate of all energy sources. It also produces the least amount of waste of any energy source and lasts up to 3 times longer than other power plant technologies.

In conclusion

I remain very optimistic about the initiative our government is taking in developing a sustainable development strategy for all the sectors of our economy. My comments should be seen in the light is to provide constructive criticism on often uninformed views. I am only too aware of the limited information the public has on nuclear technologies and its advantages. All too often we also see that the information in the public space is knowingly misrepresented. It is time that the nuclear academics start sharing the correct information, to demystify what has always been for me, a scientific marvel, with a wealth of untapped potential.

About the author

Dr Anthonie Cilliers Pr.Eng is the National Coordinator: South African Network for Nuclear Education, Science and Technology (SAN-NEST). Honorary Research Fellow: University of the Witwatersrand. At the upcoming African Utility Week from 15-17 May in Cape Town, Dr Cilliers is part of the Nuclear Power Africa conference.