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IRP 2018 suffers from major failings, nuclear analyst claims

19th October 2018

By: Rebecca Campbell

Creamer Media Senior Deputy Editor

     

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South Africa’s draft Integrated Resource Plan (IRP) 2018 contained serious flaws, which significantly undermined confidence in its recommendations. So affirmed University of the Witwatersrand honorary research fellow and South African Network for Nuclear Education, Science and Technology national coordinator Dr Anthonie Cilliers. He was addressing the recent Nuclear Industry Association of South Africa workshop on the industry’s response to the IRP.

“A key input into the IRP that we are looking at is the methodology of least-cost analysis – in particular, there are two aspects of this that we are looking at,” he said. “The first aspect is how comprehensively the methodology was implemented in terms of all aspects of costs, including socioeconomic costs and the cost to local industry. And we feel that the IRP does not address these issues [and] the overall costs fully. We will elaborate on this when we make our submission on the IRP.

“The second aspect is how the least-cost analysis actually treats each of the energy sources in terms of their actual costs over time,” he added. “In this area, we also see that costs from various sources, which have inherently different attributes, are compared to each other, which results in a flawed least-cost outcome. Apples are not compared with apples.”

The IRP compared fully indexed (for inflation) bid window costs of wind and solar energy with the only partially indexed (for inflation) life-cycle costs of other energy sources, such as nuclear. It treated these different kinds of prices in the same way. “You can’t do this,” he affirmed. “The IRP does this because it uses different sources for its figures. A bid window price is different from a levelised cost of electricity and the two cannot be compared. The IRP uses levelised costs of electricity for nuclear but bid window costs for wind and solar. Therefore, its comparison of the costs of these forms of energy is invalid. If the levelised cost of electricity was applied to wind and solar, their prices would be significantly increased.”

Rectifying the costs, to bring them all into line, changed the results significantly. “Even with extremely conservative assumptions on the costs of nuclear, the nuclear costs quickly fall into line with the costs of wind and solar, and, cumulatively, over time, nuclear becomes the cheapest energy source,” stated Cilliers.

In his presentation to the workshop, he pointed out that the IRP based its predicted costs of a South African new nuclear power plant (NPP) construction programme on the nuclear new build experiences of Western countries over the past decade, which were marked by delays and cost overruns, while completely ignoring the much better experiences of Asian countries, where most new NPPs have actually been built during this period. These countries included China, India, South Korea and the United Arab Emirates.

“We believe that a new international request for information for a nuclear power programme should be expedited,” he said to Engineering News. “This would provide up-to-date information, for the IRP is working on flawed nuclear costing assumptions, including old costing models.”

Cilliers also argued that the IRP seemed to have a back-to-front approach with its recommendations. It called for prioritising certain technologies to be implemented before 2030, and only afterwards carrying out studies into costing models and their grid effects. For example, the IRP called for the construction of gas turbines to start in 2026, although there was still no idea where the gas would come from nor if it would enjoy price stability. Likewise, it called for further such studies on wind and solar, while prioritising the acquisition of these technologies.

On the other hand, it delayed technologies already proven in South Africa, especially nuclear, but also clean coal, and called for further studies into these technologies, “despite the fact that such detailed studies have already been done on these technologies in South Africa and are in the public domain”.

Indeed, studies on the economic impact of the Koeberg NPP, near Cape Town, in the Western Cape province, and studies on the impact of the proposed new NPP, at Thyspunt, in the Eastern Cape province, had indicated that they had boosted and would boost the economy at local, provincial and national levels, he highlighted. “The manufacturing industry in South Africa is currently on its knees and is desperate for a sustained infrastructure expansion programme like this that will maintain and develop skills.”

In terms of financing, in his presentation, Cilliers noted there were various options. He cited, in particular, the case of Egypt, which had launched an NPP build programme. Of the capital expenditure, 70% was sourced through a loan from the vendor country (Russia) at 3% interest (the loan to be repaid over 20 years). The remaining 30% was being provided by private-sector advisers. In South Africa, such a deal would provide nuclear electricity at a price of R1.03/kWh for the first 20 years. Thereafter, the capital investment would have been paid off, and the nuclear electricity price would drop significantly to just R0.25/kWh (in 2018 rands and cents). “In South Africa, this would mean nuclear energy would become cheaper than solar energy after five years and cheaper than wind after eight years,” he told the audience.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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