Jan 11, 2013
EIUG head calls for rethink on SA’s nuclear planBack
Engineering|Africa|Energy Intensive User Group|Environment|Eskom|Gas|Industrial|Innovation|Mining|Nuclear|Resources|SECURITY|Technology|Africa|China|South Africa|Electricity Generation Capacity Plan|Energy|Energy-intensive Businesses|Imported And Unconventional Gas Options|Technology Innovation|Infrastructure|Kgalema Motlanthe|Mike Rossouw|Power
© Reuse this
Writing in the Business Day, EIUG chairperson Mike Rossouw described the current version of the Integrated Resources Plan (IRP), which was published in 2011 and outlines South Africa’s new electricity generation capacity plan for the 20-year period from 2010 to 2030, as “outdated”.
“A review should consider, for example, the scope for new technology innovation in power, the validity of a substantial, expensive and inflexible nuclear programme and alternative fuel options, such as gas,” Rossouw argues.
It has been reported previously that the Department of Energy is likely to conduct a review of the current IRP during 2013, and that there is an intention to increase the role of imported and unconventional gas options into a revised plan.
Rossouw tells Engineering News Online that the review is “overdue”, as there have been material changes in the electricity environment since the IRP was published.
For instance, the IRP’s assumed electricity demand growth is 2.5%, while the expectation currently is for average yearly growth of less than 2% over the coming five years.
The EIUG is not opposed to nuclear as a technology option, but is concerned that the addition of 9 600 MW of new nuclear capacity by 2030 could foreclose other opportunities that are more responsive to changing energy-market dynamics.
“For instance, we need to take a deep dive into the possible impact that the regional gas and shale gas prospects could play in affordably meeting our security of supply objectives,” Rossouw argues.
A large-scale nuclear roll-out could also further exacerbate the surge in Eskom prices, which have already climbed by more than 200% since 2007, from around 20c/kWh to 60c/kWh.
Eskom’s request for a further five yearly increases of 16% between 2013 and 2018, would result in “a huge 540% [increase] over the ten-year period”.
The EIUG believes yearly increases of 10% would be sufficient, particularly if the National Energy Regulator of South Africa insisted on greater cost prudency and operational efficiencies.
Increases that raised the nominal power price to 128c/kWh by 2018 would severely weaken the competitiveness of South Africa’s productive sectors and force energy-intensive businesses to close.
“By way of example, we have seen South Africa lose its place as the world leader in ferrochrome production to China in the past few years,” Rossouw writes.
He also quotes a National Foundry Technology Network report stating that there has been a decline of 13% in the number of foundries in South Africa since 2007.
“It does not appear that affordability has been adequately factored into the current planning and pricing considerations.” For instance, a closure of energy-intensive firms would erode Eskom’s revenue base, placing upward pressure on its costs that would have to be recovered from a shrinking customer base.
“This potential revenue collapse will be compounded by South Africa’s apparent imminent commitment to a substantial and irreversible nuclear build programme that will see Eskom’s costs and tariffs spiral even further beyond 2017.”
In November, Cabinet endorsed Eskom as the designated owner-operator of any new nuclear energy plants in South Africa, following the inaugural meeting of the National Nuclear Energy Executive Coordination Committee (NNEECC), which is chaired by Deputy President Kgalema Motlanthe.
The NNEECC has been established to oversee any future nuclear procurement process, as well as any future build programme.
Cabinet has also endorsed the proposed ‘phased decision-making approach’ for implementation of the nuclear programme, as well as a nuclear communication and stakeholder engagement strategy.
As part of this phased approach, the International Atomic Energy Agency (IAEA) will conduct an integrated nuclear infrastructure review mission to South Africa during February to assess South Africa’s readiness in terms of 19 milestones outlined by the IAEA.
The review follows a domestic self-evaluation report conducted under the aegis of the NNEECC.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
Other Economy News
Updated 4 hours ago The latest Transparency International report paints a bleak picture on corruption in Africa, with more than half of those surveyed perceiving corruption to be on the rise – and South Africa emerging as one of the worst performers. The African edition of the Global...
Updated 5 hours ago Following hot on the heels of the listing of MTN Zakhele earlier this month, petrochemicals company Sasol’s broad-based black economic-empowerment (BBBEE) fund Sasol Inzalo Public, followed suit on Tuesday – the second company to list on the Empowerment Segment of...
Updated 7 hours ago Public Enterprises Minister Lynne Brown reported on Tuesday that far-reaching interMinisterial committee (IMC) discussions were advancing on how best to reform South Africa’s State-owned companies (SoCs), many of which were currently underperforming. There are around...
Updated 3 hours ago Construction company Murray & Roberts (M&R) on Tuesday said board members Mahlape Sello and Royden Vice would be excluded from any discussion and documents relating to the investigation of the October collapse of a support structure of a pedestrian bridge being built...
Updated 3 hours ago The Nuclear Industry Association of South Africa (Niasa) is not sitting by idly while National Treasury and the Department of Energy mull over the various options for the country’s controversial 9 600 MW nuclear build programme. While Energy Minister Tina...
Updated 3 hours ago While a resurgence in manufacturing in Africa has been popularly touted as the silver bullet that will accelerate the continent’s economic growth prospects, The Economist management editor and columnist Adrian Wooldridge has suggested that Africa’s industrial...
Recent Research Reports
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
This Week's Magazine
The BMW Group will invest R6-billion at BMW Group South Africa’s (BMW SA’s) Rosslyn plant to produce the next-generation X3 sports-activity vehicle (SAV) for the local and export markets. Rosslyn will continue production of the current 3 Series through its lifecycle,...
The lack of consequences for poor performance and transgressions on the part of contractors remains a significant hurdle to tackling South Africa’s service delivery challenges, delegates heard at the Consulting Engineers South Africa Infrastructure Indaba, on...
City of Ekurhuleni executive mayor Mondli Gungubele earlier this month officially named the city’s bus rapid transit (BRT) system, Harambee.
About 58% of unstructured data stored by companies is dark data, which means that the value or regulatory importance of the data has not been determined. Subsequently, most of the stored data add costs, rather than increasing revenue or reduce regulatory risks, says...
Effective logistics, import/export and manufacturing consulting services require detailed industry knowledge and experience, but can add significant value to these industries by providing expert advice on various technical elements in their value chains, says...