South Africa's 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 on Wednesday. He was addressing the Nuclear Industry Association of South Africa workshop on the industry's response to the IRP.
"A key input in to 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 told Engineering News Online. "The first aspect is how comprehensively the methodology was implemented, in terms of all aspects of costs, including socioeconomic costs and cost to local industry. And we feel that the IRP does not address these issues, 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) lifecycle 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 nuclear power plants 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 Online". "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. "This 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 Westerm Cape province, and studies of the impact of the proposed new NPP at Thyspunt in the Eastern Cape province, had indicated that they had 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 a NPP build programme. Of the capital expenditure, 70% was coming by means of 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 that nuclear energy would become cheaper than solar energy after five years and cheaper than wind after eight years," he told the audience. "We expect that South Africa could replicate Egypt -- [funding the project with] a combination of private equity and a vendor loan."