Lobby group the Manufacturing Circle has become the latest business organisation to voice reservations about the South African government’s intention to proceed with a large-scale nuclear energy programme, describing any reliance on “old-style nuclear reactors to provide energy stability” as an “expensive, highly risky and deeply problematic intervention”.
The hard-hitting critique is contained in its second quarter Manufacturing Bulletin – itself compiled against a backdrop of ongoing load-shedding, which was highlighted by many of the survey’s 73 respondents as a threat to manufacturing output. The respondents also said electricity instability was having a negative impact on both productivity and profitability, while the sharp rise in power tariffs had led to increased production costs.
The lobby group does not oppose nuclear as a technology, arguing that advancements in new-generation modularised nuclear reactors could, in future, offer emission-free base-load power in a number of countries. However, “traditional nuclear reactors, with heavy upfront capital expenditure, are financially doomed, and socio-environmentally irresponsible”.
“Nuclear technologies themselves are subject to technological disruptions, and it will take a number of years before they settle down. Rushing to install old-style reactors now is bad timing at best, and financially irresponsible at worst,” the bulletin, which is compiled for the Manufacturing Circle by Pan-African Investment and Research Services, asserts.
The bulletin has been published only a few weeks after Business Unity South Africa (Busa) called on government to share, at the earliest opportunity, the estimated cost of the nuclear programme and its impact on the longer-term tariff trajectory.
In a paper delivered at the most recent meeting of the Presidential Business Working Group, Busa said that, while recognising the potential benefit of nuclear power as a low-carbon source of electricity, “the anticipated high cost of a nuclear programme on top of the already steep rises in electricity prices over the last few years, is a major concern to business”.
Under the current Integrated Resource Plan (IRP) for electricity, the intention is to introduce 9 600 MW of new nuclear capacity, or some six to eight reactors, between 2023 and 2030.
However, the governing African National Congress (ANC) in discussion documents released ahead of its 2015 National General Council has urged government to clarify the status of the IRP Update, which was released in 2013, but never approved by Cabinet.
The update adopts a far more cautious approach to nuclear, arguing that the lower demand projections could mean that the nuclear decision should be delayed, or even abandoned if the reactors could not be built for less than $6 500/kW.
The Department of Energy (DoE) has indicated that it plans to proceed with a procurement process during the second half of 2015 and has made reference to an overnight cost of around $4 200/kW, which is says has been achieved in other “newcomer States”, such as the United Arab Emirates, Pakistan, Turkey and Belarus.
The ANC documents stress that government “must commit to a full, transparent and thorough cost-benefit analysis of nuclear power as part of the procurement process” and “must announce publically that nuclear energy can only be procured in line with the legal prescripts and after a thoroughgoing affordability assessment”.
The DoE has stated on several occasions that it will “follow the approved procurement process, which will include a competitive-bidding process that is transparent and cost effective and in line with legislation”. It also indicated in a recent reply to a Parliamentary question that the nuclear funding requirement “is being discussed within National Treasury”.
Nuclear proponents, meanwhile, argued that the technology will offer South Africa low-carbon, stable electricity for multiple decades, while offering a major stimulus to the construction and manufacturing sectors, owing to stipulations of high levels of local content.
A number of construction and manufacturing companies have also already invested in systems and skills in preparation for the nuclear build programme.