Fluctuating coal prices, transportation and transmission costs, as well as future carbon tax penalties are risks to South Africa’s energy generating future, says South African nuclear technology company the Pebble Bed Modular Reactor (PBMR) Company.

“The challenge facing the local nuclear energy industry is that the initial capital costs are higher compared with the capital costs of fossil fuel plants. 
“However, the long-term benefit is that the maintenance and operation of a nuclear plant and the cost of the nuclear fuel are considerably lower. 
“The opposite is true for fossil fuel plants, where the initial capital cost is lower, but the long-term costs are high.
“When one considers elec-
tricity generation, one must consider the long-term implications. 
“If one only considers short-term implications, it will result in getting caught with long-
term cost factors,” says PBMR Company international marketing manager Gert Claassen.

He adds that most countries battle to raise the initial capital to build nuclear power plants, which can provide significant lower-cost benefits for more than 40 years. 
The result is that countries revert to short-term solutions of using gas and coal. 
However, this can have a costly impact on electricity generation in the long term as fuel costs rise, he explains.

In highlighting the cost differentiation, PBMR Company communications consultant Tom Ferreira notes that State-owned power utility Eskom’s open-cycle gas-turbines, which run on diesel, cost 78 times more to run for every megawatt generated than State-owned power utility Eskom’s nuclear power station, Koeberg.

“The reality is that the cheapest way to generate electricity is to have a coal-fired plant on the site of a high-quality coal mine. 
“The moment the coal needs to be transported, the costs increase. 
“If the coal is not of high quality, the economics also change. If the plant is far and transmission lines have to be built, the costs increase again,” says Claassen.

Ferreira adds: “To build a transmission line from the Medupi power station to Cape Town will cost about R8-billion, not taking into account the transmission losses along the way.”

Claassen explains that, assuming certain economic growth rates by 2030, South Africa will need to double its generating capacity and ideally one-half of that requirement should come from nuclear. 
“South Africa needs every type of energy resource that it can gather and there is a place for renewable energy. 
“However, renewable energy 
will never be able to provide the baseload that the country needs, nor will it be able to maintain it, although is can make an important contribution to the whole energy cycle,” he says.

Claassen reports that, because of economic realities, South Africa needs a balanced energy portfolio that includes both coal and nuclear, partic-ularly in coastal areas because of transmission lines, as well as some renewable energy that can be used in local areas. 
This is a balanced mix that is significant as clean energy sources become a require-
ment.

Despite Eskom’s decision to suspend Nuclear-1 at the end of last year owing to high costs, the company acknowledged, at a results presentation in August, that nuclear energy was still the biggest opportunity for the company to limit its carbon dioxide (CO₂) emissions. 
The company generated 221,7-million tons of CO₂ in the 2009 financial year and believes that nuclear and renewable-energy projects would play a major part in reducing its emissions. 
Claassen adds that the cost of carbon emissions will become a significant factor in future, particularly when carbon taxes come into effect.

“Nuclear energy has a significant role to play in electricity generation in South Africa. However, the decision on the future of South Africa’s nuclear programme now rests with government,” he concludes.