Can SA afford NOT to invest in nuclear energy?

PUBLISHED: Tue, 04 Apr 2017 16:45:18 GMT

A lot has changed in the world in the past year.  Not all of it good, particularly the growing threat of protectionism.  But one thing, which has not changed is the urgent need for low carbon energy for the world to have any chance at all of averting dangerous climate change and keeping the rise in average temperature < 2C.  The electricity generation industry has to eliminate carbon emissions almost completely by 2040.

One more thing that hasn’t changed is that the only reliable source of low carbon base load electricity is still nuclear power.   Let’s be clear – renewables make a very important contribution.  Nobody welcomes the fall in the cost of solar, wind and other renewable energy more than me and my organisation NNWE.  Renewable energy complements nuclear but it cannot replace nuclear as a supplier of baseload electricity.

One day perhaps a form of flexible long-term low-cost electricity storage may become available but there’s no sign of it yet and it would be recklessly irresponsible for any country to make energy policy on the basis that it will happen soon.

So we come back to nuclear as an essential part of the energy mix that applies just as much here in SA as it does in UK, EU, US, China, Korea, Russia and dozens of other countries around the world which plan to keep nuclear in that mix.

Need to cut carbon emissions

My support for nuclear energy in the last 25 years has been closely linked to my firm conviction about the need to cut carbon emissions in order to address climate change.  But in the last few years, the need to phase out fossil fuels has become urgent for another reason.  That’s to address health concerns about air quality.  In some places this is now the biggest and most urgent driver of energy policy.

Last week I was in China where this overriding concern about air pollution has recently led to the closure of every single coal-fired power station in and around Beijing.  Here in SA air pollution doesn’t pose quite such a desperately urgent threat to human health. But even here thousands of avoidable premature deaths are caused by poor air quality.  So until we have an economically viable form of carbon capture and storage there cannot be any long-term role for coal, as many investors around the world have already concluded.

China is switching away from coal as fast as it can and it can only do so because alongside the world’s largest renewable energy investment programme, it also has the world’s largest domestic nuclear programme but coal consumption isn’t the only source of air pollution.

Vehicle emissions from cars and trucks are a substantial additional cause in every country, and particularly in every city in the world.  Many people have recently been taken by surprise by the speed of the fall in the cost of solar power.  I urge SA not to be caught by surprise by the speed of the switch away from petrol or diesel powered vehicles to electric ones.  A switch, which the residents of every major city will soon be clamouring for, for the sake of the children and grandchildren.  Of the millions of prosperous and influential middle-class citizens who see the life expectancy of the next generation threatened by a reduction, if immediate action isn’t taken to clean up the air they breathe.

Slower growth in electricity consumption by 2030

This new trend will be led by the great cities in Asia but I’m certain that just up the road from here the citizens of Johannesburg will be hot on their heels.  This new trend, currently still in an embryonic state is directly relevant to another part of the debate here in SA.  Much interest has been sparked by the recent downward revision in the predicted demand for electricity but I seriously doubt that the forecasts of slower growth in electricity consumption in 2030 take sufficient, or even any, account of the possibility of a big extra demand for power as vehicles switch away from petrol/diesel to electricity.

Last year I identified cost as the only significant barrier to the rapid expansion of nuclear power because nuclear is already proven to be a reliable, clean and secure energy source with a safety record that is among the best in the whole energy sector.

But while fossil fuel prices remain low and the cost of renewables is still falling the need for nuclear to demonstrate that it is cost competitive is as strong as ever.  The good news is that cheaper nuclear energy is quickly becoming available.

Within the next 12 months, the first of four new Korean nuclear reactors will start producing electricity in UAE at a price, which will be cost competitive with other forms of electricity generation.

Or consider the case of Rosatom, which is building more latest generation reactors globally than any other vendor.  Rosatom appears to have managed to make it to the stage where the learning curve and the economies of scale enable it to enjoy falling costs too.

As for China’s Hualong One reactor which in the UK has just started to go through the rigorous GDA process required by the UK ONR in preparation for being built at Bradwell in the UK.  Given the size of China’s domestic market, I wouldn’t bet against that design also generating cost competitive electricity before the end of the 2020s.

Nuclear opponents site high upfront costs

I’m aware that some of the strongest opponents of nuclear argue that SA can’t afford the big upfront costs.  I don’t believe that they have recognised the extent of the fall in the price of nuclear, which the offerings from each of these vendors may well provide for the benefit of SA consumers.  What’s more these offerings aren’t necessarily limited to the technologies available.  The accompanying financial packages are also important.

The terms of any loan for nuclear new build projects have a big impact on the eventual cost of the electricity generated.  So the question isn’t “Can SA afford to invest in nuclear?”.  It’s “Can SA afford not to invest in nuclear?”

This imminent prospect of affordable new nuclear power means that the time for decisions about South Africa’s energy infrastructure is now.  This economy, blessed with great natural resources and a talented workforce has not fulfilled the high hopes, which accompanied the arrival of democracy in the last few years of the last century.  Capital investment has recently lagged all the countries in the region apart from Zimbabwe.   And not surprisingly in the last five years SA’s GDP growth has been around half of its neighbours.

The Government’s National Development Plan has rightly recognised that investment in infrastructure is necessary to support development and should be prioritised.  Investment in nuclear will therefore not only guarantee a supply of secure reliable low carbon electricity, it will also give the economy a much-needed shot in the arm.

But to capture these benefits this decision must be taken very soon.  SA can’t afford to wait until 2037 for its first new nuclear units come online.  Since I spoke at Nuclear Africa last year the future of nuclear here seems to have taken two steps forward and one back.

Integrated Resource Plan for Electricity

At a difficult economic time, the Integrated Resource Plan for Electricity published last November effectively set back the wider adoption of new nuclear.  So I hope the Government will now consider the representations from across the energy sector urging revision of the Plan to prioritise development of new nuclear.

The deadline for submission of the new nuclear build programme means certainty is needed to facilitate investment and progress.  According to the conclusions of the report which NNWE commissioned from Trusted Sources, the multiplier effect of investment in nuclear would be 3.4 x the monetary value added would amount to US $77 billion.  That’s close to a quarter of SA’s current GDP.
By contrast, much of the economic benefit of additional investment in renewable energy goes to other countries, mostly in Asia from where the bulk of the components have to be imported.

The consequence of delaying new nuclear build until the late 2030s means slower economic growth, fewer high quality jobs and a less reliable power supply.  Furthermore investment in new nuclear offers SA the chance to develop a local supply chain network which in due course will have potential export markets across Africa and further afield.

Skills development in the STEM subjects will grow to meet the demand triggered by the investment in energy infrastructure.  The opportunity, which this creates for a new generation of black industrialists who can participate in and lead the building of the power plants and the supply of goods and services to the nuclear industry, is substantial and attractive.

There are potential supply chain participants attending this event. I urge them to join me in proclaiming to the business world, to the trade unions, to the politicians the public value of nuclear to SA. This isn’t just about the profits of a few companies.  It’s about jobs, about growth, about health.  These voices need to be heard.  And heard now

Energy investment decisions cannot be short term.  The impact of how SA decides in 2017 to meet its future energy needs will be felt right through to the second half of this century.  The energy problems which Germany now faces after its mistaken decision to shut down its nuclear fleet in the wake of Fukushima are a testament to the dangers of becoming too reliant on energy sources which are beyond a country’s control.

The key to making the right choices for SA are to recognise that thinking of SA’s energy needs, only in terms of today’s demand, or even the next five years demand, would be to rob the country of the future it deserves.

Nuclear energy will provide SA with a low carbon base load power source at a predetermined cost that will help transform the entire country.  With countries like Nigeria, Kenya and Ghana moving ahead with nuclear ambitions and leading nations like UK, the US, France, China and Canada continuing with their nuclear energy programmes, it’s time for SA to follow suit or risk being left in the dark.

Speech delivered to Nuclear Africa 2017 Conference, South Africa by Tim Yeo, Chair: New Nuclear Watch Europe (NNWE)

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