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April 24, 2016

Nuclear is not too Costly and should Remain Part of SA’s Energy Mix

A RECENT opinion piece by Anton Eberhard, titled Nuclear too costly and SA does not even need it, cannot go unchallenged.

To understand the reasons for or against nuclear energy, perhaps we should first establish on what basis a decision for or against such a move should be made.

Is it based on demand forecast, environmental concerns or just capital cost? These seem to be the main focal points being proposed for abandoning the option of nuclear in SA.

Had this been the case in 2010, when the first Integrated Resource Plan for electricity supply in SA was developed, we would have had a least-cost and unconstrained power plan. However, this would have resulted in building only coal-fired power stations for base load, and gas and liquid fuel turbines and pumped storage for peaking capacity. Therefore neither renewables nor nuclear would have featured as options.

As a consequence, the Renewable Energy Independent Power Producer Programme (IPP) would have been a nonstarter.

It is important to note that when plans for the IPP were announced, there was significant public debate on the necessity of the programme and “experts” rallied against it.

The key concern was the costs, highlighted in Bid Window 1, which were on average R3,453 per megawatt-hour (MWh) for concentrated solar power, R3,374/MWh for solar photovoltaic and R1,447/MWh for wind. For the record, our current cost for the Koeberg nuclear power plant is R433/MWh. It is noted, though, that the cost of new capacity for nuclear will be higher than R433/MWh because the depreciation cost will be higher for the new plant.

This notwithstanding, and like our successful renewable programme, nuclear energy is the future.

In order to answer our primary question of how we make the decision on the appropriate generation mix, one needs to understand the electricity supply planning process.

The process, by its nature, is a multicriteria decision analysis that optimises the deployment of various technologies. The criteria considered include:

  • levelled lifecycle cost of electricity;
  • constraints of system requirements (demand and supply, electricity grid stability, security of supply, technology lead times)
  • national objectives — introduction of renewables targets, job creation, social development and future price certainty; and
  • national carbon emissions reduction commitments under COP 21, the 2015 annual Conference of the Parties on climate change.

There are certain constraints within this planning framework that strongly support the deployment of nuclear power generation. To illustrate this, one must first look at those constraints relevant to the discussion, starting with meeting the system requirements.

Electricity demand in SA has reached a plateau over the past 10 years. The demand predictions made in the IRP 2010 have not materialised and the economy has slowed. The cause of this is important as it affects future growth predictions.

The conundrum planners are facing is whether the decline in growth is natural, structural or a direct consequence of the constrained supply. It is quite likely that the latter has played a significant role in curtailing demand and, as the supply constraints ease, one will start seeing demand increasing above the recent trends.

The increased demand, coupled with future decommissioning, will require SA to build new capacity. This then leads into the question of what we build and when.

For this we need to separate dispatchable generation options, where capacity can be increased or decreased on demand, from intermittent generation options, where capacity or availability cannot be controlled, such as wind and solar.

To maintain control of the electrical network system, we require sufficient dispatchable power supplies distributed strategically across the network. These dispatchable options serve two purposes: to back up intermittent supplies (renewables) to ensure demand is met, and to provide frequency support without which the entire national supply system would be unstable.

The larger the capacity of intermittent supply in the system is, the more reactive the system needs to be. The options available for this purpose are coal, natural gas, liquid fuel, nuclear, geothermal, biomass and pumped storage. However, not all of these technologies are suitable for deployment in SA based on the following considerations:

  • geothermal is not available locally;
  • natural gas is not sufficiently available to fill this role and there is uncertainty on long-term costs though current prices are low. In addition, there would have to be limitations on maximum volumes to maintain security of supply in the event of interruptions;
  • liquid fuels are too expensive to use as mid-merit or base-load options;
  • biomass as a fuel source for large power generation is a potential fuel swap for coal in the future; and
  • pumped storage has limited future expansion in SA due to water constraints and geography.

One could also consider imports but these would also be limited due to security of supply. Also, the ability of these imports to manage intermittence without local support may not be adequate. Importing additional electricity, for example, hydro (such as importing from the Democratic Republic of Congo’s Inga 3) might help. But import capacity available will be limited so this can only be a building block of the answer.

Therefore, SA has only two real options for base-load and mid-merit operations to manage system requirements. These are coal and nuclear. The decision on which technology to deploy then requires an assessment of lifecycle cost, current and future predicted costs, and COP 21 commitments.

There has been significant debate on the current and future costs of both these technologies. There is growing consensus that future cost comparisons will swing in favour of nuclear given increasing coal-fired plant costs associated with continuously more stringent emission limits and the introduction of carbon taxes.

Nuclear would also offer much more certainty on future electricity pricing.

Nuclear does require high initial capital expenditure for construction but, operationally, nuclear offers one of the cheapest sources of electricity that comes with zero greenhouse gas emissions. This is therefore clearly more favourable than any fossil power generation.

The oversubscription to fossil fuels may also result in future early closure of assets. This, linked to increasing pressure on SA to honour its commitments to the United Nations Framework Convention on Climate Change, limits the future use of coal as a mid-merit or base-load option. SA’s commitments include to stabilise carbon dioxide emissions from 2025, and to decrease emissions from the electricity sector from 2035.

The fuel technology selection is further complicated by the lead times for construction of new power stations (10 years for coal and 10-15 years for nuclear). Once the required commitment dates are missed, you are forced into selecting technologies that can be delivered in the required shorter time frames to ensure security of supply. These forced time-bound choices may not necessarily be the optimal choices.

So the question then becomes, do we actually have any other choice than nuclear?

A similar view is shared by the International Energy Agency and Nuclear Energy Agency, as quoted below from the 2015 edition of a joint publication, Technology Roadmap, Nuclear Energy:

“Nuclear power is the largest source of low-carbon electricity in OECD (Organisation of Economic Co-operation and Development) countries, with an 18% overall share of electricity production in 2013 and second at global levels with an 11% share. The updated vision for the 2014 Nuclear Roadmap — based on the 2°C scenario of Energy Technology Perspectives: Scenarios and Strategies to 2050 — sees nuclear continuing to play a major role in lowering emissions from the power sector, while improving security of energy supply, supporting fuel diversity and providing large-scale electricity at stable production costs.

“In the medium to long term, prospects for nuclear energy remain positive. A total of 72 reactors were under construction at the beginning of 2014, the highest number in 25 years. According to the 2D scenario, China would account for the largest increase in nuclear capacity additions from 17GW in 2014 to 250GW in 2050 and, by 2050, would represent 27% of global nuclear capacity and nuclear power generation. Other growing nuclear energy markets include India, the Middle East and the Russian Federation.”

For a number of countries, such as China, South Korea and the United Arab Emirates (UAE), this has meant reducing coal reliance and the effect for these countries has been immense.

China localised a lot of the actual equipment manufacturing and created a whole new industry. South Korea now even supplies nuclear equipment to the UAE. And even the economic effect on the UAE has been significant, as the UAE has had to build a whole national operations and maintenance industry.

Finally, although there are a number of alternatives available, nuclear remains the best long-term option for the further development of SA’s energy mix that will ensure security of electricity supply whilst adhering to our various national and international objectives.

Authour: Matshela Koko

 Koko is group executive for generation at Eskom.

Published by BDLive

Date: April 05 2016