SIKI MGABADELI: South African power utility Eskom will invite bids to build six nuclear reactors in the government’s push to increase nuclear capacity. That’s despite concerns that have been raised by some campaign groups and economists. South Africa has earmarked nuclear expansion as the centrepiece of a plan to increase power generation to ease the country’s reliance on an ageing fleet of coal-fired plants and has asked Eskom to procure an additional 9 600MW of capacity.
We are chatting now to Dave Nichols, who is chief nuclear officer at Eskom. Dave, thanks for your time this evening. Let’s maybe take a few steps back and ask – why nuclear?
DAVE NICHOLS: That’s an excellent question. Basically if you want to make power on a dispatchable basis – that means when you call upon it to work, it works – you’ve got four technologies in the world that work at the moment.
That’s basically coal, big hydro plants, gas-fired plants and nuclear plants. And at the moment in this country we have no natural gas available in the country, we have no hydro facilities. There is hydro north of us, but not in South Africa. And that leaves us essentially with the choice of coal or nuclear to meet the demand for dispatchable baseload power. As we know, there are issues with the coal environment, so more importantly the long-term term economics of nuclear look very positive. So we see nuclear as the credible option for low-cost power into the future.
SIKI MGABADELI: When you talk about the prospects for nuclear into the future being positive, we have those who say that’s it’s unaffordable and that the world may eventually move away from it. How do you respond to those campaign groups and I suppose economists who look at nuclear differently?
DAVE NICHOLS: I personally look at the world market, and I’ve got to say we all have things like models and telecom models. But all those models are benchmarking the real world. If I look at the real world, I see countries that have a large degree of nuclear power.
Obvious examples are France, The Czech Republic, that kind of country in Europe, which have some of the lowest electricity costs in their environment. And I look at the renewables – and we all believe renewables have a place in the system – but essentially in terms of bulk supply they don’t bring necessarily the characteristics that the utilities need to run the grid. Look at countries like Germany, Denmark and Spain and Italy, which are heavily renewable, and their tariffs are significantly higher that those that have chosen to go a different route.
So our view is that our models indicate that nuclear is a competitive environment. People often say “can we afford nuclear”. But I think about 18 months ago we proved “can we afford to live without reliable power,” and the answer was no. And the answer is reliable power is what is the most reliable in a risk-off system that currently runs, for example. At the moment Koeberg is running highly reliably in the Western Cape. Cape Town is the most green city in South Africa, but it has non-Co2 energy provided to it by Koeberg, and has had for the past 30 years. And it’s one of our lowest-cost generating units.
And while renewables may become most cost-effective in future, at the moment they have operational issues and in many ways some cost issues.
SIKI MGABADELI: Let’s talk quickly about the procurement process. How long will that take, and what does it entail?
DAVE NICHOLS: I see the first thing is that this morning or this afternoon somebody claimed that sending out the request for information, which we plan to do late this week, will immediately require us to be in debt to R1 trillion. We don’t see the logic of that. We’ll do a staged process. It’ll take us from when we start now until we actually have a final contract with a supplier for the machines – probably something like 24 months. Any point in that time that we stop the process, then we stop the process – like when you buy a motor car, you can discuss it till you are blue in the face, but if you say no, I’m not going to sign the final [document], then you don’t get it.
And also the comment you made earlier which I think is inappropriate is, we don’t see ourselves going out and ordering 9 600MW of nuclear on the first day. We clearly see it as being a staged process, and our current view is we’ll almost certainly contract for the first two units with a long-term agreement as to how we pull the rest of them down as we go forward.
SIKI MGABADELI: No, I said that government has asked you to procure an additional [9600MW] and that we’ve earmarked nuclear as part of the plan. So it wasn’t that that’s in one go.
DAVE NICHOLS: Yes.
SIKI MGABADELI: Certainly not. We’ll leave it there. Dave Nichols is chief nuclear officer at Eskom.