You are currently viewing our desktop site, do you want to download our app instead?
Moneyweb Android App Moneyweb iOS App Moneyweb Mobile Web App

NEW SENS search and JSE share prices

More about the app

Renewables won’t cut it, says Nersa

‘SA needs nuclear for base load.’
Koeberg Nuclear Power Station. Image: AdobeStock

In concurring with Minister of Mineral Resources and Energy Gwede Mantashe’s determination for the procurement of 2 500 megawatts (MW) of new nuclear generation capacity, energy regulator Nersa has rejected the argument that renewable energy together with energy storage or gas can supply all the country’s needs.

Nersa only recently published the reasons for its decision to concur with Mantashe, which was taken in August.

Moneyweb Insider Gold

Join heated discussions with the Moneyweb community, and get full access to our market indicators and data tools while supporting quality journalism.

R63/month or R630/year

SUBSCRIBE NOW

You can cancel at any time.

The regulator maintains that the need for base load energy remains and that renewable energy is too inconsistent to supply the consistent needs of industry running day and night all year long.

It argues that coal and nuclear are the two viable options for base load energy – with nuclear being the preferred technology in the light of the need to reduce carbon emissions.

Nersa does however seem determined to prevent another Medupi or Kusile, with huge budget overruns and little accountability for design and construction flaws.

It therefore made the concurrence conditional on the engineering, procurement and construction (EPC) contract format. This will ensure that the project management risk falls upon the successful bidder, rather than government.

Read:

Demand analysis

A proper demand analysis must also be done to determine the demand profile post 2030 when the nuclear power will become available to the national grid.

This is especially needed in light of the unknown impact of the 100MW licensing exemption President Cyril Ramaphosa earlier announced that is expected to open the floodgates for self-generation, especially by industrial power users.

“This will assist to determine the capacity and the scale at which the country would need to procure additional power generation from various technologies, including nuclear,” says Nersa.

Minerals Council CEO Roger Baxter recently stated that the council’s members are involved in projects totalling 3 900MW of renewable energy projects worth an estimated R60 billion.

Power requirement

The ministerial determination is based on the Integrated Resource Plan (IRP) that was published in 2019 and sets out the country’s electricity needs up to 2030.

The plan provided for no new nuclear generation capacity to be connected during that period, but taking into account the long lead time for such projects, provided for preparations to begin for the procurement “at a pace and scale the country can afford”.

The Department of Mineral Resources and Energy considers the procurement as part of such preparations.

During a public participation process earlier this year Nersa received 304 comments from individual stakeholders. “Out of the 304 individual stakeholder comments, 235 comments were opposed to Nersa concurring with the ministerial determination, 59 were supportive and 10 were on the fence,” Nersa says.

It adds that 53 organisations submitted substantive comments, with 28 supporting the determination, 24 against it, and one “on the fence”.

Nersa says it is essential to maintain base load supply to protect jobs in the industrial sector, which represent more than 22% of the South African workforce.

In 2035, when the proposed new nuclear generation capacity will come online, the base load demand is expected to be about 38 500MW, according to the IRP.

As Eskom’s coal-fired power stations reach the end of their design life and are decommissioned, the 36 800MW capacity in 2020 will reduce to only 12 800MW, which will not be enough.

Nersa however expects the supply gap envisaged in the IRP to shrink as industrial users make use of the 100MW licensing exemption. “Hence, a moderate additional baseload capacity of 2.5GW that the Minister is proposing will go a long way to close this generation gap,” it says.

The required demand analysis will indicate whether the country will have enough base load capacity post 2030.

Nersa points to improved coal technologies and says that coal remains the second most viable option for baseload generation, since

“South Africa holds 35,053 million tons (MMst) of proven coal reserves as of 2016, ranking 8th in the world and accounting for about 3% of the world’s total coal reserves of 1,139,471 million tons (MMst)”.

Nersa rejects the argument that widespread wind and solar PV generation backed by flexible gas or storage technology can replace traditional base load generation at a 10-20% cost reduction, significantly lower emissions and water consumption as well as higher labour intensity.

Demand imbalance

Renewable energy has a further advantage of shorter construction time with less complexity than mega nuclear or coal projects.

However, the regulator argues that such a system dominated by solar photovoltaic power will result in depressed demand during the day and the need to ramp up generation from peaking plants at night.

This will necessitate the redesign of tariffs to ensure that only customers who have embedded generation pay for the expensive peaking capacity.

Relying largely on renewable energy with back-up will bring complexity to grid management and require further grid investment as well, Nersa says.

Nersa points to the experience in the state of Texas in the US where decommissioned coal-fired power stations were replaced largely by wind power.

“In February 2021, Texas faced record-low temperatures, snow and ice made roads impassable, [and] the state’s electric grid operator lost control of the power supply, leaving millions without access to electricity.”

Nersa says “to avoid a similar disaster, South Africa, which has similar conditions as Texas, needs to take heed to these lessons and ensure that it has a mix of technologies that can withstand any weather conditions by continually providing energy to the grid regardless of the severity of the weather”.

“Both nuclear and coal are able to do this,” it says.

VIDEOS

COMMENTS   9

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in and an Insider Gold subscriber to comment.

SUBSCRIBE NOW SIGN IN

If Nersa is using the Texas winter disaster as a reason not to trust alternate energy, I would like to remind them that Elon Musk has invested in the largest Manufacturing Plant ever built based in Texas and which will be primarily run on Solar Energy!
The Nuclear proposal was, by all accounts, an offering encouraged in the Zuma years probably based on the “incentives” offered by Russia including huge commission earnings for the politically connected. Speaking as a weary taxpayer, this in itself makes me suspicious and distrustful of their motivations.

South Africa is similar to Texas? Man, that’s hilarious. When last did South Africa experience a nationwide ice storm that pushed temps below zero for days on end? Because that is what happened in Texas. When have we EVER experienced anything like that? And the truth is the grid in Texas was completely unprepared for that freak event because it wasn’t winterised, due to the costs involved. Which led to the breakdowns and resultant blackouts.

This whole argument is completely spurious anyway, because there is no way this country can afford nuclear, by far the most expensive of all the energy options. Of course, that wouldn’t prevent the government from signing away our future to Russia or China, they’re entirely capable of it. But South Africans are FAR more aware of the whole energy situation now and I highly doubt they could get away with it.

The reality is renewables are the most affordable option, developed nations have already committed to funding them and they are the quickest route to beefing up the energy supply.

S. Africa has similar conditions to Texas… that’s a laugh. When last do you remember S. Africa having an ice-storm that drove temps to below zero and lasted for days on end? No, me neither. Because that’s the freak event that occurred there. S. Africa has NEVER seen anything like it.

So that’s an entirely spurious argument for nuclear and totally moot anyway, seeing as that we can’t AFFORD the nuclear option anyway.

Renewables are the cheapest and we already have funding lined up for renewable projects, which can be ramped up quickly (relatively speaking) and will allow us to buy time until we can figure out what to do with the whole energy supply mess.

I’m afraid that trying to talk sense into the ANC cadres, none of whom is even vaguely qualified to run an economy, especially trade union and communist party “stalwart” Mantashe is like trying to reason with a drunk in a bar.

Look North if you want to see what awaits us.

Good news that NERSA is insisting on EPC Turnkey. Eskom has not in its entire history built anything on time on budget.

One step better would be to make all energy PPA.

On PPA basis Eskom will not find bidders for nuclear. Coal, maybe.

The need for another nuclear base load power station functioning as Koeberg has supplied energy to the grid since the station came on stream was probably seen to be required before the Zuma era had an influence on cost perceptions causing delays. Long term planning would also have taken into account the reality of replacing generating capacity required in phasing out the smaller older and more expensive to run coal fired power stations commissioned in earlier years. The unfortunate disruptions arising from facing up to nuclear safety issues and coping with the emerging reality of corruption locally have had an influence not only in the country but also in the development of generating power and requirements and the importance of electricity supply in the Southern African region as a whole.

“ This will necessitate the redesign of tariffs to ensure that only customers who have embedded generation pay for the expensive peaking capacity.”

They can only do this on energy charges if the user is on TOU plus have a punitive effect if the user consumes power in the peak periods. Dead easy to do private storage of PV in batteries for small evening loads!

But most likely is we will see massive spike in energy availability fees (the runts per peak kVA anytime in the month. I pay 330 now that will be 500 soon,or more.

Not so easy but smart consumers with solar and battery and generators will then systemically cap their grid draw. Eg one of my transformers’ loads peaks around 350kVA – which costs me about R100k even if it was just that one I have plenty of PV and I have bigger genset. I add batteries and then cap my grid at 100kVA. Solar normally takes the rest. If not enough solar at that minute, the batteries kick in. If solar low and batteries too empty, the genset kicks in. Due to loadshedding I have gensets already, making the capex simpler.

If in winter I have 10 days where solar is too low and I run 80h of genset, this is still cheaper than taking that R80k hit for an extra 250kVA from grid. Remember I am working on now paying 330/peak kVA. My math gets even better at the likely R500 per peak kVA tariffs will respond with.

Smarter energy is now a business tactic, not a greenie strategy.

In ten years time 60 percent of the residential population will have a small solar / wind system, sadly a nuclear power plants will be too late. The solar / wind will supply the bulk of the power while Eskom will be a standby.

Martin:

Never mind residential, any business that can, should do solar and it will change demand profile substantially. Eskom will never grow their GWh again as users move to self-sufficiency.

Our business self-consumes about 75% of solar output, so takes about 25% from grid and then exports about 30% of generation mainly due to weekends. So in net terms we contribute kWh but pay stupid money for availability. (That is November stat, winter is 50% 50% and 25%)

Our say ⅔ self consumed is never going back to Eskom.

Expect radical redesign of tariffs. If you presently pay R1250pm availability per month and 180c/kWh the new model will be 2,500pm and 150c/kWh with a bump to 400c/kWh in mornings and evenings.

For residential, solar will be harder as houses consume most loads when the sun don’t shine and batteries are not cheap at scale. Except some manufacturers on shifts, most business can go mostly self-generated-self-consumed.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

Podcasts

INSIDER SUBSCRIPTION APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING

Follow us:

Search Articles:
Click a Company: