South Africa finds itself at a complicated crossroads of its energy development, and the direction many signals point towards force a questioning whether current and past experiences are lost upon the decision makers deciding the energy and economic fate of their nation. Not alone are they unable to meet the country’s electricity demand but the plans to improve supply are not only horrendously expensive but are way behind plan.
Similar to sticking your face near the murky waters of the Limpopo river to verify if a crocodile lies on the river’s bottom, so too is the precarious nature of discerning whether South Africa will lock a substantial portion of its economic future into the hereunto delivered promises of nuclear power at a cost of 1 Trillion Rand (USD 80 billion) for 8 new power units which will supply 9.6 GW of power capacity. The numbers alone, originally estimated at USD $10 billion, shortly thereafter rising to 5 times that amount, and now sitting close to tenfold higher before any ink has dried, speak for themselves. It is almost a blatant absurdity that South Africa would pursue Russian nuclear at this cost, and there is limited evidence an energy project of this magnitude would begin to come online by 2023 as promised!
South Africa is also in the process of building two of the world’s largest coal power stations, Medupi (4.8 GW) and Kusile (4.8 GW) both of which are years behind schedule. They are prime examples of how few large scale generation projects achieve full capacity on time and within budget. By the South African utility Eskom’s own admission, the costing for both coal stations is not easily delineated from the generation and distribution utility’s overall operating budgets, however good evidence points towards an ultimate completion price of USD $40-50 billion. This is already massively expensive compared to alternative projects in other countries but only one-half the completion price for an equivalent generation capacity to be built under the nuclear scheme!
Which begs these questions –
How much domestic coal could be purchased?
How many direct and indirect coal sector jobs could be ensured?
And, how much domestic economic production could the extra ~USD $50 billion purchase during the years waiting on the Russian nuclear plants to come online?
The recent push for small modular coal generation, under Independent Power Production (IPP) agreements, is clearly a reaction to mega coal generation project failures to meet schedules and costs. Less so, the doubling down on coal is an effective statement as to South Africa’s apparent limited concern to the long term effects of increasing carbon dioxide emissions.
The global energy landscape has changed dramatically in the 10 years since Medupi and Kusile were first envisioned, whereby the best information and technology of the times was decided upon. Even Germany, with its meticulously planning, found itself on the wrong side of technological advancement with a new fleet of coal generation coming online as renewable production soared. However, in addition to shuttering nuclear, a bit reactionary after the Fukishima disaster, they are closing natural gas (NG) plants, and their domestically sourced coal operations are in decline, not growth.
The need to heavily subsidize wind or solar was arguably a necessity five and ten years ago, however today, the cost effectiveness of renewable energy schemes is increasingly well recognized within a new global energy paradigm proving itself. Instead of capital being expended to allow the renewable industry to grow, the capital is being converted into actual watts of electricity on the backs of a traditional manufacturing industry and supply chain, as well as reductions in capital devoted to R&D that was necessary prior to renewable energies reaching break-even thresholds of economies of scale.
This all begs the question whether there are there extenuating circumstances that may be driving South Africa’s energy policy against the currents converging and gaining strength in the global energy landscape?
Hans Hyde, is a a leading distribution energy consultant. You can find more information on him at: https://hansworldtravels.wordpress.com/2015/06/01/about-me-a-global-energy-experience/