Sputla is right, rather do nuclear properly or don’t do it at all
Rather measure twice, and cut once.
Electricity Minister Dr Kgosientsho Ramokgopa’s decision to withdraw the 2 500MW new nuclear procurement from the government gazette should be welcomed, even by those who support a new nuclear power station.
His concession shows that finally the former Department of Mineral Resources and Energy (DMRE) – which has been split into the new Department of Electricity and Energy; and the Department of Mineral Ressources – is learning the lessons as to why the 2016 alleged “Russian-Nuclear Deal” failed.
The court judgment at the time made no ruling on the R1 trillion number that we still hear about, rather the judge ruled that the public participation process wasn’t adequately followed. In fact, all that the government had to do, if they were serious about new nuclear power was to comply with the judgment and restart the process.
The government unfortunately has a recent history of executing good plans in the worst possible fashion. The Medupi and Kusile projects are classic examples of self-inflicted wounds. Cost overruns, poor engineering, procurement, and construction management as well as attempts to involve ANC middlemen through questionable deals like the Hitachi contract.
Pointing this out doesn’t make anyone “anti-coal” any more than the DA’s spokesperson on energy Kevin Mileham being “anti-nuclear” for asking for the correct procedure to be followed, and the suspensive conditions to be met before the procurement process begins.
In my view, the 2023 integrated resources plan should be finalised before the process begins. Under a realistic timeline, the request for quotation (RFQ) should only be going out in 2028. The Department of Electricity and Energy has to reflect if they aren’t part of the problem, because the critics are right that they are mismanaging the procurement before it even began – they clearly lack people with expertise.
Megaprojects are excellent when they are done properly, but they can sink an economy if they are poorly executed. Their failure is not unique to South Africa.
Similar issues have occurred in energy-related projects elsewhere like the Snowy 2.0 pumped storage scheme in Australia, and several wind projects in Canada and the UK. Even the Olympics, with an average cost overrun of 175%, has seen significant issues, as demonstrated by the recent Paris, Rio de Janeiro, Sochi, Beijing and London winter and summer Games. Megaproject failures result from bad risk management, bad planning and sub-quality execution.
But when it comes to nuclear, the Western nuclear industry in particular has had astronomical cost overruns in recent years. For instance, at Hinkley Point C, Flamanville, and Vogtle power station, construction times have more than tripled, and budgets have more than doubled. There were several reasons for this, but one that stood out is that design maturity, and the financial model weren’t ready.
Often the staff was inexperienced or the procurement was based on political determination as opposed to a country’s energy needs. Nuclear power projects are site-specific and the engineering has to be modified and adapted to the particular circumstance. Rushing the project often overlooks these technicalities.
Another issue is the environmental impact assessment. The assessments for the Thyspunt and Duynefontein sites likely date back to the 2016 deal, meaning they will need to be updated or could be contested by environmental activists in court, resulting in unreasonable delays.
Public participation, in occurrence with the 2016 court judgment, is required before the allocation can be gazetted. In fact the Black Business Council on the advice of two engineers, one of which was Zak Madela, told the DMRE this before the recent procurement process started. Unsurprisingly, the DMRE ignored their advice.
After the setbacks at Medupi and Kusile, South Africa cannot afford to take on this level of risk again, which is why proper planning and realistic timelines are crucial. The Barakah Nuclear Reactor in the UAE serves as a successful example of how effective construction management can deliver projects in reasonable time and within budget.
Nuclear procurement involves significant capital expenditure, it can be highly competitive if managed properly. The nuclear vendors have to contribute large sums of money to respond to tenders. For example, during the 2016 deal, France set aside approximately €20 million (around R140m in 2014 currency to mobilise a team of engineers).
However, since the tender process was never completed, South Africa lost credibility as a serious player in the nuclear sector. If mishandled, the nuclear procurement will inevitably lead to a debt burden and a project that cannot pay for itself.
As Dr Rob Jeffrey previously noted, South Africa also has a history of successfully executing megaprojects such as Sasol, Richards Bay Coal Terminal and Industrial Port, and the Saldanha Bay fuel storage and port.
The government should analyse these projects and ask why they succeeded and why the others failed. With load shedding seemingly under control, there is no need to rush into building a new power station; it should be properly planned and executed.
Rather measure twice, and cut once.
Thanks for this. energy Kevin Mileham unfortunately is a UN IRENA believer who is fully behind the DA sponsors Rupert & Motsepe to implement useless unreliable Renewable Electricity in particular which is entirely dependent on the weather and climatic conditions which are unpredictable and uncontrollable.
The only ones that benefit form this are the industry speculators, product manufacturers, suppliers and installers an political industrial complex.
The consumers pay a heavy price for this as the Government are partners in a PPP scheme that if chock full of subsidies hidden behind secrecy and non-disclosure clauses in the PPA's that are beyond public scrutiny even though it is tax-payers money from whom the IPP's are sole beneficiaries.
The playing filed is skewed in the IPP's favour using legal plunder in fact. They don't produce a commodity that is useful as it cannot be produced as and when needed which is the market demand.
Additional Hidden in plain sight for the sole benefit of the Political Industrial Complex are seen below:
There is an attempt to mask it as a commodity using batteries as storage (BESS Project) which again is sponsored by Tax-payers and that cost is not added to IPP's which it should be, because it is for their sole benefit.
The same applies to the Transmission infrastructure (extensions cords if you will to transport the product to the grid, again which is funded by tax payers, where the sole benefit is for the producers. The IPP's too should be paying for this benefit.
If the above benefit costs were added to the IPP's it would make their pseudo-commodity even more ridiculously expensive than it already is.
Tax-payers should not be paying for a Private industries' profits. So from this we can deduce that tax-payers are in fact paying for Corporate Welfare. State sponsored welfare by means of legal plunder.
Bulk Wind and Solar power farm producers are the intermittent freeloaders on the electricity grid.
They are treated as if they’re generators, adding power to the grid, but instead they provide something the grid doesn’t need — power that can’t be guaranteed. Leeches comes to mind.
The rules for these type of IPP's need to be changed.
The rule should be part of the requirement to be called a producer-generators.
If you wish to sell power into the grid, you will have to guarantee a minimum level of supply and technical quality, guarantee that minimum level of supply 24/7 at the specified power quality, and critically, that minimum level can be no lower than 80 per cent of the maximum amount of energy you will be permitted to sell into the grid. You also I should pay for your own back-up and infrastructure. You must be able to provide the electricity as and when needed by Eskom.