Koeberg nuclear power station. Picture: SUNDAY TIMES
Koeberg nuclear power station. Picture: SUNDAY TIMES

ENERGY Minister Tina Joemat-Pettersson has confirmed in Parliament that the nuclear inquiry will be issued to the market on September 30. This process will, once and for all, stop the speculation about the price and affordability of the future nuclear programme.

This will enable the integrated resource plan to be updated with realistic cost data from vendors and enable a realistic business case, including the funding plan, to be put together for approval by the authorities.

Eskom and the government have always said the nuclear build programme will be delivered at a pace and a price that SA can afford. The programme will be designed to cost. The targeted levellised cost will be under R1/kWh, which is attainable based on the latest analysis of the cost of building nuclear power plants.

This would make it an extremely attractive and affordable base-load option even compared to the best estimates for renewables and gas. The power plant will be designed for an operating life of 60 years, with the option to extend life to 80 years.

In order to "design to cost", the algorithm that was used to build the Koeberg nuclear power plant will be followed. Eskom took a standard and proven reference design from France, which had a strong technological base, and implemented it at Koeberg.

The standard and reference design for the Koeberg power station was Tricastin, where construction began in 1974 and commissioning took place in 1980, while at Koeberg, construction started in 1976 and commissioning was in 1984.

This allowed for long-term benefits due to the learning spillovers from the construction of Tricastin. It had a positive effect on construction costs through lead-time reduction, which is one of the main drivers of construction costs.

What happened at Koeberg is consistent with the findings of Michel Berthélemy and Lina Escobar Rangel in their 2015 research paper on nuclear reactors’ construction costs. They showed that the cost reduction in nuclear build programmes due to learning by doing, are conditional to the standardisation of nuclear programmes, considering that those spillovers take place only through reactors of the same model built by the same architect-engineer firm.

They have also shown that contrary to other energy technologies, innovation in nuclear power leads to construction cost increases. This can be seen in South Korea, where according to research by nuclear power experts Mycle Schneider and Antony Froggatt, the United Arab Emirates chose a less technologically advanced design from builders due to lower construction costs and shorter lead times.

Global new nuclear build experience suggests that small and yet significant changes from a design of plant that has been proven in construction and operations, increases the licensing burden, but also the risks of delays and cost increases.

The South African strategy is to mitigate this by selecting a plant design that has been proven in its constructability and is licensed with an experienced nuclear regulator.

Consequently, for the design to a targeted levellised cost of less than R1/kWh to be successful, Eskom will need to be able to identify potential factors that could reduce the costs and lead times. One needs to identify a vendor with an active nuclear programme, have a standard reference plant design, and a successful track record of exporting nuclear reactors.

Today, there are more vendor countries that can provide a reference nuclear power plant design than there were in the 1970s. These include China, India, Japan, Russia, France, the US, Canada and South Korea. Some of these countries show increasing costs over time, others show more consistent costs in the longer term, and cost declines over certain periods in their technological history.

In addition, 49 of 61 reactors currently under construction are by nontraditional vendors from the East. The opportunity for SA is to wisely utilise the broader base of reference countries to achieve the targeted levellised cost of less than R1/kWh.

Eskom is ready to deliver the nuclear programme for the country because it has a stable leadership, has turned around its performance, stabilised its finances and is delivering on its new build programme.

The new Eskom board and the leadership under the new group CE have ensured that Eskom was able to meet demand without implementing load shedding for more than 13 months.

Furthermore, the stretch targets for delivery on the new build programme have exceeded expectations.

There is no doubt that the Eskom build programme has turned around and is beginning to deliver. Ingula is generating 1,000MW, and Medupi unit 5 and 6 are already on load, ahead of the rebaselined schedule. Based on the current trend at Kusile, the public can expect another pleasant surprise.

Eskom is on a firm footing and is delivering on all operational and capital build undertakings. Over and above these accolades, its profit at the end of the 2015-16 financial year has increased to R4.6bn, compared to R200m in the previous financial year.

The improved position of Eskom has been confirmed by the unqualified audit opinion from external auditors. Consequently, investor confidence in respect of Eskom has improved significantly, enabling the execution of its borrowing programme of R60bn per annum.

The 2016-17 corporate plan, as submitted to the shareholder, indicates a continuing trend of financial and operational stability over the next five years.

This improving trend will continue over the medium to long term, which will culminate in the company having cash balances in excess of R150bn by year 10 of the plan. These cash resources could be deployed to fund the new nuclear build programme. Furthermore, the corporate plan has significantly increased the borrowing programme of Eskom to R327bn, an increase of R90bn.

Eskom believes it has learnt a wealth of lessons from its current new build programme, which it can put to use in the nuclear programme to reduce the risk of schedule delays and cost overruns. As a state-owned firm, Eskom is also mandated to create jobs and improve socioeconomic conditions for all South Africans.

The successful execution of the new nuclear build programme will not only fuel GDP growth, but could alleviate levels of unemployment in SA.

Koko is group executive for generation at Eskom.