Koeberg nuclear power station is well equipped to handle the energy plant’s nuclear waste, according to a KPMG study.
The recent study by KPMG Services on the socio-economic impact of the Koeberg nuclear power station in the Western Cape and South Africa from 2012 to 2025, says the plant is well equipped to handle the safety regulations it has operated for more than 33 years.
Lullu Krugel, director and chief economist at KPMG, said electricity was a key input for the majority of products and processes in South Africa’s economy, making Koeberg a direct contributor to economic growth, both in the Western Cape and in the rest of the country.
Krugel said Koeberg stimulated economic activity in South Africa estimated at R53.3 billion between 2012 and 2016.
“The methodology which KPMG employed to conduct this review, is based on internationally accepted standards,” Krugel said, “with detailed information supplied by Eskom and official statistics.”
The report said the National Nuclear Regulator (NNR) oversaw the safe operation of nuclear installations at Koeberg and Vaalputs, the nuclear disposal site in the Northern Cape.
It said the NNR was committed to protecting people, property and the environment against any nuclear damage by establishing safety standards and regulatory practices and prescribes protective measures, such as frequent public safety forums.
According to the report, low-level nuclear waste is compressed into sealed and marked steel drums at Koeberg, before it is transported to Vaalputs in specially designed trucks for disposal in 10m-deep trenches.
About 500 steel drums arrive each year.
Intermediate-level waste is then solidified by mixing it with a cement mixture which is poured into concrete drums.
The drums are then transported from Koeberg to Vaalputs in specially designed trucks for disposal.
According to the report, the government is considering the addition of nuclear capacity as an option to add up to 9600MW to the national grid by 2030 in tranches that are affordable.
This highlights Koeberg’s role in the South African economy at present and going forward, and provides the knowledge base to expand the country’s nuclear capacity through new plants.
South Africa should optimise its funding model in the procurement of its 9 600 MW nuclear build programme to ensure cheaper electricity costs, according to Rosatom’s Nikolay Drosdov on Wednesday. Drosdov, director of international business for Rosatom, told Fin24 that South Africa should “optimise the model to decrease the price of electricity, because … the proportion between investments and loans depends on the … levelised cost of electricity”.“You have to pay interest rates from your price of electricity if you’re using a lot of debt money,” he said on the sidelines of the Nuclear Africa conference. “We can help to optimise the model, but it’s also the subject of commercial negotiations.” The Department of Energy will release its Request for Proposals by the end of March, after a year-long process of signing up vendor countries through inter-governmental agreements regarding the peaceful use of nuclear energy.
To speed up the programme, South Africa should follow the engineering, procurement and construction (EPC) procurement model, which would be signed by the existing state-owned company (Eskom) or a newly created company, according to Drosdov. “This company shall sign an EPC contract … with the scope closed to a turnkey base with one of the global nuclear vendor selected based on the competitive and transparent procedure during the procurement process,” he said. “In nuclear, we have different financial models that you can invest some money in the equity, you can attract some money from the market, from the government resources, from export credit agencies/banks (entities that provide government-backed loans),” he said. While many economists have spoken about the value add to South Africa’s economy with large nuclear localisation, Drosdov said the exact size will depend on the interest local business has for the nuclear procurement programme.
“If local business is interested to participate in the nuclear programme, we can increase it (localisation),” he said. “If not, we can supply 100% by our sources, but economically it’s not efficient. We are trying to use local partners … (due to) lower costs, but it’s the subject for negotiation.” “What could be a solution is a global partnership,” he said. “For example, you would take a Russian nuclear island (the heart of the nuclear plant) and we will integrate your local competencies and local technologies.” “We can have for example Russian/South African technology that can be exported to other countries in Africa.” Several media outlets challenged Drosdov this week over the programme, asking him whether a secret deal had been signed with South Africa. Fin24 has on numerous occasions asked this question to Rosatom officials including Drosdov, with the usual reaction that no such deal had been signed.
Energy Minister Tina Joemat-Pettersson found herself on the wrong side of the political spectrum on Tuesday after she recommended the fall under the independent power producer (IPP) office.
The IPP office is a partnership between the DoE, Treasury and the Development Bank of South Africa. An ANC cabinet member, Joemat-Pettersson also wants the auditor general to form part of the IPP office to ensure even greater transparency and accountability.
The office, which ran the successful renewable energy programme, brought investment totalling R149bn, of which R54bn was direct foreign investment, Joemat-Pettersson told the Portfolio Committee on Energy in Parliament.
“If the IPP programme has delivered such good results, then we believe we are on the right track,” she said.
“We now have an IPP for gas and coal and hence our request to do nuclear along the IPP base.”
ANC MPs Thandi Mahambehlala and Fikile Majola, who is the committee chairperson, raised their concerns over the idea, while DA MP Gordon Mackay fully supported the move.
Mahambehlala, well-known as an outspoken MP after being on the Nkandla ad hoc committee, said this would go against the mandate set by President Jacob Zuma and cabinet, while it would also not be in the interest of national security.
“The nuclear procurement programme is different from the IPP programme as South Africa will have to partner other countries,” she told Fin24.
Majola agreed with her, saying the committee would need to discuss the matter further at its next meeting.
“The DA is deeply disturbed that the ANC chair attempted to block the minister in her proposal that the IPP office head up the nuclear procurement process,” he told Fin24.
He praised the minister for both the proposal to house the nuclear programme under the IPP office and to bring in the auditor general to the office.
“A fair nuclear deal could only be through the coordination of the IPP office,” he said. “We also believe the auditor general should be part of the process.”
A government gazette released by Joemat-Peterson in December revealed that her department would be the procurement agency. This was initially going to be Eskom’s responsibility, but was moved to the department earlier in 2015.
“The role of the procurement agency will be to conduct the procurement process, including preparing any requests for qualification, requests for proposals and/or all related and associated documentation, negotiating the power purchase agreements, facilitating the conclusion of the other project agreements, and facilitating the satisfaction of any conditions precedent to financial close which are within its control.”
President Jacob Zuma unveiled the skeleton of what he described as an economic “turnaround plan” in a State of the Nation Address dominated by the current plight of the South African economy, which was unlikely to grow by more than 1% in 2016 and would not nearly approach the 5%-plus levels outlined in the National Development Plan.
The address – initially interrupted by opposition Members of Parliament, which eventually resulted in members from the Congress of the People and the Economic Freedom Fighters leaving the National Assembly chamber – laid particular emphasis on the need to reignite growth and cut waste.
Growth was held up to be at the heart of the country’s “radical economic transformation”, with the President arguing that faster growth was vital to creating jobs, ensuring business profitability and creating the basis for the tax revenues needed to increase the “social wage” of education, health and security. The absence of growth was placing downward pressure on tax revenues, while threatening South Africa’s investment grade credit rating. “Importantly, our country seems to be at risk of losing its investment grade status from ratings agencies. If that happens, it will become more expensive for us to borrow money from abroad to finance our programmes of building a better life for all – especially the poor.” Zuma said the turnaround plan, and avoiding a downgrade by the rating agencies, required government and its social partners in business and labour to forge a “common narrative” that was supportive of improving the investment climate and positioning South Africa as a “preferred investment destination”. “If there are any disagreements or problems between us, we should solve them before they escalate. This is necessary for the common good of our country.” Zuma announced the creation of an Inter-Ministerial Committee on investment promotion, which would seek to set up a “one-stop shop” to facilitate direct investment into the country. In addition, he said a draft migration policy would be placed before Cabinet this year, with a view to easing the regulations for the entry of skilled foreign workers into the country. The response plan required “doing things differently”, acting more decisively in cutting red tape and bringing policy certainty, with Zuma specifically urging Parliament to finalise its deliberations on the Mineral and Petroleum Resources Development Act, which he sent back to lawmakers on Constitutionality concerns.
It would also require the mandates and governance at State-owned companies to be tightened and for those agencies not playing a developmental role to be “phased out”. No mention was made, however, of possible privatisation, a point picked up upon by the leader of the Democratic Alliance Mmusi Maimane, who said the President should have prioritised the sale of State companies and assets to help fund programmes, such as infrastructure, that could help stimulate growth. TWO CAPITALS UNAFFORDABLE? Belt tightening within government was raised in the address, with Zuma even calling on Parliament to urgently review the financial sustainability of having separate administrative and legislative capitals, in Pretoria and Cape Town, while announcing that government would be cutting back on overseas travel, conferences, entertainment and catering. Even on the contentious area of South Africa’s plan to build 9 600 MW of new nuclear capacity, which many feel to be unaffordable, Zuma injected a new tone of prudency, saying any procurement would only proceed at a scale and pace that the country could afford.
He did not turn his back on nuclear altogether, however, announcing that the market would be tested to “ascertain the true costs” of the programme. The importance of renewable energy, coal and gas in the future electricity mix was also emphasised, with the announcement that independent power producer procurement programmes would either continue or be initiated during the year. Grant Thornton director: infrastructure advisory Grant Penrose applauded the emphasis placed on nuclear affordability. “His admission to this massive cost and South Africa’s current state of the economy, is laudable. We hope this process will be open and transparent going forward,” Penrose said. However, Maimane said that the cuts outlined were insufficient and that Zuma should have rather announced a trimming of his Cabinet to 15 Ministries, rather than repeating a number of plans that had already been canvassed, including a consolidation of the two capitals.
THE Cabinet has approved the start of the nuclear procurement programme, clearing the way for the Department of Energy to call for proposals to provide SA with 9.6GW of nuclear power without first doing a cost-benefit analysis.
The programme is controversial as several independent studies have found that the cost of new nuclear energy will be greater than energy produced by other technologies. There is also deep suspicion that the procurement will be corrupt, with Russia claiming some time ago that it had already struck a deal with SA.
The decision was made at the last Cabinet meeting of the year on Wednesday, after which Nhlanhla Nene was fired as finance minister. The approval was not announced by Minister in the Presidency Jeff Radebe in his Cabinet briefing on Friday.
Mr Nene has repeatedly said that nuclear energy would not be procured if SA could not afford it. The African National Congress (ANC) has also expressed caution, passing a resolution at its national general council in October, calling for “a full, transparent and thorough cost-benefit analysis of nuclear power”.
The decision means that a request for proposals can be issued immediately. Nuclear vendors will respond to the call with proposals that will include pricing and financing models, after which negotiations will begin. While the move does not necessarily have immediate budget implications, it signals a strong statement of intent by the government.
In the context of the firing of Mr Nene, the pounding of the rand and financial stocks and the recent credit ratings downgrade, the indication that SA wants to proceed with a large nuclear procurement will be seen as another credit-negative factor for SA.
In October, the Treasury allocated R200m to the Department of Energy to assist with a feasibility study and to procure transaction advice.
At the time, the Treasury said this was to be used to “consider the costs, benefits and risks of building additional nuclear power stations”. There is no evidence that a cost-benefit analysis was done. Department of Energy officials were not available to provide further details on Sunday, but Treasury officials said they were not aware of any work being done.
Last year, the department commissioned three studies from international consultants to explore the costs of nuclear energy. These included a KPMG study on the benchmarking of the cost of nuclear power; an Ingerop study on the cost of nuclear plants and proposed ownership models; and a Deloitte study on the financing of nuclear power plants.
In August, Business Day requested copies of these reports from the department, but was told they were classified.
The department has said its studies show that “nuclear energy is affordable”. But Business Day understands that the Deloitte and KPMG studies found to the contrary: that substantial amounts in debt and equity from the state will be required. In addition, none of the studies analysed the levelised cost of nuclear energy in relation to other technologies.
Three independent studies — one by researchers at the Energy Research Centre at the University of Cape Town; one by the Centre for Scientific and Industrial Research; and one by an engineer at the University of Stellenbosch — all published in September, found nuclear energy to be more expensive than other base-load options.
Enoch Godongwana, head of the ANC’s economic transformation committee, said he was not aware of the content of the Cabinet’s resolution and whether it would still involve a cost-benefit study at some point.
“Government needs to assess whether it is value for money and how much nuclear energy will cost relative to other technologies. Government has got to do the research … for all of that,” he said.
The government still has to negotiate the price for the procurement of nuclear power in South Africa, according to the Department of Energy.
It had completed various technical studies, including in depth studies into the cost of nuclear power, funding and financing models and economic impact of localisation, among others, deputy director-general for nuclear energy Zizamele Mbambo said yesterday.
“It is important to note that government is still to negotiate the price tag in the procurement process which is why exact figures for the study cannot be made available to the public at this stage. These studies were done to ensure that South Africa is a knowledgeable customer,” Mbambo said at a press briefing in Ballito, KwaZulu-Natal on the status of the country’s new build nuclear energy programme.
The procurement process would start in the second quarter and be completed by the end of the 2015 financial year with the selection of either a single or a group of strategic partners, he added.
Six to eight nuclear power plants
The first new nuclear power station would come on line in 2023. The government intended to build between six and eight nuclear power plants, and the bid invitation specification and related evaluation criteria would be finalised by the end of July, Mbambo said.
“It is important to note that government is still to negotiate the price tag in the procurement process which is why exact figures… cannot be made available to the public at this stage.”
Mbambo gave examples of the current world experience, saying the current world experience for quoted numbers for real export would indicate an overnight cost of about $5-billion per 1 200 megawatts, which is equivalent to $4 200 per kilowatt per reactor in new comer states.
“In countries with established domestic construction programmes, such as China, South Korea and India, the prices in order of $2 500 per kilowatts are being quoted. Among the 70-plus reactors in the world, there are a number of projects where because of the local market and political conditions the project costs are higher than these figures.”
The government was expected to complete its financing arrangements for the new build programme shortly.
Mixed energy plan
In March 2011, the Cabinet approved and promulgated a 20-year Integrated Resource Plan (IRP 2010-30), which is the government’s electricity plan. It has a mixed energy agenda that puts nuclear at 23% (9 600 MW) of energy source by 2030.
The briefing followed the submission of the Inter-Government Framework Agreements on nuclear co-operation to Parliament.
These agreements laid a foundation for co-operation, trade and exchange of nuclear technology as well as procurement, according to the department.
Going forward, Mbambo said, the government planned to follow the approved procurement process that would include a competitive, transparent bidding process that was cost effective and in line with legislation.
Work already done towards the nuclear build programme was extensive. Over and above the inter-governmental agreements, the International Atomic Energy Agency has conducted an Integrated Nuclear Infrastructure Review (INIR) mission, which is an assessment of the country’s infrastructure as it relates to readiness to start purchasing, constructing, and operating nuclear power plants.
Of the 10 recommendations made by the panel, several have been completed; others are being reviewed. Strategies have been drawn up in line with the recommendations.
The department has also undertaken study tours to various nuclear vendor countries to learn about the technologies they use and the lessons they have learned in using nuclear energy.
Vendor parades have been held, with South Africa professionals from government departments, state-owned entities and universities interrogating the vendors’ technological offerings.
“The vendor parade workshops provided a platform for South Africa professionals to exchange views with their peers on the nuclear new build programme.”
In addition, in preparing for the nuclear new build programme, national skills development is being undertaken.
Mbambo said 50 trainees from the government, entities and industry were sent to China for Phase 1 nuclear training in April. “Plans are under way to send an additional 250 trainees to China this year. Additionally, a memorandum of agreement on skills development was entered into between Necsa [South African Nuclear Energy Corporation] and State Nuclear Power Technology Co-operation of China.”
Russia had offered 10 scholarships for Master’s degrees in nuclear technology. A memorandum of understanding had also been signed covering the training and development of 200 South Africans at Russian universities and educational organisations.
South Korea had an existing programme to train South African students for Master’s degrees in nuclear engineering; already three students had graduated.
Finally, France had put in place 14 bursaries for young people from previously disadvantaged groups to study a four-year engineering programme at various universities.
“The negotiations on Nuclear Skills Development with the French government are at an advance stage that could see an establishment of a nuclear campus in South Africa,” Mbambo added.
“Government remains committed to ensure energy security for the country, through the roll out of the nuclear new build programme as an integral part of the energy mix. Government remains committed to ensuring the provision of reliable and sustainable electricity supply, as part of mitigating the risk of carbon emissions,” he said.
The nuclear new build programme would enable the country “to create jobs, develop skills, create industries, and catapult the country into a knowledge economy”.
In the fog of confusion caused by the chaos at Eskom, we lost sight of where the government had done really well in the area of power generation, said investment director Rob Spanjaard.He said the state-run renewable energy programme had won international awards for its efficiency and impact and its success could provide a model to help Eskom out of its difficulties, which were currently dragging the whole economy down.Spanjaard, the investment director and portfolio manager at Rezco Asset Management, said before the implementation of the state’s renewables programme, wind generation projects were about to be approved at a cost of 125c per kilowatt- hour (kWh).”The government, under the auspices of the Department of Energy, then did some amazing work and developed the Renewable Energy Independent Power Producers Procurement Programme [REIPPPP]. Companies and consortia were in 2009 invited to competitively bid around clearly constructed criteria.”Round one bids were accepted at 115c/kWh, round two came in at 100c/kWh, round three at 74c/kWh, and by the time round four was reached in August 2014, the bid price had dropped to 62c/kWh. The same process caused solar power to be bid down from 275c/kWh in round one to 79c/kWh in round four.
Cost of coal generation
“This should be compared to the expected cost of 128c/kWh of new coal power from Medupi. Coal-generated cost increases to 168c/kWh if the cost of infrastructure like dams is included. The final costs of nuclear power are forecast to be more expensive than coal. These renewable energy projects are very profitable to the bidders, so there are increasing numbers of groups bidding for the projects available. At the last round, only 20% of bidding projects were selected,” Spanjaard said.The REIPPPP had already brought power and hope to communities that had never had access to basic services. The Duineveld township in !Kheis Municipality in Northern Cape was one such example, where 300 households benefited from the renewable energy programme.Led by Acwa Power Southern Africa, the project won the African Community Project of the Year award at the African Utility Week on 14 May for connecting 300 homes through 75 watt photovoltaic solar systems, making it possible for children to do their homework at night.The community project formed part of an IPP programme called Bokpoort Concentrated Solar Park, located in Groblershoop, Northern Cape. Once completed, the solar park will add 50MW of clean energy to the national grid.
REIPPPP is inspirational
On 16 April, the Department of Energy approved 13 more new renewable IPP bids, which means there will now be 79 REIPPPP projects with 5 243MW being added to a national grid desperately in need of power.”The renewable programme is inspirational and visionary,” bid-winner Andrzej Golebiowski of Scatec Solar told Fin24 at the time.”It’s really big on a global scale. It’s over 4 000MW they [Department of Energy] are planning to award this year. It’s going to make it by far one of the biggest markets globally for renewables. That’s pretty impressive,” Golebiowski said after his company won three bids to produce solar energy in South Africa.His projects – solar photovoltaic Sirius Solar PV Project One, solar photovoltaic Dyason’s Klip 1 and solar photovoltaic Dyason’s Klip 2 – will collectively add 225MW to the grid.Spanjaard said these investments in energy benefited the country in many different ways, over and above energy generation.”In the process the country got an unbelievable bargain. Currently, 5 200MW has been approved at a capital cost of R168-billion. The project winners had to supply all their own capital. About 40% of the spend is now local content and thousands of jobs have been created,” he added.”In addition, billions will be donated to community projects over the life of the projects, and all projects have to be [black economic empowerment] compliant.”The projects take about 12 to 18 months to get up and running from the time of approval, as compared to 10 years at Medupi.”
Tax instead of subsidise
Referring to Eskom, he said the state got to tax the projects instead of having to subsidise a loss-making state entity. South Africa also got to protect its environment and, finally, the country got much-needed cheap electricity, he said.There were some basic lessons that could be learned from the Department of Energy’s renewable energy programme.”The lessons have nothing to do with privatisation or even renewable energy. The state – anywhere in the world – works best when it regulates, takes the position as referee, forces groups to compete openly and transparently, and then taxes them.”At the very least the government should analyse what has worked so spectacularly well for [it] in one area of power generation and apply these lessons to Eskom.”
The South African government has signed agreements with vendor countries to develop its Nuclear New Build Programme and has concluded the pre-procurement phase of the programme.
As part of expanding the nuclear new build programme and developing a sustainable energy mix, the energy department of the South African government has conducted a series of vendor workshops with seven countries namely Canada, China, France, Japan, Russia, South Korea and the USA. These nations use technology that is similar to South Africa, such as the pressurised water reactor nuclear technology, which can be seen at the Koeberg Nuclear Power Plant in Western Cape.
The South African government has signed Inter-Governmental Framework Agreements (IGFA) with Russia, China, France, USA and South Korea, while agreements with Canada and Japan are at an advanced stage and will be completed soon, said government officials.
According to the agreements, each country can contribute to and engage with South Africa’s nuclear new build programme.
An official from the South African energy department said, “The government continues to make significant progress in its engagements with various prospective nuclear vendor countries as part of the process towards the implementation of the expansion of the nuclear new build programme, as required for energy security based on a sustainable energy mix. The National Development Plan enjoins us to do thorough investigations on various aspects of the nuclear power generation programme before a procurement decision is taken. These policy prescripts are meant to add 9,600MW of electricity to the national electricity grid and ensure that we keep the lights on in a sustainable manner.”
Over the last six months, 80 South African nuclear experts have carefully analysed each technological offering for the vendor countries during the pre-procurement phase. At the end of the process, every vendor country presented unique proposals to implement the nuclear new build programme, which will support the government’s decision to develop a transparent, fair, cost effective and competitive procurement process for selecting a strategic partners to implement the programme.
The procurement process will be presented for approval by the Energy Security Cabinet Subcommittee and endorsed by the Cabinet, with the aim of getting the first unit commissioned by 2023 and the last unit by 2030.
Source: African Review
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The South African government has been holding vendor workshops with countries it could potentially partner with for its nuclear build programme, the Presidency said in a statement on Wednesday. This marks “significant progress” for the government in its engagements with various prospective nuclear vendor countries as part of the process towards the implementation of the expansion in the nuclear new build programme, the statement said. Intergovernmental framework agreements have been signed with Russia, France, China, South Korea and the US, marking the “initiation of the preparatory stage for the procurement process”, the Presidency said. Delegations from these countries have presented technology they believe would best suit local conditions at these workshops, held during October and November. The vendor workshops form part of the government’s technical investigation “in preparation for a procurement decision”, the Presidency said.
Future energy mix
Potential vendors have had to show how they would best meet the 9 600MW (9,6 GW) threshold that the South African government has set for the country’s future energy mix.The countries all have pressurized water reactor nuclear technology, which is similar to that used at the Koeberg nuclear power plant in the Western Cape.”South Africa has been safely using this technology for the past 30 years,” Mac Maharaj, the President’s spokesperson, said. Senior technical government officials, representatives from state-owned entities in the energy field, as well as academics involved in nuclear and engineering programmes attended the workshops, leading to “robust and open discussions” with vendors, Maharaj said. Guidelines for the expansion of nuclear power to ensure energy security based on a sustainable energy mix have been set out in the National Development Plan, the Nuclear Energy Policy, the Nuclear Energy Act and the Integrated Resource Plan (IRP) adopted in 2011. Under the NDP, the government is required to do a thorough technical investigation before making a procurement decision.The Presidency said its commitment to nuclear energy would be accompanied by the commitment to a “procurement process that is in line with the country’s legislation and policies”. “The nuclear new build programme will create a massive infrastructure development, thus stimulating the economy and enabling the country to create thousands of high- quality jobs for engineers, scientists, artisans, technicians and various other professions, develop skills and create sustainable industries, and catapult the country into a knowledge economy,” said Maharaj.
Source: South Africa.info