Rebuilding the energy base for real economic growth in South Africa

Aerial view of Cape Town from Signal Hill after sunset during the blue hour – South Africa modern city with spectacular nightscape panorama, 123rf.com

Rob Jeffrey

The Department of Mineral Resources and Energy in South Africa (DMRE) has published the Request for Information (RFI) in respect of the commencement of preparations for a nuclear build programme to the extent of 2,500MW.  It is already causing considerable debate between the usual protagonists, the renewable lobby and so-called greens and the nuclear lobby. 

It is an excellent start to rebuilding the reliable energy base necessary for the country.  The country must start the urgent tasks of reindustrialising and reconstructing its failing mining industries.   Both depend on reliable supplies of electricity, steel and other materials and products.  Rebuilding these two industries plus essential infrastructure development improvement will revitalise the construction industry as well.  These two industries have traditionally provided 70% of the country’s exports, and this growth will help South Africa improve its balance of payments.

Business investment needs certainty about energy sources and future potential growth.  As a developing economy, South Africa needs both to fulfil its key objectives.  Facts and science prove that this cannot be achieved by using renewables, particularly wind and solar.  Furthermore, it has been shown that wind and large scale solar are environmentally damaging and costly.  They require 100% back up and cause major chaos in supplies due to their variability and generally unpredictable supply.  The only energy sources available in South Africa capable of providing certainty of supply and economic growth at competitive prices are nuclear and HELE ‘clean’ coal supported by limited gas and domestic solar.  Both reduce South Africa’s carbon footprint while nuclear is carbon emissions-free.

Many arguments are claimed and put forward that wind and solar are the least cost options and that they create more jobs.  The arguments put forward are at best, misleading, but they are false statements and untrue.   Apart from being unreliable, they require 100% back up being instantaneously available at all times of the year.  They cause major grid supply problems which in turn results in many additional costs not included in stated figures.  These include the high Costs of Unserved Energy (COUE) due to interruption of supplies and the resulting loss of economically value-added production.  Their costs should consist of all these additional costs. They are effectively carried by Eskom or passed on to the Consumer.  Renewables are effectively heavily subsidised.

Solar and wind create relatively few jobs.  One cannot compare dispatchable Energy with non-dispatchable Energy.  There are many papers on this subject written by experts (Sklar-Chic et al.,2016, ‘Critical review of the levelised cost of energy metric’, South African Journal of Industrial Engineering), (Joskow Alfred P Sloan Foundation, P. L. (2010) ‘Comparing the Costs of Intermittent and dispatchable Electricity Generating Technologies’).  The correct way of comparing the effectiveness and efficiency of electricity-generating sources is to examine the Gross Domestic Product (GDP), and the number of jobs created after completion of construction and the units are generating power.  Using SA figures GDP is at R5.1 trillion supporting 16.3 million jobs.  One can work out that nameplate 2500MW approximately supports GDP of R386 billion and 1.2 million jobs.  Nuclear with a load factor of 90% will create a GDP of about R347 billion and R1.1 million jobs.  Wind with an average load factor of 30% would create R116 billion GDP and only 360000 jobs.

The equivalent figures for solar with an average load factor of 20% are approximately GDP R77 billion 240000 jobs.  The Levelised Cost of Energy (LCOE) for nuclear is often given as R1.30/kWh, Coal R1.10/kWh and both wind and solar are given as R0.62/kWh.  In theory, and as an estimated approximation to deliver the equivalent power of a nuclear power station 900 MW twenty-four hours per day seven days a week, approximately at least three windfarms would need to be built and 4.5 solar installations.  The real cost of wind and solar would effectively increase to at least approximately R1.86/kWh and solar R2.79/kWh.  These figures can be confirmed by including all the additional grid, system, subsidies and other costs and the economic COUE.  These additional costs must be factored into the costs of wind and solar costs to arrive at the real costs of these energy sources.  It is no surprise, therefore that many experts such as Weißbach, D. et al. have found that large scale wind and solar become a drain on the economy because of their high costs and general inefficiency.  (Weißbach, D. et al. (2013) ‘Energy intensities, EROIs (energy returned on invested), and energy payback times of electricity-generating power plants’, Energy. Elsevier Ltd) It is not surprising that where there is high penetration wind and solar in an economy, prices of electricity have increased substantially and energy poverty has increased.  High prices can be found in a variety of countries, including, for example, Australia, Germany, Canada, and California.  Following the economic slump caused by the Corona Virus countries can no longer afford the subsidies paid by the state and users to renewable Energy.

It is to be hoped that this is just a first step in stabilising the energy sector and securing long term economic growth for the economy.  The Government needs to announce a programme whereby at this stage all future baseload power will be based on HELE coal and nuclear power.  An immediate announcement should be made of new coal-fired HELE PowerStation inland.  Thyspunt should be selected as the site for the first nuclear power station.  Not only has initial preparatory work been done at the site, but the choice will guarantee reliable power for the Eastern Cape, and it will help alleviate poverty in the area. It can be seen from the figures above that potential increase in employment in the Nelson Mandela Bay, and Coega areas of over 1 million jobs would secure long term growth to the Eastern Cape which is one of the high unemployment areas of the country.

The introduction of the RFI by the DMRE should be welcomed, and Minister Gwede Mantashe congratulated on this positive move for the Energy sector. 

Rob Jeffrey

Economic Risk Consultant

Rob Jeffrey is an independent economic risk consultant.  He is the former MD of Econometrix and continues to consult for them.  Areas of specialisation and expertise include global and domestic economic trends and strategies to foster economic growth, the development of several vital sectors of the economy, including industry, mining, agriculture, credit and financial services.  One of Rob’s significant areas of expertise is the South African electricity and energy requirements of the South African economy.  He has been the author or co-author of numerous reports, papers, presentations and articles on matters related to national industrial, energy-related, economic policy and the carbon tax.  He co-authored submitted and presented reports on the economic consequences of introducing the carbon tax to the Davis Tax Committee.  Rob has broad practical experience and expertise in the industrial, construction, and engineering sectors.  He was MD of Dorbyl Structural Engineering, Chairperson of the Constructional Engineers Association (CEA), the CEA representative on the Steel and Engineering Industries Federation of South Africa (SEIFSA), and an executive member of the Association of Steel Merchant Stockholders.  He has sat on numerous councils and advisory panels.  Rob graduated with a B.Sc. in Mathematical Statistics and Applied Mathematics at the University of the Witwatersrand and has Masters Degrees in economics from Cambridge University and Business Leadership from the University of South Africa.

85 thoughts on “Rebuilding the energy base for real economic growth in South Africa

  1. Rob, I agree with your views regarding renewables. And they have certainly been all the rage here in SA for the past decade or so. However, I don’t see the current government or any future ANC government successfully adding a nuclear power station to the mix. The cost, bureaucracy, incompetence and corruption of ESKOM and the ANC already make it more than 3 strikes against before starting. That big a money pot will be too irresistible to stop temptation. Just look at Kusile and Medupi, hundreds of billions over budget, years behind schedule and effectively bankrupted ESKOM. And those were simple coal fired power stations. The best solution for SA is to allow the private sector to establish LNG import terminals at Saldanha and Coega and convert existing peaking plants in private hands to natural gas as well as construct new builds to replace end of life stations. Additionally, for Gauteng and KZN tie into the LNG import terminal TOTAL plan for Maputo and utilize the soon to be underutilized ROMCO pipeline to supply these areas with natural gas and again convert and build gas fired stations. Still not without it’s challenges but won’t take 15 years to start producing power either (don’t forget the environmentalist challenges to nuclear).

  2. ” Nuclear with a load factor of 90% will create a GDP of about R347 billion and R1.1 million jobs.”
    Really? 1.1M? What will they all do?

    • Work in industry, powered by reliable clean energy. They can’t do that with the unreliables of wind and solar.

    • The concept is, if you have plentiful, low cost and reliable electricity, industry, farming jobs will rapidly rise. More electricity, more jobs.
      It is difficult for some who live in the developed world that jobs are limited by the availability of electricity, just think how bad it can get!

      • My firm had to wind down a 15y investment in ZA due to the inability to meet delivery schedules – almost exclusively caused by power problems. The solar storm was blamed, but nature had quite a bit of help.

        That was 30 engineering and tech jobs, plus the support and infrastructure jobs which I’m sure doubled that number. Reliable energy is critical. I should be one the road right now checking sites overseas, and installing a power quality meter is an important task.

    • Things that require energy you old fool .. not rocket science. Griff explained the green alternative to us they get to read books at night with renewable energy they can harvest locally in their village. So lets have the great Stokes vision of how Africa should move forward.

      • Well, unlike some Northern hemisphere jobs, they won’t include de-icing wind turbine blades!

        • They’ll all be firefighters with all the Wind Turbine failure fires and Roof Top Solar cooling fault fires

  3. Atomic energy is not a good idea. I remember incidents of tools being left after repairs at Koeberg which could have caused a disaster. Gas is available now from Mozambique and that is not far. Gas powered electricity is the best option and cheapest.

    • “Atomic energy is not a good idea.”

      That’s a pretty sweeping statement. Do you mean everywhere or South Africa in particular? Also, your reason is very weak- hearsay and speculation. You could use it against any human endeavor.

      • Hi Eustace

        Not recommended for anyone, but especially not South Africa. We are not really a fully fledged developed economy. I remember trying to visit the area where they put the (nuclear) waste under in the ground but was prevented by enormous fences and big “Keep out” signs. Clearly, tourists are not welcome there. Like I always say, if it is not good for tourists or your children children, it is not good for you….either.

        • Are you really saying you can’t find a few hundred intelligent people in South Africa to run a reactor? There is a list of 3rd world countries that have nuclear reactors and the old less safe type. Wow I guess there really is nothing anyone can do for South Africa.

          • So says the ideologue.

            Are you still trying to claim that nuclear power is the only form of power that uses water to re-condense the steam?

          • That is just an unsupported and dare we say uneducated claim. Given you connection to the country dare we guess you fear someone like you running the nuclear power station?

          • The ruling ANC has this ‘thing’ about deploying comrades to everything they run. This is, of course, why EVERY state-owned entity (including our diamond mine) is completely broke. If you are not a ‘comrade’ in the single-racial ANC, you are extremely unlikely to get any government job, irrespective of competence and knowledge. And so goes Africa…

        • Actually nuclear power is perfect for South Africa.

          Unless you are a racist and think ‘blacks’ are to stupid to run an atomic power station, of course.,

          • The entire black ANC South African government was captured within a few years by an unknown corrupt Indian family from Northern India – the Guptas. They dictated government policy, government ministers, procurement and goodness knows what else.
            A Nuclear industry will be infected with the same corruption and incompetence as everything else the black South African elite touch – with fatal results.

        • S. Africa has both developed and undeveloped portions. It would develop a lot faster if it would drop the socialism/communism/racism.
          Putting nuclear waste underground is a stupid idea. Better to reprocess it.

    • Hi Henry

      I worked for an engineering inspection group in the late 80’s that had a non-destructive testing contract to inspect the welds on the steam coils in Koeberg. It was Friday and the surf was up, so the 2 technicians rigged the radiographs by filming the same weld over 100 times, and changed the lead letter ID’s only. They were caught out by the fact that the weld they chose had an inclusion – so their films all showed the same flaw.

      Needless to say, the company seized as an entity in Cape Town

      Would safety practices be better these days?

    • Hi Henry

      I worked for an engineering inspection group in the late 80’s that had a non-destructive testing contract to inspect the welds on the steam coils in Koeberg. It was Friday and the surf was up, so the 2 technicians rigged the radiographs by filming the same weld over 100 times, and changed the lead letter ID’s only. They were caught out by the fact that the weld they chose had an inclusion – so their films all showed the same flaw.

      Needless to say, the company seized as an entity in Cape Town

      Would safety practices be better these days?

    • Atomic energy is the best possible energy source.
      I remember incidents where people were killed in natural gas explosions.

  4. ” …. South Africa’s carbon footprint …. ” It looks like only one year of the OCO2 satellite results were ever released, but that year, 2014-15, showed that South Africa, along with Southern South America and Australia, did not have a carbon footprint.

    • I truly believe that an …… atmospheric sensing CO2 satellite …….. is a flim-flam scam of junk science at its best.

      Fer shame, fer shame, …….. on those who claim it is a tool of science discovery.

  5. Remember that South Africa gave their nuclear weapons to Israel ahead of an impending rise in status of Black Africans, in fear of the nuclear bombs being distributed amongst groups that should not have them. Israel already had a limited nuclear bomb inventory, thanks to France, but they were larger and cruder (ie, not useable for missile/torpedo armament), but the South African devices were modern and “suitcase” sized. I would personally be more at ease if South Africa utilized some of the thorium designs, which reactors do not produce fissile daughters. Otherwise, go nuclear!

    • “Ron Long July 5, 2020 at 3:03 am

      Israel already had a limited nuclear bomb inventory, thanks to France…”

      Really? I think you have the wrong supplying country there.

    • Israel’s first nuclear bombs were built from highly enriched uranium stolen from the NUMEC plant (owned by an Israeli-sympathizer) in Apollo PA around 1965. The sloppy material safeguards required to cover the theft left a Superfund site for US taxpayers to clean up.

      The uranium was fashioned into warheads (Israel did not have an enrichment capability at the time) to be used as doomsday devices to deter an Egyptian counteroffensive in the event the 1967 offensive in the Sinai failed. The bombs were to be positioned at strategic passes in the Sinai. Because the Sinai offensive was successful, the weapons were never needed.

      It’s plausible the the Israeli’s knew or suspected that the USS Liberty (deployed right off the coast) heard transmissions regarding the deployment or status of these weapons and this was the motivation for the deliberate attack to sink the Liberty. It also explains the US keeping the details of the attack secret because it would expose the uranium theft and motivate a middle east nuclear arms race among the Arab nations. At the time, the US was not a significant source of weapons for Israel.

  6. ” …. South Africa’s carbon footprint …. ”

    More Carbon Dioxide does not do anything to South Africa, apparently.
    This year, winter is again ca. 1.5 degrees cooler than the year before. And this is not a one year thing. In fact, the trend on Tmin is 0.8K down, on average, over the past 40 years.
    Click on my name to read my report.

  7. I am surprised South Africa thinks it has the luxury of debate any more. Given the state of SA infrastructure and its ongoing maintenance, does anybody seriously think that distributed “renewables” and the associated layers of complexity are an answer?? if they do they are probably asking the wrong question.

    This seem more about where money is flowing to than serving the interests of the SA people.

  8. I’m just waiting for griffs appearance here to tell us s.th. new about wind and solar power aa good enough for SA.
    😀

    • Yeah all those people able to read at night with there village power farms are going to create the industrial revolution 🙂

    • And where is Mr Molten Salt? This is the perfect arena to trot out his one trick pony.

  9. I hope that the RFI’s from many people spell out very clearly the high level of danger of engaging with China’s Belts and Roads program.

  10. LdB says
    ‘ Wow I guess there really is nothing anyone can do for South Africa”

    LdB, I am not sure which country you are from, but chances are 99% that you are living in a country where they started raising electricity by burning ‘biomass’.
    Maybe you should view that latest movie from M Moore? And then you can tell me how such terrible intelligent people living in your country could come up with the idea that burning trees is ‘carbon’ neutral and better than burning coal or gas?

      • Problem with biomass is, the carbon sinks get depleted to create the biomass AND then doesn’t regrow as fast as would need be to fuel a modern society. We would still be pumping out more CO2 annually than would be taken up by an ever depleting carbon sink

    • Again you have zero understanding … no single country makes the rules on what is carbon neutral

      So let me repeat that …. NO SINGLE COUNTRY.

      Now lets see if you can educate yourself … do some reading on who makes that decision and come back to us.

  11. Just think of the food that could be grown if they had reliable pumped water countrywide.
    Just think of the healthcare system they could have if they had reliable and cheap electricity.
    Just think of the mineral processing industries that could be setup with a reliable and cheap electrical supply.

    Just think of the lives saved, leading to smaller families, leading to better health, leading to the true opening up of Africa to the benefit of the locals and visitors alike.

    It is shocking that the legacy of Obama that the world bank refuses loans to poor countries that want to build reliable power stations. Shocking.

  12. Leo Smith says
    ‘Unless you are a racist and think ‘blacks’ are to stupid to run an atomic power station, of course., (sic)’

    No, you got that completely wrong. I fought against apartheid, as the record will show. (click on my name).

    Note the first comment on this thread from Nick Stokes. He questions the number of people required. That number refers to ALL the people involved in building a nuclear plant.
    We simply don’t have a big amount of qualified engineers in SA who can run a building project as big as this, according to the laid down regulations (by the AEC).

    \As far as my remark concerning the forgotten tools: ANYBODY can make a mistake like that. In fact, I admit, it could have been me, as I am terrible forgetful and absent minded.

    That is why I do not like nuclear energy.

    That is why things went wrong Chernobyl….

    • No what Nick missed was if you have a large scale excess energy you can develop industry … or if you want to be a pessimist there is at least some chance of extra jobs. The issue with solar/wind is you are never going to have large/scale excess because you have no back. So there is 0% chance you are ever going to develop and additional industries using solar/wind actually all you will do is send currency out to China and employ a few low paid installers.

      The engineers to build and run a nuclear reactor in the first instance will be foreigners you buy the design from a country. What you do is make sure that training and technology exchange is part of the package you buy. Do you think countries like North Korea, Iran etc have reactors that were built and run by them initially?

      • LdB

        Yes, but we cannot afford (anymore) to import an enormous number of engineers to build such a plant.
        At least, I think, you understand my problem.

        • Same argument reflected in the mirror of necessity: You cannot afford not to.
          This is where infrastructure deficit spending might be the only sensible option. The biggest caveat would be the cost of corruption.

        • Check out the small scale, modular nuclear plants that Rolls Royce have designed and developed with 60 year life-spans.

          Designed for pre-installation manufacture so that all components can be delivered on 40ft containers ready for assembly on site. Modular so that they can be installed individually to serve a city or in groups to serve major city / industry.

        • Henry Pool said it …. n’ said it…. n’ said it

          July 5, 2020 at 7:16 am “We simply don’t have a big amount of qualified engineers in SA who can run a building project as big as this, according to the laid down regulations (by the AEC).

          July 5, 2020 at 7:54 am “Yes, but we cannot afford (anymore) to import an enormous number of engineers to build such a plant.

          July 5, 2020 at 7:55 am “Yes, but we cannot afford (anymore) to import an enormous number of engineers to build such a plant.

          Now Henry Pool, ….. it doesn’t require the importing of an enormous number of DESIGN engineers to build a nuclear generating plant. The design can be done anywhere and all one has to do is purchase it from a supplier of said.

          And Henry Pool, ….. it doesn’t require the importing of an enormous number of OPERATING engineers to build a nuclear generating plant ………. but it will require the hiring of an enormous number of SKILLED and non-skilled laborers to build a nuclear generating plant.

          And Henry Pool, …..the construction of a shiny new nuclear generator in SA is not going to solve your problem unless the design and installation of a power distribution network is completed, that delivers said power to all the pre-wired homes and businesses. And then you can educate lots of skilled labor and build factories and electrify them for the skilled labor to work in.

          Building nuclear generators in countries with a HIGHLY unstable political climates is asinine and idiotic, …… and that includes most all Africa.

        • So what is your alternative doing nothing and go back to the dark ages or buy lots of wind towers or solar panels from china. You get that has exactly the same effect and you can’t run industry from that source so it’s worse.

          What you need is to look at all the options and then you put a case together and then try to get the money from the various developing nation help groups.

    • Once again, Henry demonstrates that his fear is based on ignorance.
      If aren’t stupid enough to build Chernobyl style power plants, without containment vessels, then you have no reason to fear a Chernobyl like event. Beyond that, they had to deactivate most of the safeties in order to run a test that they lost control of, to create the accident. So even if you did the first two things, don’t do the third and you won’t have any problem.

      And no, the numbers don’t just refer to the building of the plant. If you think it takes 1.1 million people to build a nuclear plant, you must be a socialist.

      • Some truth in that: during the time I lived and worked in southern Africa, the most vicious ethnic hatred I saw was intertribal, exceeding any white/black discrimination, even during apartheid. And those generational hatreds are not confined to Africa, but are worldwide.

    • No, that is not why things went wrong at Chernobyl. Do not project your own limitations on others.

  13. The real cost of wind and solar would effectively increase to at least approximately R1.86/kWh and solar R2.79/kWh. [when the average load factor of 30% for wind is considered]

    The LCOE calculations published by the EIA already take average load factor into account.

    They don’t include the costs for backup, energy storage or extra grid stabilization measures.

  14. Jason Deport says
    Would safety practices be better these days?

    eishh

    You tell me.

    To answer a question of somebody else on this thread (to me)
    better an explosion due to gas than due to a nuclear melt down?

    • With modern plants, you have to purposely sabotage them before there is even a remote chance of them melting down.

      So you are asking what’s worse, a bad accident that happens frequently, or a worse accident that is almost impossible to make happen.

  15. LdB

    Yes, but we cannot afford (anymore) to import an enormous number of engineers to build such a plant.
    At least, I think, you understand my problem.

  16. Is there any political support for this?
    I am not up to date on SA, but I thought the trend was to shut down industry and to move toward unreliable energy sources and infrastructure. Have things changed?

  17. ‘ It is not surprising that where there is high penetration wind and solar in an economy, prices of electricity have increased substantially and energy poverty has increased. High prices can be found in a variety of countries, including, for example, Australia, Germany, Canada, and California.”

    Given the financial impact in Ontario of the broad based Covid-19 lockdown, subsidies to large scale renewables should be removed. Long term contracts, signed by the Liberal government should be cancelled by invoking force majeure.

  18. ‘Unless you are a racist and think ‘blacks’ are to stupid to run an atomic power station, of course., (sic)’

    The median IQ in sub-Saharan Africa is around 80 or below. South Africa would have difficulty attracting sufficiently intelligent people to staff their nuclear power plants, particularly with their aggressive affirmative action hiring policies. That’s why the the country is falling apart.

    • I don’t know where you get that crap from, but it isn’t true.

      SA is falling apart because it’s run by Marxist kleptocrats (but I repeat myself).

    • “South Africa would have difficulty attracting sufficiently intelligent people to staff their nuclear power plants”

      World class innovators – All educated in sub Saharan Africa

      Elon Musk – SpaceX
      Nick Sloane – Concordia Salvage Master
      Chris Barnard – Heart transplant
      ……….

  19. Commentators need to research facts before commenting. Much of the discussion of nuclear energy is driven by costs of constructing such plants in developed countries, where costs have been inflated by regulation and litigation. China has built two 1,000 MWe plants in Karachi, Pakistan in less than 6 years. They could certainly do the same in South Africa.

    “In July 2013 ECNEC approved two units of the Karachi Coastal power project with net generation capacity of 2117 MWe. The total cost of this was estimated at PKR 959 billion ($9.116 billion), with $6.5 billion (68%) being vendor finance.”

  20. LdB

    In their summary, that you quoted, Wiki conveniently left out that most of the protests against Koeberg was concerning the cooling water which affected the fish. The fish all died in the area of the ocean surrounding the Koeberg plant. Another problem is the waste.

    Anyway, we don’t want nuclear here in South Africa. Gas is available from Mozambique and it is I think 10 times cheaper to build a gas powered plant. The CO2 does not do much here, it is not get any warmer here. (Check my report, by clicking on my name)
    Why go the nuclear route?

  21. Ja. Ja.
    North. South. East. West.
    Gas is best.
    I did not find anyone here disagreeing except the usual nuclear energy mongers.

  22. Of course, the real problem with nuclear power plants is that, as recently amply demonstrated, all of our fellow countrymen are extreme hypochondriacs. So if there is the slightest tremor or storm cloud, all the power plants will be shut down for fear.

    For example, when Japan suffered a tsunami, Mrek el shut down the remaining nuclear in Germany. As DirkH explained, she was afraid of a tsunami.

  23. There is one other thing about using gas in SA:

    We have gas, in the Karoo. Unfortunately there are also a few people living out there. Really, only a few. But they managed to get their voices heard, so hard, that the gas companies all left with their tails between the legs. But looking at the USA, I think it was really the mining of gas that kick started their economy.

    It could do the same for SA.

  24. It is high time we stopped calling them “greens”. They are nothing other than the useful idiots for the Marxist movement. The Wizard of Oz has outed him/her/itself during the recent riots.
    Otherwise they would support nuclear. Full stop.

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