The Government’s nuclear power plans: is a rational debate possible?

Earthlife and SAFCEI litigation

Earthlife Africa and the Southern African Faith Communities’ Environment Institute (SAFCEI) instituted legal action against the Minister of Energy in October 2015. This legal action requests the Western Cape High Court to declare unlawful and unconstitutional all decisions taken to proceed with the procurement of new nuclear power plants. The ground for the application is the fact that such decisions had been taken in the absence of a procedurally fair public participation process and without a formal determination (as required under the Electricity Regulation Act, No. 4 of 2006 (ERA)). Such a determination must establish that not only that new generation capacity is required but also the degree to which that electricity must be generated from nuclear power. The application also points out that the Minister used an outdated assessment of electricity requirements and how to address them (as set out in the Integrated Resource Plan (IRP) dating back to 2010), instead of making a new determination on how much new nuclear generation capacity was required.  

A new determination by the Minister in December 2016 was made in the midst of public consultations on a new IRP, which has a closing date of 31 March 2017 for public comment, thus, as the application puts it, effectively rendering that process a sham. The application also refers to comments made to the Minister by an expert working group appointed by herself on 16 September 2016, to analyse certain concerns expressed by members of the Ministerial Advisory Council on Energy (MACE) on assumptions used in the draft 2016 base case scenario for the new IRP. The working group reported on 31 October 2016 to the Minister that “…… A least cost IRP model … does not include any new nuclear power generators. The optimal least cost mix is one of solar PV, wind and flexible power generators (with relatively low utilisation)”.

The Earthlife and SAFCEI application further requests the High Court to declare unlawful and unconstitutional an intergovernmental agreement of September 2014 with Russia.  As a result of the binding nature of the obligations in this agreement, the applicants maintain that it requires approval by Parliament in terms of Section 231(2) of the Constitution. Formal parliamentary approval is required and not just tabling, which is reserved for agreements which are more of a routine or administrative nature, in terms of Section 231(3) of the Constitution.

In addition, the application requests two other intergovernmental agreements that were signed with the USA and South Korea, in 1995 and 2010 respectively, to be declared unlawful and unconstitutional, since they only were tabled in June 2015, and therefore not within a reasonable period as required by Section 231(3) of the Constitution.

This case was set down for hearing in Cape Town on 13 December 2016. The Court and the applicants were informed just before the start of proceedings on that day that the Minister had in fact signed a new determination in terms of the ERA eight days previously, on 5 December 2016, detailing a nuclear requirement of 9 600MW and for ESKOM to be the plant procurer. As a result, the Court postponed the hearing of the case to 22 February 2017 and ordered the Minister of Energy to pay the wasted costs, including that of four counsel, on a punitive scale. The new determination by the Minister was only Gazetted on 14 December 2016.

It is important to note that this legal challenge does not address the issue of nuclear power on environmental grounds, but confines itself to the legality of action taken by Government.

What happens next?

Quite apart from the above legal action, the public consultation process in respect of updating the IRP is due to run until 31 March 2017, after which the Government will publish an updated IRP. The draft updated version which was published in November 2016, placed an annual limit on the construction of renewable capacity. But the reason for this limitation has not been explained and, as mentioned above, it is in conflict with the advice of the Ministerial Advisory Council on Energy. The practical effect of these changes is to make space for a nuclear option, which would otherwise have been excluded, purely on the basis of cost.  

In the meantime, ESKOM has gone to the market with a Request for Information (RFI) with regard to the nuclear new build programme, with a closing date of 28 April 2017. Although this does not ask for firm proposals for nuclear power plant construction, this has been done whilst the public consultation process for a new IRP is still continuing.

Two issues that continue to confuse the nuclear debate in South Africa

ESKOM’s position, as it has been explained in its public statements, remains that nuclear is the only option as, in its opinion, renewables are too expensive and cannot be accommodated beyond a certain degree in ESKOM’s network on grounds of grid stability. The discussion about the two issues of cost and grid stability require some explanation, since it is easy to become confused on the basis of the selective way in which the facts are being aired.

The first issue concerns cost comparisons between nuclear/coal energy generation and renewables, and the second involves the question of grid stability. Each of these is dealt with in turn below.

A. Cost comparisons

It is important to compare apples with apples in contrasting the cost of renewables with coal or nuclear power. For example, some recent analyses have compared the cost of renewables (taken as an all-in cost, including construction, financing and running expenditure) to ESKOM’s current costs from its long-established coal power generation system, using only running costs for purposes of cost comparisons. This is like comparing the cost of a used Rolls Royce and a new Toyota Camry on the basis that the Rolls Royce is already paid for and its only cost is therefore its maintenance and petrol consumption. On the other hand, the Toyota Camry’s cost is taken as its aggregate purchase, financing and running costs. On this basis, the Toyota Camry would appear to be the more expensive option.  

It is certainly tempting for ESKOM to do the calculation in this manner. It has surplus coal generating capacity at the moment and the cost of using such surplus capacity is of a marginal nature. What is not mentioned, however, is that surplus capacity is not a permanent situation and will certainly change over the years as ageing coal plants are decommissioned, or if electricity demand increases. It is also well known that the cost of renewable energy has decreased substantially over the past few years, and it needs to be specified in any comparisons whether the latest prices of renewable energy are being used.  

In this context, it should be kept in mind (and this is not widely publicised, for whatever reason) that ESKOM’s own statistics show that its electricity output is currently 5% less than it was 10 years ago, whereas total electricity purchased is on the same level (and this includes renewable energy).  

B. Grid stability

Matshela Koko, ESKOM’s interim CEO, stated on 28 October 2016 that “… the combination of solar, wind and flexible generation, as is currently proposed, will result in system instability due to reduced system inertia” and that “to protect the system from black outs the growth of renewable energy resources needs to be capped until energy storage systems have proven themselves”

(http://www.eskom.co.za/AboutElectricity/FactsFigures/Documents/GrowthRenewablesCapped.pdf). 

Whilst he is correct that coal and nuclear energy (referred to as synchronous systems) provide inherent stability to the system, he is not prepared to consider technical solutions that are available and in operation to deal with renewable systems (referred to as non-synchronous). Without going into a detailed technical discussion, we can refer to the situation in Ireland, where the grid operator controls a system with 60% renewable energy (ie. non-synchronous) today, with plans to go to 75% by 2020. South Africa will not be at these levels for 20 years. There seems to be a fixation on ESKOM’s side with nuclear power, coupled with an unwillingness to consider alternatives which have a proven track record and which are not expensive.

Conclusion

The issues relating to cost and grid stability are being dealt with in what are ping-pong battles in the media  - a rigorous comparison of all the alternatives, without any hidden agendas, is obviously required to bring some clarity to the discussion.  There is no sign that this will happen.  If the Minister of Energy persists in issuing an updated IRP which goes against the advice of her own ministerial working group, and if ESKOM, as the appointed procurer (as well as acting as a referee and player in a monopolistic market), issues a RFP on the basis of the findings of that IRP, we can expect litigation to follow soon afterwards, to be instituted by any number of public interest groups which have been keeping a close eye on developments. The decision by the Western Cape High Court in the current proceedings may well provide greater clarity as to the way forward.

Anton van Dalsen, Legal Counsellor, HSF, 16 February 2017