There was a long debate before the launch of the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP). There were all manner of guesses about how much we would have to pay to buy renewable energy. NERSA went through several rounds of renewable energy feed-in-tariffs (REFITs). People prepared offers, and then the REFITs disappeared.
The final announcement of the REIPPPP was therefore met with a lot of scepticism. When it became known that it would cost R15-million just to get sight of the document required to make a bid, scepticism turned to rage: where was the transparency we had been promised? To its credit, the Department of Energy didn’t blink. Requests for proposals went out in August 2011. In November, when the dust had settled, there were 53 bids of which 28 were selected. A year later, contracts were signed. Most projects got their finances sorted out soon thereafter.
The second round of bidding started as the first closed, in November 2011. This time there were 79 offers, but only 19 were selected. Importantly, prices for solar PV and wind tumbled.
After four rounds of bidding, we have ordered nearly 3400 MW of wind capacity with an investment of R73-billion; 2300 MW of solar PV with an investment of R62-billion and 680 MW of other technologies at a cost of R57-billion.
Nearly 6400 MW of capacity has drawn an investment of R192-billion. The wind energy cost has fallen from R1,42/kWh in Round 1 to R0,71 in Round 4, while the cost of PV has fallen from R3,44 to R0,86/kWh.
The REIPPPP office has had nothing but praise from all who have done business with it. It has been tough but fair; commercially astute and squeakily clean. Above all, it has cost taxpayers nothing: the R15-million per bid has paid for an army of lawyers and accountants who have made the process run smoothly and absolutely free of corruption.
This story is worth telling, because the REIPPPP has clearly been an outstanding success. It shows that we really can handle billions of rand. The story is also worth telling because there is another source of energy waiting in the wings which had very similar problems at the outset. Our nuclear programme was launched with great fanfare back in 2008 and fell flat on its face.
An assessment in 2010 showed that, while renewable energy was great, we would still need something to keep the lights on and the wheels of industry turning when the wind wasn’t blowing or the sun wasn’t shining. More fossil fuel was felt to be undesirable, so nuclear had a resurgence. The plan called for a fleet of reactors with a capacity of 9600 MW to be installed over the next few decades.
Enter the National Planning Commission. How could we possibly afford the estimate of some R500 to R600-billion? And did we need 9600 MW of capacity?
Capacity is only one measure of the electrical supply system. Capacity gives an indication of the maximum possible output of power, so it is exciting, like your 450 kW Porsche.
Probably a more important measure is the energy actually produced. It is measured in kWh if you are thinking of your home, and TWh if you are thinking of the nation. All that lovely renewable energy will produce about 20 TWh per year.
9600 MW of nuclear power will produce close to 80 TWh, four times as much energy at three times the cost. The planning commission was misled. Nuclear is as affordable as renewables.
Most renewable technologies have an expected lifetime of about 25 years. But these are comparatively new technologies and have not had 25 years to prove themselves. In contrast, nuclear energy has a demonstrated lifetime of 60 years and more. So the capital charges for each renewable kWh are at least twice the equivalent capital charges of nuclear power. That is one reason why the cost of energy from Koeberg is currently the lowest in Eskom’s fleet.
These arguments, however, do not satisfy the nuclear critics. What about safety? Surprisingly, even if you include Chernobyl, Three Mile Island and Fukushima, nuclear is demonstrably the safest of all sources of energy. A big accident can cause massive disruptions, but few are injured. Contrast that with big dam failures: Banqiao killed 171 000 and destroyed 11-million homes in 1975.
What about nuclear waste? Two features of nuclear waste are often overlooked. First, its volume is very small. The waste from the first few years of Koeberg’s operation now sits in the open air in a few steel casks about 4 m high and 2 m in diameter. That is a smaller volume of solid waste than a coal-fired power station produces each day.
Secondly, while it is true the radioactivity will persist for millions of years, it is not true that it will be dangerous for millions of years. We are exposed daily to radiation levels far higher than we are ever likely to experience from those casks. Do you live on the Highveld? Then you receive far more cosmic radiation than we lowly coastal dwellers. Do you live on granite outcrops, like those sun-worshippers at Clifton? That healthy glow may owe something to the radiation you inevitably receive.
Storing the waste does not present a real problem. The French found the cost of burying a lifetime of nuclear waste is cheaper than the annual cost of the country’s landfill sites.
Nuclear costs are large, even if spread over several decades. Large costs create large opportunities: either for saving, or for corruption. The REIPPPP has proved that we have learned to manage billions of rand honestly, and can reduce costs. Now we need to show that we can apply the lessons to our nuclear programme.
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