Prospect of New Coal-Fired Power Plant in South Africa

BRISBANE, Australia - May 27, 2013 - PRLog -- South African Public Enterprises Minister Malusi Gigaba told the Cape Town Press Club recently the government remained committed to building nuclear power, but getting the program into motion was taking longer than expected.

"The big challenge is what happens post-Kusile in 2017," he said of Eskom's second major coal-fired expansion. The first project is Medupi, which is due to commission its No.1 unit in December.

"We need to take decisions early and quickly so we don't get the country back to the power supply uncertainties of 2008. When the last generator of Kusile starts delivering power the next generation of power stations must already be in motion," Gigaba said.

This is not the first time Gigaba has questioned the likelihood of nuclear energy fulfilling South Africa's future power needs on the scale first identified, or in good time.

Doug Kuni, MD of the South African Independent Power Producers Association (SAIPPA), added another dimension of uncertainty. He said it was not definite that either Medupi or Kusile would be commissioned on time and another source of coal-fired power ought to be built, although it was arguable whether Eskom should do it.

He also thought failing to build new power generation capacity sent a poor message to foreign investors which, in turn, would lead to disinvestment.

"There are still some serious challenges facing Eskom and the track-record does not suggest a speedy delivery," he said.

Eskom spokesperson Hilary Joffe said another coal-fired power station was more affordable than building nuclear power.

"We have been looking at it for a long time," she said of a third coal-fired power station, which is referred to as 'Coal 3'. "It has certain advantages. It would be in the Waterberg [a region in South Africa's Limpopo province] and therefore we could just move infrastructure and skills we have developed across seamlessly.

"New capacity also allows us to do long-standing maintenance on existing capacity that is currently running unreliably."

There was also the fact Eskom was expected to decommission some 10,000MW of capacity which would need to be replaced by other coal-fired sources of energy, as well as nuclear.

However, a spokesperson for the Energy Intensive Users Group (EIUG) said caution was required before making a decision. He was doubtful another coal-fired power station was the right decision especially as policy relating to South Africa's future power mix was becoming more fluid amid lower-than-expected economic growth.

The EIUG is an association comprising Eskom's top customers including Anglo American, BHP Billiton, petrochemicals giant Sasol, and Glencore Xstrata.

"Sure, new generating capacity needs to be looked at urgently, but we need to do it in the context of an updated Integrated Resource Plan (IRP)," the spokesperson told the SACR. "The last IRP was based on a higher growth rate and so now I think it would be unwise to rush into decisions."

The IRP assumed gross domestic product growth in South Africa of 3% to 3.5% which compares to a current estimate of 2.7% - a target some economists believe is still ambitious for 2013.

Joffe acknowledged that economic growth had become an increasingly important matter to Eskom. For instance, the utility had seen a decline in electricity demand because of lower business activity.

"At the moment, we are running at negative demand growth," Joffe said.

The IRP was published in 2010 and recommended nuclear energy should account for 23% of South Africa's total energy mix and coal-fired power stations 15%. The remaining 42% would be sourced from renewable energy sources such as wind and solar power.

The nuclear program, however, has not progressed. To achieve the nuclear targets set down by the IRP2010, a power station needs to be built every year between 2023 and 2026 and the last two in 2028 and 2029.

The IRP is being revised with the EIUG believing it will recommend a more flexible approach on the constituents that contribute to South Africa's future power requirements. "I think it will make provision for new elements such as gas," the EIUG spokesperson said.

The South African government recently gave its blessing to exploration of the country's Karoo region where large amounts of underground gas has been discovered.

Angeli Hoekstra, a partner in consultant PwC and who has Eskom as a client, said the new version of the IRP might also consider inter-regional sources of new energy.

"It will probably look at where power can be imported with Inga 3 (a large hydroelectric power station in the Congo), providing a potential new source of power," she said.

There was also the prospect of gas from Namibia and new hydroelectric power from Mozambique as well as a significant increase in transmission capacity using Zimbabwe as a hub along with Botswana and Mozambique.

Gigaba, however, did not dismiss the contribution nuclear power could make to South Africa's future energy requirements, despite it being highly expensive to build

"Later the cost levels out and it is also less costly in terms of carbon emissions and the cost drastically subsides when you consider nuclear power's long-term sustainability and reliability," he told the press club.

"We could even use the current build program and the benefits we've drawn from that to further support the nuclear build program," Gigaba said.

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