2,500MW nuclear plans for South Africa pushing ahead – with ownership the next big question – BusinessTech

Despite energy minister Kgosientsho Ramokgopa withdrawing the Ministerial Determination for the procurement of 2 500MW of nuclear energy in August, the energy department is continuing its studies and processes laying the foundation for an eventual build.

Updating the portfolio committee on energy about the 2,500MW nuclear plans this week, the department said it was making progress on the feasibility studies and analysing the responses from vendors and stakeholders as part of the 2020 request for information (RFI) related to the build.

It has also investigated funding and ownership models and will present three recommendations to the Cabinet.

In January 2024, a decision to procure nuclear was gazetted by the department as part of section 34 Ministerial determination in line with Electricity Regulation Act.

However, the determination—and the National Energy Regulator of South Africa’s (Nersa) concurrence of the process—had come under legal pressure with groups contending that, amongst others, public comments had not been sought and the procedure had not been fair, which led to it being withdrawn.

Despite the withdrawal, the procurement of nuclear energy still remains a government plan for the country’s energy security. Nuclear energy forms part of the government’s Integrated Resource Plan 2019’s envisaged energy mix for South Africa.

The department confirmed it is already in the process of resubmitting the section 34 approvals to Nersa for a new determination.

“Nuclear is part of the mix. Nuclear is part of the future but it’s important that as we go out…the procurement process must be able to stand the test of time. In this instance, it’s the ability to be able to subject itself to scrutiny,” Ramokgopa said.

“Let’s go back to that process; accord the public an opportunity to scrutinise, respond and then on the basis of that [Nersa] can make a determination on concurrence. Once we receive that, we’ll issue the gazette and ensure that we procure.”

Background work ongoing

According to the department, regulatory processes related to the nuclear build are underway, and the RFI process showed readiness and willingness to proceed with more nuclear energy in the country.

Notably, on the regulatory front, some of the first steps to be followed include the requirement for Eskom to obtain a Nuclear Installation Site License (NISL).

“The site licensing process started way back when Eskom submitted its NISL to the regulator in 2016. The public participation process was conducted in 2021.

“This is a non-design-specific approval that certifies the site is suitable for a nuclear installation and the external considerations that need to be taken into account (e.g. seismic loadings),” the department said.

Eskom has also applied for NISLs for both Duynefontein and Thyspunt. This decision is still pending, the department said.

Regarding the RFI, the department made several observations related to the potential build, including costs.

The department appears to be looking at small modular reactor (SMR) technology, the majority of which is in the design stage with plans to be operational by 2030. It said that two SMRs are already operational and commercially demonstrable.

Of particular note, the department said it would take around 10 years to construct and operate Pressurized Water Reactors and much less time to get SMRs up and running.

In terms of costing, the RFI outlined a capital range between $1,470/kWe (1,000kW) and $9,530/kWe. The value used in the IRP is around $5,000/kWe.

However, the ultimate costs would depend on the financing and ownership model, with some companies offering vendor-funded financing models involving private consortiums.

The ultimate recommendation made by the department to Cabinet, however, would be three ownership models:

• Private public partnership (PPP) – where the state, through an SPV and Eskom, owns a minority stake. Eskom will not be the controlling shareholder and the asset will be transferred back to the state with an opportunity to run it. Until then, vendor retains ownership without right of use.

• Majority government ownership – where the state, through Eskom, holds 51% of the shareholding. This is in line with the Nuclear Energy Policy of 2008, but it is heavily reliant on backing from the South African fiscus and hinges on Eskom’s balance sheet, which carries associated risks.

• 100% government-owned – where the state fully finances and controls the assets, Eskom is responsible for all phases of deployment and all risks are carried by South Africa. Needs full support from the National Treasury, with Eskom as the sole investor.

The department stressed that the Cabinet’s decision is critical to the process before it can issue any request for proposal (RFP).

It added that many local companies are interested in offering support services to the build, and there are clear commitments to localisation, with most vendor companies willing to collaborate with local companies.

Most importantly, however, a re-submission to Nersa for a new section 34 of the Ministerial Determination—the need for new generation capacity being determined by the Minister to ensure the continued uninterrupted supply of electricity—is underway.

Read: South Africa halts nuclear plans – for now