Business Unusual

Electricity prices getting you down? How does free sound?

Nobody wants a repeat of the load shedding of a decade ago. So the question is what energy mix works best for our economy and us.

We already have some of the largest coal plants in the world and, while we have a lot of coal, it is not good for the planet. The power stations are also clustered in one part of the country, making distribution more challenging.

The alternatives are other forms of fossil fuels like gas, nuclear or renewables.

Gas is good for peak consumption although, being a fossil fuel, has a negative effect on the environment.

Nuclear is a tested base load supply in South Africa and Koeberg's track record barring a “bolt in the turbine” has been good with no major nuclear issue in the 30 years of operation. All the fuel used to power the plant is still stored on site, but it is filling up and no-one has a long term plan for safe storage. The cost to run it may make it still competitive but only because the capital expense is already dealt with. The cost of decommissioning, when that happens, will still be significant.

Building a new nuclear plant will be a big capital outlay, something that would impact significantly on the cost to produce the energy and stretch the country’s debt. They take a long time to build. While there is a global nuclear market, it is in decline, so new research and lower costs are less likely.

For wind, solar and even bio, hydro and geothermal, the types typically regarded as renewables there are a lot more factors in their favour and wind and solar even more so.

The Experience Curve

Innovation and improvements are long overdue in the renewable sector thanks cheap and plentiful coal, a strong fossil fuel lobby and citizens who were ignorant to the long term impact of greenhouse gas production.

The Experience Curve holds that as production increases, costs fall.

Germany was one of the first to provide a stimulus to encourage development by offering significant subsidies to renewable energy products. Those investments are beginning to pay off with increased power supply, reduced carbon emissions and lower prices.

Over time the improvements were sufficient to warrant others doing the same. The trickle has become a flood with China investing heavily to address both its rising pollution and meet the still growing energy needs of its expanding economy.

Its production has increased availability and reduced the costs to install solar.

Source: climaterealityproject.org

The oil dependent economies of the middle east are also looking to renewables as a way to remain leaders in the energy field and using their fund reserves from fossil fuels to fund the development and investment in renewable projects, both for their needs and in projects around the world.

South Africa’s NDP has set a target of 20 000 MW of the 29 000 MW new capacity to be renewable, but still has nuclear as part of the energy mix. There may have been a time when being a nuclear energy producing nation may have held economic value as the technology was used in other areas (SA has the only nuclear plant on the continent). But in the same way the continent has skipped fixed line telecommunications in favour of mobile, it is also certain Africa and the world will not pursue nuclear as a long term viable solution.

Consider the expected R1 trillion potential cost to produce the six to eight reactors to deliver about 9000 MW. It would typically be centred in a single location with very long build times.

Source: climaterealityproject.org

A solar power project completed in 2016 produced 75MW and cost R2.6 billion. SA could create almost 300 projects of that size around the country for the same price while generating over 22 000 MW of power. The projects would take less time to build, have almost no environment impact and can be situated to operate both on and off the grid.

There is another potentially more significant industrial revolution underway and it does not involve AI, but the very means to power our planet not just to cover our needs for the foreseeable future but potentially to ensure we have a future on the planet at all.

A basic comparison between cost, time and power generated for nuclear versus renewables.


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