Renewables won’t cut it, says Nersa

In concurring with Minister of Mineral Resources and Energy Gwede Mantashe’s determination for the procurement of 2 500 megawatts (MW) of new nuclear generation capacity, energy regulator Nersa has rejected the argument that renewable energy together with energy storage or gas can supply all the country’s needs.

Nersa only recently published the reasons for its decision to concur with Mantashe, which was taken in August.

The regulator maintains that the need for base load energy remains and that renewable energy is too inconsistent to supply the consistent needs of industry running day and night all year long.

It argues that coal and nuclear are the two viable options for base load energy – with nuclear being the preferred technology in the light of the need to reduce carbon emissions.

Nersa does however seem determined to prevent another Medupi or Kusile, with huge budget overruns and little accountability for design and construction flaws.

It therefore made the concurrence conditional on the engineering, procurement and construction (EPC) contract format. This will ensure that the project management risk falls upon the successful bidder, rather than government.

Demand analysis

A proper demand analysis must also be done to determine the demand profile post 2030 when the nuclear power will become available to the national grid.

This is especially needed in light of the unknown impact of the 100MW licensing exemption President Cyril Ramaphosa earlier announced that is expected to open the floodgates for self-generation, especially by industrial power users.

“This will assist to determine the capacity and the scale at which the country would need to procure additional power generation from various technologies, including nuclear,” says Nersa.

Minerals Council CEO Roger Baxter recently stated that the council’s members are involved in projects totalling 3 900MW of renewable energy projects worth an estimated R60 billion.

Power requirement

The ministerial determination is based on the Integrated Resource Plan (IRP) that was published in 2019 and sets out the country’s electricity needs up to 2030.

The plan provided for no new nuclear generation capacity to be connected during that period, but taking into account the long lead time for such projects, provided for preparations to begin for the procurement “at a pace and scale the country can afford”.

The Department of Mineral Resources and Energy considers the procurement as part of such preparations.

During a public participation process earlier this year Nersa received 304 comments from individual stakeholders. “Out of the 304 individual stakeholder comments, 235 comments were opposed to Nersa concurring with the ministerial determination, 59 were supportive and 10 were on the fence,” Nersa says.

It adds that 53 organisations submitted substantive comments, with 28 supporting the determination, 24 against it, and one “on the fence”.

Nersa says it is essential to maintain base load supply to protect jobs in the industrial sector, which represent more than 22% of the South African workforce.

In 2035, when the proposed new nuclear generation capacity will come online, the base load demand is expected to be about 38 500MW, according to the IRP.

As Eskom’s coal-fired power stations reach the end of their design life and are decommissioned, the 36 800MW capacity in 2020 will reduce to only 12 800MW, which will not be enough.

Nersa however expects the supply gap envisaged in the IRP to shrink as industrial users make use of the 100MW licensing exemption. “Hence, a moderate additional baseload capacity of 2.5GW that the Minister is proposing will go a long way to close this generation gap,” it says.

The required demand analysis will indicate whether the country will have enough base load capacity post 2030.

Nersa points to improved coal technologies and says that coal remains the second most viable option for baseload generation, since

“South Africa holds 35,053 million tons (MMst) of proven coal reserves as of 2016, ranking 8th in the world and accounting for about 3% of the world’s total coal reserves of 1,139,471 million tons (MMst)”.

Nersa rejects the argument that widespread wind and solar PV generation backed by flexible gas or storage technology can replace traditional base load generation at a 10-20% cost reduction, significantly lower emissions and water consumption as well as higher labour intensity.

Demand imbalance

Renewable energy has a further advantage of shorter construction time with less complexity than mega nuclear or coal projects.

However, the regulator argues that such a system dominated by solar photovoltaic power will result in depressed demand during the day and the need to ramp up generation from peaking plants at night.

This will necessitate the redesign of tariffs to ensure that only customers who have embedded generation pay for the expensive peaking capacity.

Relying largely on renewable energy with back-up will bring complexity to grid management and require further grid investment as well, Nersa says.

Nersa points to the experience in the state of Texas in the US where decommissioned coal-fired power stations were replaced largely by wind power.

“In February 2021, Texas faced record-low temperatures, snow and ice made roads impassable, [and] the state’s electric grid operator lost control of the power supply, leaving millions without access to electricity.”

Nersa says “to avoid a similar disaster, South Africa, which has similar conditions as Texas, needs to take heed to these lessons and ensure that it has a mix of technologies that can withstand any weather conditions by continually providing energy to the grid regardless of the severity of the weather”.

“Both nuclear and coal are able to do this,” it says.