Russia’s 2014 nuclear deal cheaper than Ramaphosa’s Just Energy Transition

With a price tag of just over R1.5 trillion for the first phase only, the Just Energy Transition Partnership (JETP) is a complex mix of plans to move the country from coal-fired power to green energy.

Nuclear deal – R1 trillion, JET – R1.5 trillion for phase one

But, back in 2014, South African’s were appalled when news broke of a secret meeting with twenty of Russian president Vladimir Putin’s top nuclear experts pitching what would then be South Africa’s biggest-ever deal – carrying a price tag of a whopping R 1 trillion.

At the time, it was reported that 50 South African experts — including its nuclear chief, Zizamele Mbambo — had grilled officials from Russia’s state atomic energy company, Rosatom, at a secretive four-day conference at the Champagne Sports Resort.

Rosatom officials had pitched eight of their “VVER” pressurised water reactors for South Africa’s massive “nuclear build” programme, intended to add 9 600 megawatts to the grid by 2030.

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Mbambo, at the time, said Rosatom was not the only bidder for a nuclear contract and that other countries including France, Canada, South Korea and China had been invited to make submissions.

R1.5 trillion and counting in the short term

Eight years ago, the idea of spending R1 trillion on nuclear power was too obscene to contemplate. But somehow, South Africa seems to have overcome its difficulties and has since entered a new, more expensive deal for a different type electricity supply (the long term sustainably of which is sketchy) with the United Kingdom.

While the UK envoy to the Presidential Climate Finance Task Team says solar power would be the fastest way to alleviate Eskom’s problems, its plans and how this transition will be financed remains vague at best.

During a presentation at the Energy Indaba currently underway in Cape Town, South African Nuclear Energy Corporation (Necsa) chairman David Nicholls told delegates that the country’s only long-term solution to the energy crisis is nuclear.

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“If one started now, and the first units could come online in 2032/33 it would see large scale replacement of the coal fleet by the mid 2040s. The state needs to lead this programme,” Nicholls told delegates.

Nicholls presentation showed that costs of renewables and related storage (specifically batteries) have stopped falling and are in fact rising in most cases.

“The new model of the free market based largely on renewable energy has demonstratably failed in many markets and required massive state financial and regulatory support – to the detriment of the population,” he said.

Essentially, the system privatised profits and socialised losses.

Nuclear is cheaper, cleaner and sustainable

Speaking to The Citizen on the sidelines of the conference, Nicholls, who also served as Eskom chief nuclear officer for 34 years, explained how a nuclear project would go down.

Using the analogy of buying a car, in which the buyer would decide on the make, model and specs according to his/her needs, the same would apply to nuclear companies.

Various countries state-owned companies would pitch their products and models and South Africa would decide on which best suited its needs, pockets and economy.

“The building costs would be funded by the vendor, with a single payment contract,” he explained.

Delays in bringing the system online (as seen with Medupi and Kusile) would be penalised up to $2million daily.

“Nuclear deals can only take place with a state body, such as Eskom and other foreign state bodies,” said Nicholls.

“Nuclear deals cut out the middle men, which lobby groups oppose,” he added.

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World electricity supply dependent on ‘classic’ energy model

The harsh reality is that while South Africa is being ‘pushed’ towards renewables, the world, including countries lobbying for our transition toward clean energy are still largely dependent on classic energy sources, built nearly 40 plus years ago.

But these existing bases are ageing and are not being replaced.

The Vietnam renewable energy case study

A report by ESI Africa details the successful rollout of renewable energy by Vietnam, which has a 99.47 million-strong population.

According to the Global Electricity review, Vietnam’s unparalleled growth in solar power had not only reduced power sector emissions, but also reduced the country’s costly gas import bill.

By 2021, Vietnam experienced incredible solar growth (337%) becoming the world’s 10th largest solar generator.

Vietnam became the only Asian country to meet and exceed its entire electricity demand.

To achieve this, there was a standard feed in tariff of $0.935 kWh (R1.74) with a twenty-year Public Purchase Agreement or 18% higher than the domestic tariff.

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But Vietnam’s future (2023) energy plans include installing 25 000MW of new Liquid Natural Gas plants, 12 000MW of new coal plants and 7000 MW of hydro electric power.

The new plan only includes 708MW of new PV plants and 6000 MW wind.

“Like the German experience, this doesn’t really support the belief that renewables are an effective long-term solution for a national grid size similar to South Africa,” said Nicholls.

Short term solutions to darkness

Like an aging car, maintenance is not only essential, but costly. However, Nicholls wagers one of Eskom’s best bets to stabilising the wobbly grid lies in repairing the existing coal stations and running it until the end.

“In the absence of significant hydro power potential, the major portion of Eskom’s long term plan needs to be nuclear.”

If the process starts now, the first units could go online by the early 2030’s and a capacity equivalent to Eskom’s current coal fleet can be completed by the 2040s.