Renewables Make Up 30% Of All South African Foreign Direct Investment. Why Is Nuclear Still On The Table?
South Africa is delaying the procurement process for a controversial fleet of proposed nuclear power plants but the government remains committed to nuclear expansion, an official said Thursday.
This has drawn attention to South Africa’s status as a global model for renewable energy, and raises new question about why the country is pursuing nuclear when renewables look so promising.
South Africa has the fastest growing green economy in the world, according to credit rating agency Moody’s.
“South Africa was the continent’s largest renewables market in 2015 in terms of asset finance for utility-scale projects and it saw the highest year-on-year growth globally,” said Christopher Bredholt, a Moody’s vice president, in a Sept. 16 report.
Asset finance is usually used by businesses to lease equipment without having to buy it outright, according to Finance & Leasing Association.
South Africa had the highest growth globally for asset finance in 2015 at 300 percent, representing $4.5 billion, according to Moody’s.
Johan van den Berg is CEO of the South African Wind Energy Association.
“The renewables industry is responsible for approximately 30 percent of all foreign direct investment into the country,” van den Berg said in a Daily Maverick report. “We’ve built a 7-billion rand ($505 million) infrastructure sector in four years, all with private money, creating many jobs and significant new manufacturing capability.”
This raises further questions about the need for nuclear power, but on Thursday, Energy Minister Tina Joemat-Pettersson said South Africa is “fully committed” to plans for nuclear procurement.
The government identified nuclear expansion as key to increasing its power generation. The price tag — up to 1 trillion rand ($72 billion) is just one of the concerns.
Lawsuits challenging South Africa’s planned nuclear build are a factor in the delayed procurement process, said Jeff Radebe, minister in the presidency, at a post-cabinet briefing in Pretoria, according to Eyewitness News.
At least $14 billion of private investment has been poured into solar and wind developments. By mid-2016, renewables were providing around 16 percent of South Africa’s energy during peak times, and growing. By the end of 2016, South Africa is expected to have 400 wind turbines running; by 2020, it could have cumulative wind capacity of 5.6 gigawatts, Daily Maverick reported.
South Africa’s Renewable Energy Independent Power Producer Procurement Programme is considered a successful economic model that ranks among the top 10 globally. Its competitive tender model plays a role in this success, said Raine Naude, a research fellow in the Management Programme in Infrastructure Regulation & Reform (MIR) department.
The bidding process tends to award multiple bidders in each competitive tender, which typically reduces corruption, Naude said, according to Daily Maverick. This differs from unsolicited, directly negotiated projects directly between the provider and the government. South Africa’s program allows high levels of transparency and objectivity as bids are evaluated. The competitiveness results in lower prices, especially when there are multiple bid rounds.
“Our cheapest sources of power are now wind and solar energy,” said Anton Eberhard, MIR director. “The Department of Energy has awarded long-term, fixed-price contracts for wind energy as low as 57 cents per kilowatt hour, far below Eskom’s average cost of supply.”
Distrust of nuclear
There is widespread public distrust of South Africa’s nuclear expansion process. That distrust is rooted in a 2014 announcement that the Russian nuclear agency Rosatom had secured the rights to build the new South African nuclear plants, The Conversation reported. The South African government downplayed the announcement, claiming it was wrong.
Media investigations found evidence that people close to the president and groups linked to the ruling ANC have significant financial interests in expanding nuclear power.
The development of new nuclear power plants with a generating capacity of 9600 megawatts was first presented in the Department of Energy 2010-2030 Integrated Resource Plan for electricity. Nuclear’s share of the mix would amount to 13 percent of South Africa’s 2030 generating capacity, compared to 46 percent coal, 11 percent solar and 10 percent wind, according to the plan.
This plan is considered outdated. Opponents say improvements in renewable energy tech and lower future energy demand make the nuclear build questionable, The Conversation reported:
Given the widely acclaimed early successes of the Renewable Energy Independent Power Producer Procurement Programme, it is difficult to understand why the renewable fraction is not being increased further, and why the national power utility Eskom, under the leadership of Brian Molefe, a nuclear disciple, now opposes new renewable energy developments.
The promotion of nuclear energy at the expense of renewables bucks global trends. An industrial nation like Germany is phasing out nuclear power, and has a much higher renewable energy investment than sunny, windy South Africa. Chinese renewables expansion currently exceeds nuclear development by far.