SA needs to spend R200bn on power stations

Posted On Monday, 16 August 2004 02:00 Published by eProp Commercial Property News
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With coal reserves dwindling, nuclear power is an option for the future and government is considering more Koeberg-type plants

Infrastructure IndustryWith coal reserves dwindling, nuclear power is an option for the future and government is considering more Koeberg-type plants

SA will have to spend R200bn over the next 20 years on power stations to ensure adequate electricity supplies, and the cost of electricity is set to double or treble during this period at a rate of 5,7% a year.

This is the prognosis by Steve Lennon, MD of Eskom's resource and strategy division.

"We have a plan in progress to look at all potential technologies: coal, gas, nuclear, solar, wind and hydro forms of energy generation."

He said the planned pilot pebble-bed modular reactor, a nuclear mini-reactor, would probably be online by 2010.

Lennon said there was a high level of confidence in the negotiations with a number of countries, including France, Britain and the US, to fund the building of the first prototype at a cost of R6,4m.

He said it would cost the country's electricity utility about R30bn to replace one power station.

The costs would escalate after 2025 when the country's coal-fired stations built in the 1980s were decommissioned at the end of their 40-year lifespan.

Lennon said that current projections for the cost of electricity from a new generation of power stations with new coal prices or natural gas capacity were about 22c per kilowatt-hour (kWh) to 30c/kWh, compared with current costs of 10c/kWh to 14c/kWh.

Tony Twine, senior economist at Econometrix, says the R200bn expenditure seems neither onerous nor untenable.

"If evenly spread over a 20-year period it would add 0,834% to the current 16% of gross domestic product spent on fixed investments."

Twine said that the last time that Eskom had spent heavily on electricity plants was in the first half of the 1980s. "At that time we easily ran the economy on fixed investment shares of 20%," he said.

Twine said that in the worst-case scenario, with current rates of 10c rising to 30c in the next 20 years, the compound interest escalation rate would be 5,7% a year.

Minerals and Energy Minister Phumzile Mlambo-Ngcuka indicated last week that the pebble-bed modular reactor was at least 10 years away from becoming a commercially viable project.

She said because coal reserves were dwindling, SA would need to rely on nuclear power in the future.

Government was considering the construction of other nuclear plants similar to Koeberg.

Lennon said the pebble bed technology was a candidate for the US Idaho project to develop a technology for generating large quantities of hydrogen.

He said the "hydrogen economy" was seen as the economy of the future. High-temperature gas reactors were one of the primary sources of hydrogen.

"The generation of hydrogen is probably more important than the generation of nuclear energy."

"This with fuel-cell technology provides the mechanism for energy transformation from oil to hydrogen as an energy source."

There were already vehicles at experimental level that were powered by fuel cells.

Lennon forecast that the widespread use of fuel-cell-powered vehicles within 10 years would create the need for hydrogen.

He said that the challenge to provide an infrastructure that could be used as an alternative to oil was immense.

"It will probably take 15 years for this to happen," he said.


Last modified on Tuesday, 05 November 2013 08:48

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