South Africa prepares for newbuild tender

18 March 2016

South Africa's state-owned power utility Eskom has submitted site licence applications to build and operate nuclear power facilities at two locations. The National Nuclear Regulator (NNR) said on 15 March that it had received applications for "multiple nuclear installations (power reactors) and associated auxiliary nuclear installations" at Thyspunt in the Eastern Cape and Duynefontein in the Western Cape.

NNR will now start a review of the application "to determine level of compliance with relevant regulations and whether it should be accepted for further technical assessments and public comment". Orion Phillips, NNR's senior manager for standards, authorisations, reviews and assessments, said: "The NNR has a robust system for licensing sites for new nuclear installations and we believe that this system, combined with the NNR's extensive know-how in regulating a wide range of nuclear activities, can assure stakeholders that we strive for the highest standards for nuclear safety and security."

Eskom has not yet identified a plant type or technology for the plants. Last December, South Africa's energy department gave the go-ahead for a request for proposals (RFP) to be drawn for construction of a new generation of NPPs. Earlier in March, Reuters reported Department of Energy director general Thabane Zulu as saying that the RFP would be issued by the end of this month.

Intergovernmental agreements have been signed with several vendor countries that have expressed interest in the nuclear new build programme. Once a nuclear vendor has been decided upon, then a nuclear installation licence application will be initiated, Eskom said.

South African president Jacob Zuma previously announced plans to "test the market to ascertain the true cost" of building new NPPs. Zuma said in his annual state of the nation address to parliament that South Africa "will only procure nuclear on a scale and pace that our country can afford". However, he affirmed plans to build 9,600MWe of new nuclear generating capacity in the next decade. South Africa's only NPP, at Koeberg in the Western Cape, is owned and operated by Eskom. Its two pressurised water reactors began commercial operation in 1984 (930MWe) and 1965 (900MWe). Unit 1 entered in July 1984, followed by the 900 MW unit 2 in November 1985.

Russia, France and South Korea are all expected to tender. France's special envoy for the nuclear partnership with SA [South Africa], Pascal Colombani, says France's offering will be differentiated by transparency and compliance with all regulations. Colombani was visiting SA for talks with Energy Minister Tina Joemat-Pettersson and government officials. The French government has also appointed a nuclear attache who will be based in Pretoria.

"The Russians are serious contenders, but we are convinced that our offer will be better than what they can offer. We are extremely strict on compliance, ethics and transparency," he said. Colombani added that the French offering would involve a genuine partnership including skills and technology transfer and in which South Africans achieved "complete mastery" of the technology. The ownership and financing model would require SA to have full sovereignty of the project at all times and would require that the South African government contribute both equity and debt. France, through its export credit facility, would be able to finance much of the borrowing, he said.

Reuters reported that Russia is confident of winning the bid because it has the best technology and a cost advantage due to the weak rouble and oil price, state nuclear corporation Rosatom said on 16 March. Nikolay Drozdov, head of international business at Rosatom, told Reuters that the cost of building nuclear plants in South Africa would be much lower than the $100bnn estimate reported in the media. However, he denied reports that South African President Jacob Zuma and Russian leader Vladimir Putin had already agreed to give Russia the nuclear build contract, saying this was "baseless speculation".

Drozdov said the extent of localisation in the newbuild project would depend on the interest local business. "If local business is interested to participate in the nuclear programme, we can increase it (localisation)," he said. "If not, we can supply 100% from our sources, but economically that's not efficient. We are trying to use local partners ... to lower costs, but it's the subject for negotiation." He added: "For example, you could take a Russian nuclear island and we will integrate your local competencies and local technologies.We can have, for example, Russian/South African technology that can be exported to other countries in Africa."

Rosatom project manager Irina Manina told the 2016 Nuclear Africa conference in Centurion on 16 March that the nuclear programme could create 10 200 jobs during construction, 10 000 jobs in related industries and consumer goods, and just over 5700 jobs during the operation of new nuclear plants. Rosatom estimates that the nuclear programme would add $22.8bn in gross value added to the economy. Meanwhile the benefit to local subcontractors directly involved could be around $21bn.

South Korea is advocating an independent power purchaser (IPP) model. Bae Sang Ha, chief representative of Korea Electric Power Corporation (Kepco), said on the sidelines of the conference that an IPP would eliminate the need for South Africa to pay a huge amount before the plant is in operation. Sang Ha said Kepco would offer its 1,400MWe APR1400 reactor and would tailor its bid to the requirements set out in the RFP. However, he noted that an engineering, procurement, construction (EPC) format could require an upfront cost of up to $40bn, which South Africa might find unaffordable. Under an IPP model, South Africa could appoint one of the bidding countries as an IPP and only start paying for the nuclear power when the plant comes into commercial operation under a power purchase agreement (PPA) agreed upon when the deal is concluded.



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