As oil prices continue to rise and demand for power in emerging markets grows at unattainable rates, stakeholders in the energy sector in those markets will no doubt have had one eye on the UK on January 10. John Hutton, the UK Energy Secretary made a statement in the House of Commons asking energy companies to submit plans for construction and operation of new nuclear power stations. The White Paper on Nuclear Power and the Energy Bill were also published.
Current Nuclear Power: UK and South Africa
UK electricity production is about 400 TWh gross, from 81 GWe capacity. Net imports are about 8 TWh. Annual consumption is 355 TWh, or about 5700 kWh/person.
In 2006 UK nuclear plants generated 19% of UK electricity (69 billion kWh of some 380 billion kWh net), compared with 36% from gas and 38% from coal. There are 19 UK reactors totalling 11 GWe capacity. In addition, about 3% of UK electricity demand is met by imports of nuclear power from France, so overall nuclear total in UK consumption is about 22%.
Total generating capacity in South Africa is 41.3 GWe about half of the UK. Generation is mostly coal-fired, and largely under the control of the state utility Eskom. In 2005 electricity generation was 245 billion kWh, with 2 TWh net exports and 198 billion kWh final consumption. Some 94% comes from coal-fired plants and in 2006, 4.4% – 10 billion kWh – was from nuclear.
South Africa has a single nuclear power plant. The Koeberg plant was built by Framatome and commissioned in 1984-85. It is owned and operated by Eskom and has twin 900 MWe pressurised water reactors (“PWR”) the same as those providing most of France’s electricity.
While there had been no intention to build further power stations of this type, the government announced early in 2006 that it was considering building a further conventional reactor, possibly at Koeberg, to boost supplies in the Cape province.
UK White Paper
Following the nuclear consultation in 2006, the UK Government has responded with the White Paper referred to above. It proposes that nuclear power is both safe and a source of electricity generation which has a low carbon dependency. It is clear that the Government sees a role for nuclear power with no cap on the percentage of the country’s energy which can be derived from nuclear power. This is part of the Government’s continuing efforts to reduce the UK’s carbon footprint and to diversify electricity generation in the UK.
The White Paper identifies a number of “facilitative steps” to encourage companies to invest in new nuclear power plants which the Government hopes will enable potential operators to make applications in 2010 in relation to specific sites and will permit construction to commence 2013/2014. The facilitative steps include:
- new legislation to impose a duty on operators of new nuclear power plants to cover “the full costs of decommissioning and their full share of waste management and disposal costs”;
- development of criteria for assessing the suitability of potential nuclear sites through a Strategic Siting Assessment (“SSA”) and a formal Strategic Environmental Assessment (“SEA”) to consider the high-level environmental impacts of new nuclear;
- meeting the requirement of European law that the economic, social or other benefits of specific new nuclear power technologies outweigh any health detriments by implementing a process of Justification;
- ensuring that new nuclear plants are treated like other critical infrastructure projects and dealt with effectively through the use of a National Policy Statement;
- strengthening the resources of regulators, especially at the Nuclear Installation Inspectorate (“NII”), and assisting regulators to pursue new build design proposals through a process of Generic Design Assessment to complement the existing site-specific licensing process; and
- improving the EU Emissions Trading Scheme (“EU ETS”) to give investors confidence in a “long-term multilateral price signal”. The Government is also keeping open the option of further measures to reinforce the operation of EU ETS in the UK if this is necessary to provide greater certainty for investors.
Response from Operators
Nuclear operators welcomed the White Paper and announced plans for at least four new reactors. British Energy, which already runs eight UK reactors, said it was "positioned to move quite rapidly" to get plants running by late 2017. Observers have pointed out that there will be tough competition from other countries, including South Africa, trying to attract a limited number of nuclear operators to build new plants.
There are currently more than 30 reactors under construction around the world and over 90 in the pipeline.
Hutton said he expected several new plants to be running by the mid-2020s and France’s EDF said it aimed to build four reactors in the UK.
Britain’s Centrica, France’s Areva (already shortlisted in South Africa) and Germany’s RWE and E.ON also said they were keen to get involved.
New Nuclear in South Africa
A draft nuclear energy policy for South Africa was published in August 2007 which addressed growing electricity demand and the country’s 87% reliance on coal. It outlines an extensive nuclear programme to develop all aspects of the nuclear fuel cycle. With uranium mining already well established, conversion, enrichment, fuel fabrication and also reprocessing of used fuel are envisaged as strategic priorities related to energy security. Reactor technology will be PWR, while the Pebble Bed Modular Reactor (“PBMR”) is developed for both electricity and heat.
By 2016 the local manufacturing of nuclear components and equipment should be under way and the PBMR commercialised, all with a view to exports as well as local use. Conversely, export of unprocessed uranium will be restricted and a strategic stockpile will be maintained.
The Nuclear Energy Corporation of South Africa (“Necsa”) expects nuclear capacity to increase to about 27 GWe, supplying 30% of electricity, by 2030, including 12 new large PWR units and an initial set of 24 PBMRs.
Reaction from the Market
Early in 2007 the Eskom board approved a plan to boost output to 80 GWe by 2025, including construction of 20 GWe of new nuclear capacity so that nuclear contribution to power would rise from 6% to more than 25% and coal’s contribution would fall from 87% now to below 70%. The new programme will start with 4 GWe of PWR capacity to be built from 2009-10, with the first unit commissioned in 2016.
The environmental assessment process is under way, considering five sites, and selection of technology will follow in the first half of 2008. Areva’s EPR and Westinghouse AP1000 have been short-listed.
There are, generally-speaking, few similarities between the UK and South Africa given the myriad differences between the countries: size, population, climate, industry, trading relationship with other countries, to mention just a few. This is probably also true of the UK and South African energy sectors. It is interesting, therefore, that both countries appear to be standing at the crossroads in terms of nuclear development and that the apparent timetable for development of new build nuclear plants is similar in both jurisdictions. The next ten years will make for compulsive viewing.