Apparently there is an activity known as “walking the dog” in government – a strategy aimed at silencing selfish politicians, officials and advocates and reassuring them if they are restless and nervous about some actions will.
Of course, it’s exciting to sniff the territory on a brisk walk with the anticipation that something big is at stake. However, this is inevitably short-lived, and things soon return to their normal and more leisurely state of inactivity. Mission accomplished.
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There are some examples of this in South Africa’s coal and nuclear energy sectors. The media and the public must be careful not to be confused by the noxious smoke and sometimes radioactive mirrors that pour out of these neighborhoods in their excitement.
2,500 MW of new nuclear power?
After a board meeting of the National Energy Regulator of South Africa (Nersa) on August 26, 2021, there were breathless public statements from officials of the Department of Mineral Resources and Energy (DMRE) regarding a regulator’s decision regarding 2,500 MW of new nuclear power in South Africa.
The regulatory authority is said to have “approved” a so-called nuclear provision according to Section 34 within the meaning of the Electricity Regulation Act (ERA). Some in the media fell for this hook, line, and sinker. The nuclear energy sector was enthusiastic and assured that the procurement of 2,500 MW of new nuclear energy in South Africa will now begin.
In the days after the board meeting, however, Nersa seemed very reluctant – first, what exactly needed to be clarified, what the board was okay with, and second, whether it was Nersa’s consent at all, as opposed to conditional consent, which was still subject to a number of suspensive conditions.
Of course, the independent regulator took a very delicate line – to at least make it appear that the noisy nuclear sector had got its way while covering all political and legal aspects, protecting its fragile reputation, and being careful not to be the scapegoat for breaking up the nuclear ambitions of a quarreling minister.
However, on September 3, 2021, Nersa finally succumbed to growing pressure to disclose all the details of his actual decision on August 26, 2021, with Reasons for the Decision (RFD) to follow in due course. In doing so, the tricky game Nersa had to play became clearer.
Conditions precedent?
In contrast to the public statements and media interviews by DMRE officials, the written details of the board decision show that Nersa has not yet consented to the provision in Section 34 per se, but that this consent is still subject to a number of conditions precedent that have not yet been met.
The exact wording of Nersa’s decision of August 26, 2021 on the conditions precedent shows that the energy regulator has decided:
To agree to the start of the procedure for the procurement of the new nuclear power generation capacity of 2,500 MW in accordance with Resolution 8 of the Integrated Resource Plan for Electricity 2019-2030 … subject to the following conditions precedent:
- Fulfill Decision 8 of the IRP 2019-2030, which requires the nuclear facility construction program to be carried out at an affordable pace and on a modular scale that the country can afford as it is not an option to regret in the long run;
- Recognition and consideration of technological developments in the nuclear space; and
- To further strengthen the rationality behind the 2,500 MW capacity of nuclear energy. A needs analysis is required with the aim of comparing the planned load profile after 2030 with the generation profile that would be required for this load profile. This will help determine the capacity and scale the country would need to source nuclear power.
So it is clear that Nersa is only with Decision 8 of currently Integrated Resource Plan for Electricity, IRP 2019-2030, “Start” Preparations for a nuclear construction program amounting to 2 500 MW ”, whereby this is subject to the conditions precedent listed.
The regulator is not has agreed to the start of a Request for Proposals (RFP) for a new nuclear power plant in South Africa, nor has Nersa given the green light for a new nuclear program.
Please not so fast
It goes without saying that any public procurement must continue to comply with the requirements of the Public Finance Management Act (PFMA) and the Constitution. As such, the National Treasury remains a gatekeeper by requesting a positive outcome on a detailed cost-benefit analysis and requesting the National Treasury to determine the affordability of such a procurement.
The technology for a new nuclear building in South Africa has not yet been decided. Would these be giant pressurized water reactors (PWR) like the Rosatom VVER 1 200 units? Or small modular nuclear reactors (SMRs) that have yet to be developed, piloted, commercialized, licensed and tested elsewhere in the world?
The suspensive conditions even suggest that the rationality of a 2500 MW new core construction program still needs to be determined by long-term demand forecasts for the period after 2030 in order to determine the generation mix required to meet this demand.
As the current IRP does not foresee any new nuclear power in the years up to 2030, it is clear that new nuclear procurement cannot begin until an updated IRP has been considered by the government’s “social partners”. approved and announced by the cabinet.
1,500 MW of new, clean coal power?
Another example of “walking the dog” can be found in the ongoing proposals by the minister and his officials at DMRE that “clean coal” technologies be used for the 1,500 MW new coal-fired power plants listed in the 2010-2030 IRP in the two tranches of 750 MW each, which are planned for 2023 and 2027, respectively.
However, experience with the Coal Baseload IPP Procurement Program 2014 has shown that new coal-fired power plants in South Africa cannot be financed. The latest research by the internationally renowned coal-fired power plant expert Dr. Ranajit (Ron) Sahu also show that “clean coal” technologies are not economical and cannot be used in the required timeframe anyway.
Analysts suggest that the ongoing empty promises of clean coal-producing capacity for South Africa may simply serve to silence loud coal-sector stakeholders in misguided, optimistic hopes.
The 9,600 MW nuclear power fleet
Another case of “walking the dog” was detailed in an article in the Daily Maverick on Aug. 26, 2021. In the article, former Deputy Finance Minister Mcebisi Jonas reveals that there was a general understanding within the government that the 9,600 MW nuclear deal with Russia, pushed in 2017 by then-President Jacob Zuma and Energy Minister David Mahlobo, would be terrible for South Africa .
According to Jonas, President Ramaphosa’s instruction was to “walk on the path” as long as possible. “He [Ramaphosa] said that when we have to make a decision, Zuma will be gone. He told us to find everything in the book to delay it ”.
The question that arises is whether the benefits of walking the dog really outweigh the disadvantages? It is difficult to give an unequivocal answer to this question, but our President clearly seems to prefer walking the dog to dealing with selfish elements within the party circle.
However, an ill-founded but agonizing question arises again and again as to what Vice President David Mabuza was really up to during his extended five-week vacation in Russia in July 2021.
Putin would likely be a big, vicious dog, ready for a fight and not easy to control while walking – a bear rather than a dog, actually. And I would hate going for a walk with a grumpy bear!
Chris Yelland is the managing director of EE Business Intelligence.
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