CAPE TOWN - Failure to develop its nuclear and clean coal potential will ensure that South Africa continues to fall behind its global and African economic peers. South Africa’s immediate past growth has averaged less than 2.5% whilst countries such as India, China, South Korea and the ASEAN countries including Malaysia and Indonesia have had growth rates in excess of 5%. Clearly part of the problem is the Zuma era.
Corruption, state capture and the decline in both domestic and foreign investment have been major contributors to the poor performance. The Zuma legacy is only part of the problem. Critically, major blame must be attached to the uncertainty regarding electricity and the future energy policy of the country. South Africa has unbelievable assets in terms of its people’s, infrastructure and commodities. It should be aspiring to have one of the highest economic growth rates in the world. Of great concern is that the peer countries mentioned are all aiming at future GDP growth in excess of 5% whereas South Africa will continue to languish far behind.
Why is this. One major reason is simply that South Africa appears to have selected the wrong energy policy. The electricity plan for the country as currently defined appears to favour renewables. A developing country rich in in fossil fuels and in need of industrialisation and development of its mining sector for sustainable development must ask itself this question. What industrial or mining company will invest heavily in a country which has selected electricity supply based on variable, intermittent and unpredictable sources of energy supply. In each case the energy and electricity policy of its peers is based primarily on continuing to develop its clean coal, other fossil fuels and nuclear energy. Certainly, they each have planned the limited introduction of renewables but their base load supply is predominantly supplied by sources offering great certainty of supply. The list of countries following this approach can be broadened to include Poland, Russia and many Eastern European States amongst others.
African countries are also outperforming South Africa not only in economic growth. Now comes the news that “Zambia recently got on the nuclear technology train when it signed an agreement with Russia’s ROSTOM to develop a Centre for Nuclear Science and Technology (CNST) in Lusaka”. The project is expected to help Zambia sort its crippling energy woes that recently brought many industries to a standstill. Aside from its large energy potential, nuclear science has a place in global agriculture and environmental protection. NECSA has recently received a major international award for its work and achievements in nuclear medicine. It is one of the largest suppliers in the world and is highly profitable. It was started years ago by Dr Don Mingay and a team pitted against major opposition, including some of the very same people who object to nuclear today. The strong team at NECSA must be congratulated on this success.
Kenya has just signed up for the first Ultra Super-Critical coal-fired power station outside of South Africa. It is one of the most technologically advanced coal fired power plants in the world. Others will follow. Nuclear and clean coal technology offers the world the cheapest most consistent and convenient electricity generating energy sources. This is precisely why peer countries have selected these power sources as their major energy sources into the future. Kenya, Uganda and Ghana, have all stated their intent to follow a nuclear path. Unfortunately South Africa appears to have been persuaded that renewables is the way to go. One needs to ask the question why this is the case when all its peers have rejected this approach and are following policies that involve increased fossil fuels and/or the increased use of nuclear. Real world data does not support the argument that renewables offer a future of cheap electricity. Prices of electricity in Germany where there is a major wind and solar program are twice those of France which is 75% nuclear and twice those of Poland which is coal. Many experts consider that the German “Energiewende” or ‘swing to renewables’ to be disastrous and a costly failure. This is also the situation in South Australia. Germany has effectively put a moratorium on further expansion of “Energiewende”. The evidence is that energy poverty amongst citizens is increasing as a result of sharply increasing electricity prices resulting from increasing use of renewables, particularly wind. Such countries or states include Germany United Kingdom California and South Australia, amongst others.
The CSIR Energy Centre has continued to back its so called least cost solution for South Africa despite all the real-world evidence. Importantly, it has ignored work by experts that have stated very clearly that the Levelised Cost of Electricity (LCOE) methodology cannot be used to compare consistent high load factor generation sources, such as coal and nuclear, with variable unpredictable low load factor generation sources, wind and solar. Furthermore, local and international experts have made clear that high penetration renewables is economically damaging and that the CSIR solution is unworkable. Originally it was a thought experiment and should remain that. The continued bias of the CSIR over the years has now been explained by the fact that the former Chief of the Energy Centre of the CSIR left to join a German renewable company. He is being followed by his acting successor at the Energy Centre. There are always a number of views on matters. It is important that these so called least cost solutions be more closely investigated and that other more realistic points of view, often contrarian, be more thoroughly reconsidered and reopened.
In the meantime, South Africa is falling behind. It is time to ensure that this does not continue. Any major move to renewables whilst a country is rich in fossil fuels and uranium, the world’s two most efficient and cost effective natural energy systems defies any economic, financial, mathematical, scientific, environmental or even rational human logic. It is time for a radical reappraisal.
Rob Jeffery is an independent economic risk consultant. He is the former MD of Econometrix.
Rob graduated with a B.Sc. in Mathematical Statistics and Applied Mathematics at the University of the Witwatersrand and has Master’s degree in economics from Cambridge University, and on MBL from the University of South Africa.
The views expressed here are not necessarily those of Independent Media.
- BUSINESS REPORT