Koeberg Power Station near Melkbos as seen from the air. File Photo: IOL
Koeberg Power Station near Melkbos as seen from the air. File Photo: IOL

Figure the True cost of nuclear energy

By Kelvin Kemm Time of article published Sep 21, 2018

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The terms “cost” and “price” are used interchangeably by people. But years ago an economist friend told me that it is incorrect to do so. I always remember that lesson.

The “price” is what you pay for an item when you buy it, but the “cost” is what you calculate at the end of the life of the item when it ends up on at the scrapheap.

For example, imagine that you buy two pairs of shoes, one pair for R200, the other for R500. Those are the “prices” of the shoes, Then imagine the R200 pair lasts only two months then starts to break, so that in disgust you throw them in the bin. The shoes have then “cost” you R100 a month.

Imagine that the R500 pair lasts a respectable two years before they end up going in the bin. Then the R500 pair have cost you R20 a month. So the “cost” of the R500 shoes turns out to be much less than the R200 pair.

The lesson in all this is that when you talk about “cost” you had better be sure what you are talking about.

Let us now take a giant leap from shoes to nuclear power. How many people know that the lowest-cost electricity available right now in South Africa is nuclear power, coming from Koeberg nuclear power station?

It is sold to Eskom at about half the Eskom selling price. In contrast, all wind and solar energy is bought by Eskom at a price greater than Eskom sells it for. So it is then sold at a loss.

Another important distinction is between “service” and “commodity”.

When you buy petrol at a petrol station you are buying a commodity, the petrol. When you keep going to a particular petrol station you get a service. They have the petrol and they put it in your car. They even wash the windows and pump the tyres. Imagine going to the garage and the attendant says: “Morning sir, can I wash your windows and pump your tyres? But I am afraid we have run out of petrol”.

Petrol available when you want it makes petrol supply a service, not just a commodity. Electricity on call is a service.

Imagine turning on your lights at 8pm and no lights. Then someone tells you that you are one of the lucky people supplied by “renewable” solar power: the sun does not shine at night.

Nuclear power is available in large quantities every minute, all year.

Solar is only available for part of the daytime, not at night or if it rains.

Wind power is only available when the wind blows. So wind and solar are sold as a commodity, not a service. Nuclear is sold as a service.

When Eskom buys wind and solar power, they have to keep coal and nuclear running to fill the gaps. So the “backup” coal and nuclear costs should be added to the cost of the supply of solar and wind, but it is not.

About 10 years ago it was calculated that 9600MW of new nuclear power would be needed to add to the existing 2000MW we already have. To reduce cost it was decided to follow a “fleet approach”: we would ask for quotations to build three power stations sequentially over 10 years plus.

This would be the cheaper nuclear route because the building teams would move from one construction site to the next, providing job security for workers, plus long-term income for the large construction companies.

The total “price” was calculated at R650 billion. So the R650bn would steadily unfold over a decade.

Nuclear reactors are now designed to last 80 years. Koeberg was designed to last 60 years and is now about half- way through its life, producing South Africa’s cheapest electricity, reliably.

Wind and solar are designed to last a mere 20 years, so you have to replace them three times to equal a nuclear reactor’s lifetime. That’s not factored in when people make wild renewable energy “cost” claims.

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