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This interview was originally aired on RSG Geldsake and has been translated into English in this transcript.
RYK VAN NIEKERK: South Africa could soon have a new nuclear energy reactor to generate critically needed electricity. André Pienaar from C5 Capital heads a project to build a new modular nuclear reactor in the Western Cape and, if all goes according to plan, it could deliver electricity by as soon as 2027.
Read: Here comes the nuclear IPP
André is on the line. André, welcome to the programme. Tell us about this project. What exactly are you planning?
ANDRÉ PIENAAR: It’s a project that we started about a year ago with a sustainability or viability study of a private-sector financed small nuclear reactor network for South Africa stationed in the Western Cape, where the greatest part of South Africa’s nuclear power ecosystem is established. And what we see globally under development as best practice, is where the private sector becomes directly involved in funding nuclear energy innovation in partnership with governments and in conformity with local national regulations.
RYK VAN NIEKERK: You say ‘we’ – who are those in this consortium?
ANDRÉ PIENAAR: There are a number of companies involved.
For us it was very important that the potential investment in South Africa would provide jobs and contribute not only to an increase in electricity production but also bolster the nuclear ecosystem, increase training and lead to job creation.
So the consortium is a combination of international and local companies, and in South Africa we are working with Lesedi [Nuclear Services], South Africa’s leading nuclear power engineering group, not only in South Africa but probably also in Africa, and a local nuclear power innovation company called Stratek Global, led by Dr Kelvin Kemm.
RYK VAN NIEKERK: Tell us about its modular nature. We previously chatted about the small nuclear reactor you are building in America which is based partly on research done here in South Africa on the pebble-bed reactor project. But exactly how will this thing all tie up?
ANDRÉ PIENAAR: One of our portfolio companies, X-Energy, is busy building the first small nuclear power reactor for an industrial plant in Texas for Dow Chemical in [Seadrift] and this will be the US’s first small nuclear reactor for an industrial plant. It’s an excellent model for the future for clients to draw energy directly from the reactor. And it’s a model we would like to replicate elsewhere as well – and I think there is great potential for replicating it in South Africa.
The funding of nuclear energy by the private sector is a new development and one can compare it to the development of computers.
In the previous century, in the 1960s, computers were available only to governments, and they had massive old mainframe computers that took up a great deal of space and demanded great capital outlay. We went on to desktop computers, then laptops, and now we have computers in our watches and telephones.
I think nuclear energy will go through the same developmental cycles, with nuclear reactors getting smaller and able to be built at a micro-level on a modular basis. And secondly, the modulisation of nuclear reactors will be accompanied by safety innovation, creating opportunities for the private sector to finance nuclear reactors in partnership with government.
RYK VAN NIEKERK: As I understand it, they are like 80/90-megawatt units which are connected to one other to create a bigger reactor. How long does it take to build such a reactor?
ANDRÉ PIENAAR: For micro nuclear reactors around one to eight megawatts, and then a small nuclear power reactor on a modular basis can be anything from 20 to 90 megawatts.
And then, as you say, one can put together the modular nuclear reactor units to build a larger reactor.
I think the first small nuclear reactors, based on the new Reactor 4 model, will come online and be switched on around 2027 – and I think that’s a very exciting development.
The Mark 4 reactors are completely safe and switch themselves off automatically, and can’t melt down because of the way the reactor has been built and the use of what we in South Africa called the ‘pebble-bed’ technology and what the US today terms the Triso Fuel Energy model.
RYK VAN NIEKERK: Who has to sign that agreement, because there are so many involved in South Africa’s electricity supply chain? We’ve seen our independent private producers programme take years for particular projects to get off the ground – in some cases six or seven years. Many of these projects ended up in court. It is utterly bureaucratic. Why makes you think you will be able to switch a reactor like this on in South Africa within three years or by 2027?
ANDRÉ PIENAAR: I think the funding and construction of projects is attainable within a period of three to four years.
The regulatory approval is of course outside our control, and that would depend on government. But I think there are a couple of things working in favour of a project such as this.
One is the government announcing that it will see great demand for nuclear-power-based electricity in future, and government anticipates it can be an important player in South Africa’s clean energy solution.
Then I think the independent power supply model is being established in the country as an acceptable part of the country’s power network. I also think many of the snags and problems are being ironed out slowly but surely, and one hopes that the process will proceed in that manner and that as the model becomes better established it becomes easier.
And, most importantly, with the Pebble Bed [Modular Reactor; PBMR] programme that was developed up to 2010 [in SA], many of the regulations and permits are already in place for South Africa – and South Africa actually established one of the most advanced regulatory frameworks for small nuclear energy more than a decade ago. And, in particular, at two sites – at Koeberg in the Cape and at Necsa [South African Nuclear Energy Corporation] in Pretoria – many of the required regulations and permits are already in place for building a small nuclear reactor.
And if one can just dust off those old works and access all the preparatory work to get South Africa ready for small nuclear reactors, that would create new possibilities.
RYK VAN NIEKERK: Well, let’s hope that happens and that there is less bureaucracy in that process.
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But nuclear energy is expensive. These nuclear reactors and modular reactors are however considerably cheaper, but what sort of costs should South Africa expect should this project get off the ground?
ANDRÉ PIENAAR: If one keeps in mind that Mr Zuma tried to sell Russian reactors costing more than $60 billion to South Africa, then the cost of small nuclear reactors is a mere fraction of that amount.
I think it is possible to build a first small nuclear reactor in South Africa which in the long term will make a highly cost-effective contribution to the country for the country’s energy provision.
That’s why I think the private sector needs to do the pioneering work. We are not asking government for money to start the project; it will be funded entirely by the private sector.
The first customers are established Western Cape data centre companies that have an urgent need for sustainable energy to serve their data centres around the clock, because the data centres serve both the South African and the international economy. So I believe there are already established customers with urgent needs, and there is a model for private-sector funding.
RYK VAN NIEKERK: So the electricity won’t go to Eskom, but go to private clients?
ANDRÉ PIENAAR: That’s the model we are working on – that it initially will go to private clients.
It will of course take pressure off Eskom and put Eskom in a position to supply more electricity to other needs.
I think the model’s second advantage is that the initial cost of constructing the first reactor will be financed by the private sector and building further reactors will be more cost-effective. So the private sector carries the risk and the initial cost to the entire country’s benefit into the future.
RYK VAN NIEKERK: And how does the price of your generation per kilowatt hour compare with renewable energy projects in South Africa currently?
ANDRÉ PIENAAR: Renewable energy is of course very important and a key part of the country’s energy solution, and in the short term solar energy is one of the most important solutions to the country’s energy needs.
I think small nuclear reactors are really supplementary to renewable energy and other established sources of energy. I also think there is great potential for combining small nuclear reactors with, say, green hydro[electric] solutions and building green hydro[electric] plants.
And we are very excited about the green energy belt that is being developed between the Western Cape, Northern Cape, Namibia and Angola. I think is possible to build such a green energy belt from Cape Town all the way to Luanda, and that’s why we are talking of not only one nuclear reactor but a future network of up to six small reactors.
RYK VAN NIEKERK: Then I think in your first comments you said that you have finished a sustainability study. Is this project financially viable?
ANDRÉ PIENAAR: Yes, we have done a lot of in-depth work and the project is totally commercially viable and sustainable in the long term. We are optimistic about the project’s potential to make an important contribution to the Western Cape’s energy requirements.
Koeberg provides a large part of the Western Cape’s power to date and we of course hope this will continue because Koeberg is a very important part of South Africa’s nuclear energy ecosystem, and we therefore see the small nuclear reactor model as a supplementary energy solution for the region and the country, but also for the entire mainland.
Small nuclear energy generation has a very important contribution to make in totally solving the energy scarcity.
Energy scarcity is one of the biggest challenges we face, not only in South Africa but across the entire African continent, and I think the innovation and possibility for small nuclear reactors will make an important contribution to totally resolve energy scarcity.
RYK VAN NIEKERK: I’m sure there are many regulatory hurdles ahead of you. What is the next one? What must happen next so that you can take the project forward and give it some momentum?
ANDRÉ PIENAAR: Well, the project has great areas of momentum. The next step is to deal with the regulatory application and our permit, and our timeline is to submit those early next year.
RYK VAN NIEKERK: André, thank you for your time tonight and all the best for this project.
ANDRÉ PIENAAR: Thank you very much, Ryk. I appreciate our chat.
RYK VAN NIEKERK: That was André Pienaar, the head of C5.