Nuclear Is `Next Big Thing' for S. Africa's Eskom, CEO Says

  • Atomic energy to be utility's focus after current plan ends
  • Raising funding for nuclear is `totally feasible,' CEO says

Eskom Holdings SOC Ltd., South Africa’s state-owned electricity utility, is preparing to take part in the country’s plan to procure as much as 9,600 megawatts of nuclear-generated power, its chief executive officer said.

Nuclear energy will be the company’s focus after it completes a plan to refurbish its existing power plants and build what will be Africa’s two biggest coal-fired facilities, CEO Brian Molefe said in an interview in Cape Town. The company will add more than 17,000 megawatts of new capacity to the national grid over the next five years as it spends 280 billion rand ($20 billion) to upgrade plants, 64 percent of which are in their midlife, it said in June.

“Once that program tapers off in about 2021-22, then nuclear will be the next big thing for Eskom,” Molefe said. “Eskom has done many studies about nuclear power and we are dusting those off. These include the environmental impact assessments and where the nuclear power stations should be located.”

In June, the Department of Energy said it will take over from Eskom as the lead agency implementing the country’s multibillion-dollar nuclear-reactor program after the utility said it was unable to handle the program given its funding constraints. The company, which supplies about 95 percent of the nation’s electricity, had planned blackouts once almost every second day in the first half of 2015 because it can’t meet demand from aging plants following years of underinvestment.

Power Shortages

The government plans to add more atomic energy to the national grid by 2029 as the country grapples with shortages that have curbed mine and factory output and limited investment. Price-tag estimates for as many as eight reactors range from $37 billion to $100 billion. Eskom operates the continent’s only nuclear power plant -- the Koeberg facility near Cape Town that supplies about 4 percent of the nation’s electricity.

“The life of a nuclear asset is typically 60 years, and its pay-off time is around 20 years,” Molefe said. “Koeberg was paid off in 18 years. So it is totally feasible that we can raise the required borrowing," he said.

The country’s energy plan lists Eskom as the owner and operator of the new nuclear fleet. The blueprint for the country’s electricity supply, called the Integrated Resources Plan 2010, is due to be updated by the end of April.

The Department of Energy is the procurement agent for the entire nuclear-build program, Zizamele Mbambo, deputy director-general of nuclear energy, said by phone. The government has assigned specific roles to different state-owned entities, he said.

“Eskom is the only organization in the country that’s got the experience of operating a nuclear power plant," so it will serve as owner-operator of the project, Mbambo said. “There will be other entities that will be created as we expand the program."

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