Going nuclear only way out our energy quagmire

IF WE don’t diversify our energy sources, we can put our economic prospects where the sun don’t shine. The important aspect of the energy debate that we forget when we talk of the merits of a future with or without nuclear  is how beholden the country’s economic case is to just one province.

One province that holds all the energy capacity cards and, as we saw in 2008, adverse weather conditions can trump them all.

Of the 14 baseload stations – these are the stations that provide the backbone of the entire generation capacity, come rain or shine –  11 are in Mpumalanga.

Diversifying that risk are one nuclear plant in the Western Cape, a coal-fired station in the Free State and another in Limpopo –  two when Medupi finally comes on line.

Unfortunately, when Eskom’s other coal-fired power station, Kusile, is ready to feed into the grid, it will only deepen our reliance on Mpumalanga.

Beyond these power stations, our generating capacity is largely made up of peak demand stations – hydro-electric, pumped storage schemes and gas –  mainly in our coastal provinces.

It doesn’t take an expert to see the risk posed by our dependence on one geographical area, where most of the country’s vast coal deposits lie.

Because we have no reserve margin to speak of, a prolonged and unusually high bout of rainfall will always threaten a blackout on the scale last experienced in 2008.

In that summer, wet coal –  added to the fact that mines were churning out metals to meet what were at that stage record commodity prices –  led to a blackout. A perfect storm.

We need to diversify, and not only increase baseload capacity in the short term with Kusile and Medupi. (In any case, when they come on line some of the older and more expensive stations to operate will be taken offline.)

The other eight provinces need to up their contribution, but they aren’t blessed with Mpumalanga’s coal reserves, which some analysts forecast could last 400-odd years.

Eskom has done well in stimulating renewable energy projects such as wind in the Western Cape and a solar plant in the Northern Cape. The company is also building the 1332MW Ingula pump storage power project.

But they can’t make up for the amount of energy a baseload station such as Medupi can produce, which is just short of 4800MW. The Klipheuwel Wind Facility in the Western Cape can produce only 3MW.

But any baseload expansion, by virtue of geography, quite simply can’t be coal.

Nuclear is the only solution.

Never mind all this political storm over whether Russia gets to build a fleet or South Korea (as we have struck an agreement with that Asian nation in line with the one struck with Moscow). Or for that matter France, with whom we are set to sign a similar deal next year.

The fact that we are all thinking about the arms deal experience is more a comment about the public’s lack of faith in the current political leadership than about the fact that we have an energy question that needs to be answered.

How does South Africa ensure we remain an attractive investment destination in the decades to come?

The Economist Intelligence Unit put out a report listing the 25 largest economies by 2025. Eight will be from Asia, two from Latin America and the sole African representative isn’t South Africa. Rather Nigeria, I am afraid.

Now the sums involved in taking the nuclear path are ridiculous for a country the size of South Africa, and especially one whose growth rates in the short to medium term aren’t attractive.

But if there’s anything to be built by the state to improve that outlook, it’s addressing this energy quagmire.

If shale gas is the more viable option, then I may change my mind on the nuclear option. And accept an energy future in the clutches of Shell or Exxon Mobil.

It’s a case of choosing your devil, I guess ...

Ron Derby is the Financial Mail’s deputy editor