African Business Magazine, 31 January 2017
At the height of the Second World War, as scientists from the United States and Germany desperately competed to develop a super weapon with which to administer the knockout blow, the US army gained access to a remote mine in the Belgian Congo’s Katanga region.
Near the backwater town of Shinkolobwe, its name erased from maps under strict military orders, miners had uncovered what one engineer called “a freak occurrence in nature” – a uranium deposit capable of changing the outcome of the war. This super-rich find, exported in secrecy to the United States, comprised the raw material for the Manhattan Project, the classified weapons programme whose devices brought annihilation to Japan’s Hiroshima and Nagasaki, ending the war and pitching the world into the nuclear age.
Since those pivotal days, Africa’s role as one of the world’s leading exporters of uranium, a raw material that enables both atomic destruction and peaceful nuclear power generation, has been much more widely known. According to the World Nuclear Association, over 15 African nations may have deposits, while the three largest – South Africa, Namibia and Niger – account for some 18% of world production today.
As with so many of Africa’s valuable raw materials, uranium left the continent’s shores for wealthier nations where, enriched, it acquired enhanced value. While the rest of the world used Africa’s resources to embrace nuclear technology in war and peace, South Africa was the only country on the continent to develop domestic nuclear energy generation.
Yet if ambitious policymakers have their way, all that could be set to change. For the first time, many African countries have expressed an interest in developing nuclear power for peaceful generation. At the general conference of the International Atomic Energy Agency (IAEA) in 2015, director general Yukiya Amano revealed that more than 30 member states were considering or preparing nuclear power programmes for the first time, a third of them in Africa.
In January, the IAEA conducted an eight-day review of Ghana’s nuclear programme, following similar reviews in South Africa, Nigeria and Kenya, in which it offered words of encouragement and a roadmap to the nuclear future. The rest of the continent is enthusiastic – some 150 officials from 35 African countries gathered under the IAEA in Mombasa, Kenya, in April 2015 to chart a way forward.
Need for power
For African countries, the driving factor is obvious. Africa’s inability to generate enough electricity continues to hobble economic growth, shaving 2 to 4% off GDP every year, according to the Africa Progress Panel. The panel estimates that some 600m people on the continent do not have access to electricity, a figure that will require $55bn per year in investment by 2030 to fix.
Against this grim backdrop, nuclear technology has acquired a reputation among policymakers as a cost-effective and environmentally friendly fix. “Nuclear power is considered a prominent alternative and a more environmentally beneficial solution since it emits far less greenhouse gases during electricity generation than coal or other traditional power plants,” Ogbonnaya Onu, Nigeria’s minister of science and technology, told local media in December. “It is a manageable source of generating electricity and has large power-generating capacity that can meet industrial and city needs.”
Yet not all are so enamoured with Africa’s rush to nuclear. Critics point to the vast upfront costs of nuclear power stations, the security and safety issues of hosting plants in volatile countries, and the technological and political improvement that will be required to bring legislative and regulatory systems up to date. They point to Africa’s underutilisation of renewable energy, and suggest that the plans are a timewasting exercise dreamed up by a declining industry desperate to prove its relevance.
“I don’t think there will be new-build nuclear programmes in any of the African counties where they are currently being discussed – whether in Ghana, Nigeria, or South Africa,” says Mycle Schneider, an independent expert at the World Nuclear Industry Status Report. “You can’t build a new nuclear plant under market economy conditions anymore. It’s over.”
The price of investment
Less than an hour’s drive north of Cape Town, Africa’s only nuclear power station continues the work that it embarked upon in 1984. A cluster of grey buildings, topped with twin white domes, Koeberg reflects the dour design sensibilities of the engineers who planned the site on behalf of the 1970s apartheid government.
The plant continuously draws in water from the Atlantic Ocean, cooling two French-designed reactors that provide around 5% of South Africa’s total electricity needs. While the 2000MW Koeberg is touted as a domestic success story, plans to expand South Africa’s nuclear industry by an additional 9,600MW have proved more controversial.
From debates around the upfront costs of three new plants to media claims of foreign influence over the bidding process, the battle to expand South Africa’s industry is likely to offer lessons for countries across the continent. Perhaps the most enduring criticism of the scheme has focused on constructions costs. An analysis by EE Publishers, a South African publisher specialising in energy, places the capital costs of the new plants at around $50bn, excluding interest.
That has sparked fierce debate, particularly within the cash-strapped Treasury, about affordability. Yet industry champions claim that these short-term costs are vastly outweighed by future savings.
“Nuclear in the long term has low costs as you amortise the plant,” Phumzile Tshelane, chief executive of the government-owned South African Nuclear Energy Corporation (NECSA), tells African Business. “If African countries are going to leapfrog to much more profitable economic development, they will have to choose sources of energy that are relatively cheap in the long term. I believe that when you look at the lifecycle costs, nuclear is cheaper.”
The issue remains one of fierce contention. A 2017 economic study commissioned by the World Nuclear Association says that the unit operating costs of nuclear are currently low relative to alternative sources of energy, but that the economics of new plants are ever more influenced by construction costs.
Schneider argues that controlling those costs is becoming almost impossible, the result of fragmentation and skills loss in an industry that has lain almost dormant for decades. “Nuclear power technology has become more and more expensive […] one issue all around the planet is that the industry has lost competence because of the gap in construction.
“There was no continuously ongoing construction in the Western world. An industry which was very concentrated on the national level has turned into a huge chain of globalised subcontractors.”
As a result, the costs of new plants in the developed world have spiralled. The French national audit body, the Cour des comptes, reported in 2012 that the overnight capital costs of building new plants increased from €1,070/kWe for a plant commissioned in 1978 to a projected €3,700/kWe at Flamanville, due online in 2018.
Meanwhile, the costs of solar panels have fallen some 80% since 2009, offering a viable alternative for sunshine-rich African states. Against this backdrop, prospective African countries need to weigh the costs of construction against projected long-term savings, renewable energy alternatives and the economic cost of electricity shortages.
“Generically we can say nuclear can compete economically, but it’s really dependent on each country,” says Anthony Stott, a senior nuclear engineer with the IAEA’s nuclear infrastructure development section. “Countries have to weigh up the costs of not having energy and electricity … they need to start looking at costs over a 60 to 80 year period.”
Costs are just one of the many serious issues that African countries will have to get to grips with when weighing up the viability of their nuclear programmes, many of which are highlighted by the IAEA’s 19-point “Milestones” plan for interested countries. While South Africa’s Koeberg experience means that Pretoria can be relatively confident of checking the boxes in future projects, other African countries will have a much tougher road to approval. Legal and regulatory systems need updating, issues of safety and security must be addressed, and there are ongoing concerns around the lack of existing grids.
“The IAEA has a ballpark figure that 10% of your capacity could be nuclear. Which means that if you want 1000MW [from nuclear power] your grid should have a capacity of 10,000MW as a rough figure. Many African countries don’t have that size grid at this point in time,” says Stott.
A 2015 report from McKinsey estimated that just seven African countries have a grid access rate of over 50%, with the remainder of countries stuck at an average of 20%. Schneider argues that the global trend for micro-grids – small networks with local supply sources – means that most African countries will have no need to pursue the centralised grids required to host a nuclear plant. The industry points to developing regional power pools as a potential saviour.
“Unfortunately in many African countries there is not sufficient grid infrastructure to handle these reactors. There are, however, plans underway for power pools in Africa, such as SAPP, WAPP, EAPP, which would change this dynamic,” says Viktor Polikarpov, vice-president of sub-Saharan Africa at Rosatom, the Russian state-owned nuclear firm that is heavily involved in Africa.
Could there be an African solution to this problem? One alternative could emerge from the South African nuclear industry, which sees a chance to export its domestic expertise to the continent. Kelvin Kemm, CEO of consultancy Nuclear Africa, says that the South African industry is pioneering pebble-bed (PB) reactors – cheaper, smaller reactors of around 100MW that he says can operate independently of a centralised grid and away from large sources of water.
He argues that such technologies offer Africa an emissions-free future in line with the Paris Climate Agreement, and an alternative to unreliable hydro energy in drought stricken parts of Africa. “As far as other African countries go, we can imagine that in about three years we’d be in a position to build PB reactors. We’ve already had people calling and talking about them.”
A nuclear future?
Despite the vast challenges ahead, African countries appear undeterred from their quest for nuclear. In December, South Africa’s Eskom issued a request for information from interested companies, the next step towards a tendering process for its new generation of plants.
In January, the IAEA concluded that Ghana had made “considerable progress in the development of its nuclear power infrastructure,” but that more government studies and work on a legal framework would be required going forwards. Meanwhile, other African countries have ploughed ahead with agreements with foreign firms to develop their industries – in September, Kenya signed a deal with the Korea Electricity Corp and plans its first plant by 2027 at a cost of $5bn, while Nigeria plans to build plants with Rosatom, the Russian firm that will bid on South Africa’s new-build programme.
The involvement of foreign firms has inflated already sky-high expectations about Africa’s nuclear future, but raised eyebrows among sceptics worried about foreign influence and geopolitical intrigue. While some see the dark hand of great power politics, Schneider believes that foreign firms may be engaging Africa out of weakness rather than strength, using tenuous African projects unlikely to amount to anything as a showcase to keep their struggling domestic industry alive.
“If it was recognised that there is hardly any chance of any more plants being exported to other countries, it would become obvious that the chance for rebuilding the domestic nuclear industry is close to zero. In other words, if you don’t retain the phantom of future projects, you are not dead tomorrow, you are dead today.”
He points to only three new nuclear plants in the world last year, comprising just 3000MW out of an annual world generating capacity of up to 200,000MW. “From a realistic view, none of these projects will go ahead. There is no market for nuclear power plants,” he concludes.
Yet still the work goes on. African countries continue to work with foreign partners, ministers hold meetings, and the IAEA presides over regular reviews. NECSA’s Tshelane says that countries must think big – from hundred-year partnerships to dynamic connections with neighbours and the establishment of supply industries.
After decades of lacking ambition when it comes to power projects, is Africa in danger of overreaching? The IAEA’s Stott believes not. Far from being a mirage, he believes a viable industry looms on the horizon. For now, the sceptics have been sidelined.
“I think there’s about four, not including South Africa, that are making good progress, but it’s at least 10 years away, more likely 15, before they could have a plant. It’s not something that will happen quickly but there could be four or five that have built their first nuclear plant.”
Written by David Thomas
David Thomas is Digital Editor at IC Publications and a features writer at African Business Magazine. He has previously been published at the Financial Times, Wall Street Journal and South Africa’s Cape Times.
“Going nuclear: Africa’s energy future?”
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