News analysis

Photo Jay Caboz.
SA's Koeberg nuclear power plant. (Photo: Jay Caboz)
  • American nuclear energy company NuScale has been citing Cape Town as an example of an ideal customer for its still-theoretical generators.
  • It has now received in-principle financial support from the American government to build a nuclear power station in South Africa.
  • NuScale's pathfinder project for its new technology, in Idaho, just got a promise of an infusion of US government cash worth some R23 billion.
  • While South Africa abandoned plans to create next-generation PBMR systems, the administration of Donald Trump has pushed small-scale nuclear development.
  • For more stories go to www.BusinessInsider.co.za.

Russia once thought it had a done deal to build new nuclear reactors in South Africa. Half a decade later, thanks to its sheer political weight, China seems to be a serious contender for the job. Both France and South Korea have, at various points, been in the running too.

But as of this week, an American company with no track record of actually building commerical nuclear reactors yet is lining up the kind of money from the US government that could make its plans for South Africa viable – replacing a dream of home-grown next-generation nuclear with an imported version.

NuScale, a company with roots in US-funded research, this week received assurances that the American government will provide up to $1.4 billion (around R23 billion) in subsidies for a 12-module reactor it hopes to start building in Idaho by 2025.

The project is a commercial one, with municipal buyers lined up for the electricity, but the cash from the US department of energy is intended to bring the cost of that electricity down to $55 per MWh on a levelised cost of energy (LCOE) basis, making the project at least vaguely competitive with other forms of power generation.

Without the subsidies, the supposedly once-off cost of building a first-of-its kind power station would make the NuScale project commercially unviable, its planned customers say.

Just how once-off such costs are, and how much money the US government ends up actually spending on the project, will be closely watched in South Africa.

Last week the US International Development Finance Corporation (DFC) announced it had signed a letter of intent to support NuScale "to develop 2,500 MW of nuclear energy in South Africa". 

NuScale has cited Cape Town as a purely theoretical customer for a 12-module version of its nuclear energy system, saying that such an installation could desalinate enough water to keep the entire city going.

But the 2,500MW number cited by the DFC suggests its South African ambitions are substantial. That is the full generating capability the South African government now envisages adding to the national grid from nuclear stations – but the government plan calls for a mixture of the conventional pressurised water reactors (PWRs) such as Russia's Rosatom sells, and the type of small modular reactors (SMRs) NuScale is developing.

By seeking development finance for the full 2,500MW, NuScale appears to be signalling a plan to bid for the whole thing, rather than seeking to build only part of a new set of nuclear generators in SA alongside companies from China or elsewhere.

That matches the aggressive posture of the US government under the administration of Donald Trump. The DFC letter of intent is the first time the organisation has supported any nuclear project; a ban on its involvement in nuclear energy was lifted on the recommendation of a working group formed by the White House.

The state funding for the NuScale project in the US, meanwhile, comes after consistent and determined efforts under Trump's presidency to "revitalise" nuclear energy in America, both in production and through research and development on next-generation systems. 

South Africa, though determined to buy new nuclear power stations, has not had a similar political appetite to invest in research. In 2010 it mothballed work on the pebble bed modular reactor, a project launched in the late 1990s to create a safe, small, modular reactor system for both domestic use and sale abroad.

As of this year there are still vague plans to revive the project, in one form or another, but even if those were to succeed, the pace of development would have to be improbably fast for it to have any place in South Africa's current round of explorations. 

See also | Eskom ‘abandoned’ plans to build a nuclear power station in the Eastern Cape – but is paying R16.5 million to keep it alive

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