Electricity outages are an emotional rollercoaster for most South Africans who have lived with rolling blackouts (Known locally as load-shedding) since 2008. Yes, it has been over 12 years and the only thing that Eskom (the energy giant and monopoly in SA) has managed to deliver over that time has been a series of staggering losses and further drain on the national fiscus. In fact, my podcast last week was recorded earlier than usual to fit into my co-host’s load shedding schedule showing that you cant escape Eskom’s woes even beyond SA’s borders.

A Texan Storm

Yet today, this is not the topic of my post. Rather, I have chosen to take a wider angle to global energy markets in the wake of a series of weather-related outages which have rocked Texas. For those unaware, Texas has one of the most competitive energy markets in the world.

With over 70 electric providers in Texas, consumers are spoilt for choice and often see competition from different providers offering low rates and incentives to customers move across. Then a Winter Storm arrived. Now, unlike Canadians who have become accustomed to living in these frigid conditions, the inclement weather in Texas caught most unprepared. Texas does not operate snow shoveling trucks and road salting and most energy use for heating in Texas tends to be electric rather than gas up here in Canada.

This posed a problem and saw large swathes of the state (Texas is roughly half the size of South Africa) without power and/or cellphone reception. It also compromised energy production in what is a key energy producing state, having a knock on impact on global oil prices.

An interesting Bloomberg article also indicated that some power providers were actively offering rebates of around $100 to customers who cut their usage and one even offered a chance to win a Tesla Model 3 if users were able to cut their usage by more than 10% over the month.

Now isn’t that refreshing and I am sure many readers will be wishing Eskom could learn a thing or two 😊

Now as quaint as this situation may be (Texans are a hardy bunch and will bounce back), it highlights a multitude of mega trends for me. The full extent of these are usually too bulky to fit in a single blog post but lets touch on just 2.

Energy makes the world go round

First, Climate change is real. I wrote this piece Amazon under fire touching on this theme a little while ago. I wont go into this in too much detail here, Check it out.

Secondly, Energy intensity remains a feature of the future economy. The source of that energy may transition from oil and fossil fuels to solar or wind but the inescapable fact is that as we integrate into a society of smart devices and the internet of Things, we will only continue to consume more and more energy.

Now we know that SA’s energy prices are a little on the higher side of the global average. I wont go into this.

Interestingly as well, it appears as though the gap between residential and commercial pricing in South Africa tends to favour businesses over households by quite a margin. In fact, only Australia (in the subset considered) exhibits a higher gap between the tariffs charged to households over business. Other emerging market powerhouses either charge businesses more or the prices reflect less of a divergence. While I wouldn’t want to make any inferences from this, it is a point to consider as the country grapples with energy shortages and challenges in reshaping its overall energy policy.

Renewables have been the main thrust of new energy investment in South Africa since around 2013. This largely comprised of wind power but increasing solar (both thermal and photovoltaic).

Source: IEA

However, the overall proportion of renewables to SA’s total energy mix remains small as coal remains the dominant source. This has environmental and long term policy impacts as the world transitions increasingly toward cleaner energy.

Source: IEA

We also know that the cost of adding renewables into the energy mix has fallen precipitously and that technologies like Solar and wind now exhibit generation costs well below coal and other traditional generation sources. However, one of the main drawbacks of renewables, and in particular, solar and wind, are that without adequate storage capacity (batteries) that they do not make for a sound substitute to stable baseload which has thus far been supplied by coal, gas and nuclear.  

Source: Lazard

In fact, this was part of the problem in Texas more recently. Renewables currently make up 15% of Texas’ energy mix, well above the 11% average for the rest of the US (which also happens to be the proportion of renewables in SA at the moment). So how do we build for a cleaner energy future with reliable baseload while waiting for battery tech to catch up? Is it always a winner takes all approach or could we consider the ‘portfolio effect’ in the energy mix?

Enter nuclear

Now for the contentious part. In SA, the discussion around nuclear has been… well, nuclear. Mired in allegations of graft and a cost which ran into the trillions of rands, it has been a non starter in many respects. Nuclear plants are expensive to build (although relatively cheap to run) and as such require a long term outlook as part of a broader energy mix.

It may not deliver the immediate gains as they take around 5 years to build (but SA has been dithering for 12 years already as indicated above). However, it is known to provide clean and stable baseload to the energy generation mix. But why limit ourselves to the nuclear technology of the past. Reactors like South Africa’s Koeberg are generally water cooled and still have all the safety concerns that plagued the nuclear industry over the last few decades. But things have moved on and a new wave of nuclear may be about to start.

New technologies

I am not an engineer so I would be keen to hear from anyone reading this who is and what your views are on the developments indicated below. For a brief time South Africa explored the pebble bed modular reactor as a potential viable nuclear option which could offer smaller scale and hence overcome the barriers of large capital investments as well as mitigate the risks of a single large nuclear plant. This remains an option to consider. The PBMR was put on care and maintenance 2010 and was reincorporated into Eskom in 2012. As at last year, Eskom was considering expressions of interest in its decision to dispose of PBMR.  

To my knowledge PBMR remains a viable alternative and there have been some developments in the field.  More recently, renewed interest in nuclear tech in the USA has seen a player like X-Energy revive its efforts in bringing PB reactors back onto the agenda there.

There is also the newer development of a molten salt reactor with thermal storage which is being developed by TerraPower, a company chaired and championed by billionaire turned philanthropist, Bill Gates. Check them out at www.terrapower.com for more info.

Terrapower is calling the new technology the ‘traveling wave reactor’ and is based on using depleted uranium instead rather than enriched uranium. This turns nuclear power on its head and effectively will use what is currently considered nuclear waste as its primary feedstock. This, in an of itself, seeks to decrease the risk of enrichment proliferation.

Depleted uranium is also supposedly easier to manage and the design of the process also seeks to remove the risk of a pressure related destabilizing event (similar to what happened at Chernobyl and Fukushima). The feedstock will have a life of 40-60 years, currently beyond the lifespan of a traditional coal fired plant.

In fact, Terrapower was on the verge of building its first prototype plant in China when the Trump administration’s actions on trade policy hampered that deal. Regardless, it continues to push forward and is seeking approval for several sites both within and outside the US.

Parting thoughts

All I am saying is that the world is moving at a frantic pace. The pace of technological advancement means that sometimes, preconceived notions of concepts (like nuclear power) need to be challenged. I for one have been quoted publicly as being in support of nuclear conceptually.

This is because I do not think that it is incongruent with my passion of a cleaner future. I believe that they are complementary and that nuclear may be a means for us to get there. South Africa has a reasonable amount of technical skill and ‘know how’ in this space and also has the ability to manage nuclear power plants.

Perhaps SA needs to get out of its own shadow and throw this back on the table as a viable solution to energy policy again. And to reclaim a seat at the global table where new technologies and approaches are being pioneered. I am not saying that this is the answer but I am saying that if we are not part of the conversation, we are unlikely to get invited to the party.

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