Koeberg nuclear power station's life extension project is likely to cost at least three times the projected R20bn without any guarantee the station will be able to operate after July 2024.
An updated breakdown of expected cost overruns — the project was officially budgeted at R20bn in 2010 — was submitted last month to the National Treasury by watchdog group the Koeberg Alert Alliance. Treasury confirmed receipt of the submission and plans to respond.
The document analyses direct and indirect costs related to a project to extend the plant’s life by 20 years. Koeberg's operating licence expires in July 2024.
A cost-benefit analysis in the submission argues the life extension project be abandoned. “Diverting whatever funds still to be spent on Koeberg into strategically strengthening the grid would have a far more long-term benefit,” it said.
The authors, including energy activist and National Nuclear Regulator (NNR) board member Peter Becker, raised concerns about the economic cost of load-shedding related to the project.
Koeberg has two units, each generating 920MW. One or the other has been offline for 19 months and the situation is expected to continue well into next year. Rather than spend billions on a possible 20-year life-extension (strict criteria must be met to obtain an operating licence), the plant should be run at full capacity now to plug the electricity generation gap. This would buy time as new generation capacity comes online.
“The damage to the economy from the long-term outages (with more than half of them still ahead at the time of writing), while external to Eskom’s financials, are unacceptable,” the report said. The Council for Scientific and Industrial Research (CSIR) estimated a six-month outage of one unit at Koeberg costs the economy R311bn. Two such outages would cost about R622bn.
“Abandoning the refurbishment would not only reduce the extra load-shedding resulting from the long outages still required, it would also make grid capacity available to new renewable energy projects and make the Koeberg site available for forward-looking projects such as a utility scale battery installation. A thorough cost/benefit analysis is urgently required using up to date figures to inform such a decision,” the report said.
The cost analysis estimates:
- inflation adjustment since 2010 (R20bn) would add about R18bn in 2023 rand terms;
- foreign exchange fluctuations, interest payments and a huge damages claim from a supplier upped the bill to more than R70bn; and
- Eskom underestimated how long refurbishing the units would take. The original five-month estimate is now closer to 15 months, escalating costs.
It is unclear which hidden or indirect costs Eskom included in the original 2010 estimate. These could include costly items such as disposal of additional nuclear waste due to be transported to the Vaalputs disposal facility in the Northern Cape.
Cost overruns similar to those at Kusile and Medupi power stations could also add to the total.
“Given the particular complexity and nature of the refurbishment being attempted at Koeberg, this means the costs could ultimately be somewhere between R80bn and R140bn,” the report said.
It makes no sense, or cents. The planned extension for Koeberg put the brakes on new generation capacity
— Lydia Petersen, Koeberg Alert Alliance spokesperson
Koeberg Alert Alliance spokesperson Lydia Petersen said the document was sent to the Treasury on July 5, but they had struggled to get an acknowledgment of receipt.
The authors’ intention was to flag concerns about potentially wasteful expenditure when South Africa urgently needed investment in more sustainable power generation options. “As set out in the submission to Treasury, it's clear the original estimate of R20bn cannot hold true,” Petersen said.
“It makes no sense, or cents. The planned extension for Koeberg put the brakes on new generation capacity. The billions spent on refurbishing a plant designed in the 1960s and built in the 1970s could have been spent on strengthening the grid or on battery storage for renewable technologies and grid stability.”
Becker said the indirect cost of the project was immense as the power station was underused. “At the height of load-shedding Eskom plan to ... take unit 2 offline [when] we need it to be available by the time we don’t need it,” Becker said.
Energy analyst Clyde Mallinson authored a report 18 months ago warning of cost overruns. The loss of each Koeberg unit, he said this week, equates to an extra stage of load-shedding under existing conditions, costing the economy billions.
“National Treasury has received the report from Koeberg Alert Alliance and is studying the contents. Upon completion, Treasury will engage either Eskom or the DPE (the department of public enterprises) on the way forward,” Treasury told TimesLIVE Premium. Eskom has yet to respond to queries.
Knox Msebenzi, MD of the Nuclear Industry Association of South Africa, said Koeberg's life extension and refurbishment had always been part of South Africa's long-term nuclear plan.
“To argue against taking off the units when they are needed most is to ignore the stringent safety requirements needed by the regulator.
“Besides, well run economies require long-term planning. The life extension of Koeberg was planned from inception of the project. The anti-nuclear lobbyist who delayed the new nuclear build should answer for the power crisis South Africa finds itself in. Many have argued that had the 9,600MW new nuclear build planned in the 2010 – 2030 IRP had gone ahead, South Africans may never have heard about load-shedding,” he said.
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