The case for nuclear electricity in South Africa – An economic view

This paper makes the economic case for nuclear electricity in South Africa. The importance to the economy of having clean, reliable and affordable electricity serves as background against which the case is made for the cost for electricity by means of nuclear generation. The aim of the paper is to provide a realistic, objective and honest prediction of the Levelised Cost of Electricity (LCOE) which could be expected from deployment of two 1600MWe reactors on the Thyspunt site. The paper does not follow the traditional approach whereby sensitivity analysis is performed on key LCOE parameters such as construction time and discount rate. It rather assumes realistic values for these parameters, based on global indicators and taking account of the South African context. It describes pre-requisite conditions that must be met for these assumptions to be valid. The authors submit that this approach is typical of the systems approach to resolving highly complex intra-disciplinary problems. The paper proposes a project capitalization plan and reports the calculated LCOE generated by a nuclear plant at R1.28/kWh. It is concluded that an advanced capitalization plan holds many advantages, but these come at the price of very complex contractual arrangements. It was further argued that pre-requisites for such advanced capitalization schemes include a stable socio-political situation, predictable legislative environment and a vibrant economy. © 2014 International Council on Systems Engineering.