This is an opinion piece that appeared in the Financial Mail on 24 June, 2016.
According to the pro-nuclear power lobby assembled last month in Cape Town at the ‘Nuclear Power Africa’ event during the African Utility Week, South Africans should banish any fears they may harbour about the potentially disastrous financial consequences that may result from the Government’s proposed nuclear energy procurement. Rather, South Africans should look forward to a golden age of prosperity which will ride on the wave of cheap nuclear power.
Spurred on by the screening at the event of the fiercely pro-nuclear film ‘Pandora’s Promise’, South African and overseas nuclear industry promoters, supported by South African nuclear engineers, asserted that a simple causal relationship between energy production and economic growth exists. If energy production increases, so the argument goes, both foreign and domestic investment dramatically increases, countless jobs are created and the South Africa economy booms. In making this argument, nuclear advocates rubbished any claims that South Africa could not afford the procurement of new nuclear power plants, arguing in fact that South Africa could not afford not to (pro-nuclear speakers also rubbished the estimated cost of R1 trillion, stating that it ‘is just a nice round number of newspapers to write about’).
There are numerous problems with this simplistic argument, not least of which is that there is no clear evidence that increased energy production automatically leads to economic growth. This was made abundantly clear in recent research carried out by the Energy Research Centre at the University of Cape Town which illustrates that if energy costs are high economic growth slows, jobs are shed and household consumption falls.
If the global history of nuclear power generation teaches us anything, it is that nuclear power is expensive. One of the great ironies of nuclear power is that no industry in the modern era has been the recipient of so much financial support from the state to keep it afloat, making it the most ‘socialised’ of industries. The current nuclear power station being built by EDF in England, Hinkley Point C, is a classic case in point. It is proving so expensive to build (current estimates of total cost are in the region of R400 billion) that there is a real danger that EDF will go bankrupt before its completion, forcing French President François Hollande to recently commit public funds to the project. Similar cost overruns plague the construction of Olkiluoto 3 nuclear power station in Finland which is nine years late and already three times over budget (the current cost estimate is R146 billion).
Recent evidence from South Africa suggests that the construction of mega-projects like nuclear power stations is likely to be fraught with problems. Eskom’s abject failure to deliver Medupi and Kusile on budget (both are now nearly three times over budget) and on time (both are likely to be at least four years late) does not bode well.
But there is no need for South Africans to worry about such things. According to a representative from Rosatom who spoke at the ‘Nuclear Power Africa’ event, all large-scale infrastructure developments are good for economies. On what did she base this conclusion? Her recent skiing trip to the Russian sky resort of Sochi which she claimed was much improved by the infrastructure that had been built to host the winter Olympic Games in 2014, at an estimated cost of R750 billion.
We can only hope that those in Government who are proposing to spend colossal amounts of tax-payers money on nuclear power stations are basing their decisions in the real world.