Independent analysts calculate ‘true cost’ of Koeberg’s refurbishment at R300bn

29 Sep 2022

The purpose of the refurbishment is to extend the operation of the plant beyond its design life — which ends on 31 July 2024 — for another 20 years. Koeberg, Africa’s only nuclear power station, produces greenhouse gas emission-free, baseload power.

“The numbers are scary,” said Clyde Mallinson, an independent energy analyst on Thursday at a media briefing where he and Peter Becker of the Koeberg Alert Alliance shared their analysis on Eskom’s beleaguered Koeberg steam generator replacement project and its costs to the South African economy.

Their analysis comes two days after Eskom presented to a joint meeting of Parliament’s Portfolio Committees on Mineral Resources and Public Enterprises. In that meeting, on Tuesday, Eskom provided an update on the refurbishment — or steam generator replacement project — of the Koeberg Nuclear Power Station.

Unit 2 was taken offline at the start of the year for maintenance and refuelling, with the effect of removing 920MW — just less than a single stage of rolling blackouts — from the national grid. It was only returned to service on 7 August and subsequently tripped several times, contributing to the escalation of rolling blackouts to Stage 6.

The purpose of the refurbishment is to extend the operation of the plant beyond its design life — which ends on 31 July 2024 — for another 20 years. Koeberg, Africa’s only nuclear power station, produces greenhouse gas emission-free, baseload power.

Speaking about the extraordinary amount of diesel used this year to offset capacity constraints caused by breakdowns in the coal fleet, Mallinson said that according to his calculations, Eskom had spent roughly R5-billion on diesel alone to fill the supply gap, which itself has been exacerbated by the supply deficit that has come as a result of the refurbishment.

“We took it [Unit 2] off when we needed it the most,” he said. According to their calculations, the cost to the economy was more than R30-billion up until when Unit 2 was returned to service.

“We’re talking about an amount of money close to its [Eskom’s] existing debt,” said Becker, explaining that their calculations did not reflect just the cost to Eskom, but to the country as a whole. The final total they came to was that the true cost of the refurbishment was north of R300-billion.

“We need Koeberg more than ever now to go through to its end of life … that will buy us the time to put in the wind, solar, storage to replace the output of Koeberg,” said Mallinson.

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The lifetime extension project, approved by the Eskom board in 2010, was estimated at the time to cost R20-billion. Until very recently, Eskom had maintained that the total cost is still R20-billion, despite a significant increase in inflation and a dramatically weaker rand/dollar exchange rate.

On Tuesday, however, Eskom finally admitted that the actual cost will be “significantly different” if it is calculated using up-to-date figures. It also shared an update on the setbacks the utility has faced — and caused — in getting the project completed timeously.

Asked by members of the two committees what the updated cost of the life extension project is in “today’s money”; what the impact of the delays is on rolling blackouts; and the depth of Eskom’s human resources with nuclear expertise, the utility offered short responses devoid of any substance.

Eskom’s CEO, André de Ruyter, took the opportunity, however, to clear the air on the utility’s stance on nuclear power under his watch.

“Eskom is definitely not anti-nuclear; we are pro-nuclear, otherwise we wouldn’t be pursuing this life-extension project,” he said.

In its presentation on Tuesday, Eskom shared technical details about the travails of the refurbishment project. It said that the scope of refuelling Outage 225 on Koeberg Unit 2 was originally intended to include the replacement of the steam generators on Unit 2.

“However, Eskom had to remove the project from Outage 225 due to several serious deficiencies in the front-end loading of the project, which would have caused significant delays to the outage, which Eskom and the country could not afford. Both Eskom and the contractor have contributed to these deficiencies and there are several associated disputes between Eskom and the contractor which are currently subject to dispute adjudication,” the presentation read.

“An example cited by the contractor regarding Eskom’s role in contributing towards the project not commencing as scheduled include that the facilities, which were required to house the old steam generators, once removed, were not ready for use. Eskom has identified poor project management, inadequate contract management and a lack of financial discipline as being contributory factors towards the project not commencing as scheduled,” it continued.

Keith Featherstone, Eskom’s acting chief nuclear officer, gave an update on what he called the “SGR [steam generator replacement] saga”.

“We’ve been talking about this project since 2010, so it’s been on the cards for a long time … there was actually no excuse from an Eskom point of view for these facilities not to be ready … the removal of the steam generator project from the outage required the outage to be completely replanned and the final scheduled end-date ended up being very similar to the original plan.

“However, during the startup phase, emergent technical issues resulted in the delay of the return of the unit to service, which happened only on August 7, 2022. If the steam generator replacement had not been withdrawn from the outage, based on the table scheduled by the contractor, the Koeberg Unit 2 contribution to load shedding would have lasted much longer because those delays during the startup phase would have happened irrespective of whether we returned the unit to be in a position to start up.”

Featherstone continued: “The steam generator replacements are now scheduled for Outage 126 on Unit 1, which starts during December this year, and Outage 226 for Unit 2, which is currently scheduled to start in October 2023. The change does not alter the overall life extension plan for Koeberg, but the compensation events and the CPAs [contract price adjustments] will have an impact on the cost allocation, which is still in the process of being finalised.” DM/OBP

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