Dr Dawid Serfontein

Report
Nuclear Power More
Profitable than Coal
Nuclear Africa 2014
18-20 March 2014
Dr. Dawid E. Serfontein
School of Mechanical and Nuclear Engineering,
North-West University, South Africa.
Introduction


IEP and IRP Update lay an excellent foundation:
very comprehensive set of data and sophisticated
modelling tools.
I reviewed both documents for NIASA:
See my summary in conference booklet
 + links to NIASA's website.


I found a number of serious flaws in the IEP, which
have seriously skewed its results against nuclear:
Implementation would impact very negatively on
South Africa’s economy and energy security.
Own modelling results: First show
the correct way.
Business case for nuclear:
Nuclear plants twice as expensive as coal, but:
 Last for 60 years, vs. 25-50 years.
 Much lower fuel cost than coal.
 Load factor = 92%,
vs. 20 - 30% for PV solar and wind.
 Therefore nuclear produces cheaper power!

Own modelling results (continued)


Calculate LCOE as function of the Weighted
Average Cost of Capital (WACC%):
Government invests 100% of the capital as equity.
Nuclear:
Expected case : Overnight cost = $5,500/kW-installed
 Pessimistic case: Overnight cost = $7,000/kW-installed.


Coal:


Expected Case: External cost = Only R120/ton CO2
carbon tax.
Pessimistic case: Full
external costs.
LCOE ( R/kWh )
LCOE as a function of Post-tax WACC
1.50
1.40
1.30
1.20
1.10
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
Nuclear:
$5,500/kW+
Full env. costs
Nuclear:
$7,000/kW+
Full env. costs
Coal-Full env.
costs
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%
Post-tax Real WACC
LCOE: CoalR120 C-tax
only
% Return on CAPEX
8.0%
% Return as a function of electr. selling
price
7.0%
Nuclear:
$7,000/kW+F
ull env. costs
6.0%
5.0%
4.0%
3.0%
2.0%
Coal-R120 Ctax only
1.0%
0.0%
0.4
0.6
0.8
1.0
1.2
Electricity selling price (R/kWh)
Nom. Return ( R/kW/Y)
7000
Nominal Return as a function of electr.
selling price
Nuclear:
$7,000/kW+F
ull env. costs
6000
5000
4000
3000
2000
Coal-R120 Ctax only
1000
0
0.4
0.6
0.8
1.0
1.2
Electricity selling price (R/kWh)
Conclusions
 New
Nuclear will produce electricity
at a much higher profit than coal.
 External cost of New nuclear
(R0.005/kWh) is about 50 times lower
than that of coal (R0.26/kWh)!
Conclusions
 SA
should thus deploy nuclear as long
lead-time cheap base-load technology.
 Add peaking technologies.
 Lastly add quickly deployable
technologies when shortages loom.
 Develop local nuclear project
management skills.




Contrast with flawed IEP and IRP
Update
Unrealistically high real discount rate has been used:
Economic Opportunity Cost of Capital (EOCK) of
11.3%!
Nominal discount rate of 11.3 = 5.3% real discount
rate, which would have produced fundamentally
different optimisation results.
This massively underestimated the cost efficiency of
nuclear power for reducing CO2 emissions.
We propose a real discount rate of 3%.
Discounted income values for different discount rates
100%
3.0%
5.0%
Discounted value
80%
8.0%
11.3%
60%
40%
20%
0%
0
10
20
30
Years
40
50
60
More flaws


Intermittency costs of wind and PV solar have not
been taken into account.
“Time of day” electricity selling prices have not been
taken into account, which has also unfairly
benefitted intermittent sources, especially PV solar.
Flaws (continued)




Cooking the environmental books with imported
CO2 emissions.
Led to massive imports of petrol, diesel and natural
gas and coal power and hydro: 90% of South
Africa’s energy imported!
Would cause massive local job losses,
serious problems on the balance of payments,
threaten national security.
External costs were not internalised:
Gas, coal and nuclear.
Conclusions
 Flaws
decreased nuclear, gas and wind
capacity and inflated solar and coal.
 Easy to correct flaws in IEP and IRP
Update!
 Correction will:
 Save
massive amounts of money,
 boost the economy and job creation
 and promote energy security.
Thank you!
Any questions or comments?

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