Eskom Says Large PWR Project is "Too Big" – Does That Mean a Revised Focus On Pebble Beds?

On Friday, December 5, 2008, Eskom, the giant South African utility, announced its decision to halt the bidding on a previously announced, 2 or 3 unit nuclear power station. The remaining bidders in the project were Toshiba’s Westinghouse division with a proposal for a 3-unit AP-1000 based station and Areva with a 2-unit EPR based station.

Both of the bidders must have been disappointed in the decision; they had each invested a considerable amount of time, effort and money to win the projected $12 billion (US) contract. Each has set up local partnerships, established local offices, and had people in country for several years developing their bids.

“We’re disappointed because we put a lot of work into the process, but we’re hopeful the South African government will remain committed to developing nuclear power,” Jacques-Emmanuel Saulnier, spokesman for Areva in Paris, said by telephone. “If South Africa comes back to us, we’ll be there.”
(Source: Bloomberg.com – South Africa Scraps Plan to Build Nuclear Power Plant (Update3) )

Eskom’s problem is certainly not a lack of market for the power that the new plants could produce. For nearly a year, Eskom has been using rolling blackouts and power curtailments to large industrial customers like gold and diamond mines as way to keep its grid from collapsing due to excessive demand. Eskom is a near monopoly supplier in a country where there is a great pent up need for electricity; a small portion of the country lives with electrical supplies equivalent to those in America or Europe, a larger portion has no power at all. South Africa has large and easily mined supplies of coal, but those are located a thousand kilometers or more from the main population centers that need more power.

Of course, there is also the problem that increased coal consumption will lead to increased emissions of NOx, SOx, fly ash, CO, mercury and CO2.

Even with stong motivation, Eskom’s board took a hard look at the economics of the project and determined that it was so big that it entailed too much risk of causing a company failure.

“It’s too big, we can’t do it,” Johannesburg-based Eskom spokesman Fani Zulu said. “The bidders were informed after we took the decision at a board meeting yesterday.”
(Source: Bloomberg.com – South Africa Scraps Plan to Build Nuclear Power Plant (Update3) )

There are some hints available for how SA may be planning to meet its growing electrical power needs within the constraints that it faces for raising capital and its desire to avoid an increasing dependence on coal-fired power. There are at least three paths, each of which might be pursued in parallel with the others.

• Constraining growth of power demand by constraining economic growth
• Reduced risk nuclear development by “going small” with a more focused capital investment in pebble bed reactors
• Spreading risk of large scale nuclear development by establishing international partnerships

The Bloomberg article mentioned previously talks about the breathing room provided by the world wide economic downturn. One reason why the company feels reasonably comfortable with halting development of a major project now, even though they have current and future supply challenges, is that they expect for demand growth to slow and perhaps even go negative for a year or more. This is not due to some kind of spectacular “negawatts” program, it is simply going to happen as a result of lower production in mines and manufacturing plants due to a reduced ability for many people to afford to buy things in a world in economic crisis.

While the economy will temporarily slow growth in demand, Eskom leaders know that such a situation is a rather painful way to get a temporary reprieve from the need for massive new capital investment. As most observers of the nuclear industry know, South Africa has a nuclear option that requires a much smaller amount of capital for each unit – they have been developing the 165 MWe Pebble Bed Modular Reactor (PBMR) for more than 15 years and are getting close to an operational unit.

An unnamed source (I feel like I am becoming more and more of a real journalist) whispered to me that PBMR company may be considering a directional shift in their plans that could get them into production more quickly. Right now, the longest item in their development process is the helium turbomachinery. It has been more of a challenge than most people expected to turn the paper designs into real machinery that can provide the operational reliability needed for a direct cycle nuclear facility. The option that might provide a quicker path, albeit with a bit lower plant efficiency, is the German/American/Chinese model of a helium cooled reactor with a steam plant power system.

Instead of having a direct Brayton cycle gas turbine, the system would use helium circulators to move gas through the reactor and through a heat exchanger to generate steam. Once you get to that point, the steam plant machinery is very conventional and well proven. Circulators, despite the Ft. St. Vrain experience, are simpler to build since they can be a direct evolution of existing hydrogen handling systems. I remain enthusiastic about direct cycle nuclear gas turbines, but there is little doubt that the steam plants could be constructed more quickly from today’s state of the art in manufacturing. They would also have a better chance of the operational reliability that enables nuclear to compete with even cheap coal.

I am purely speculating here, but a South African program shift from direct cycle helium gas turbines to one aimed at pebble bed heat sources with helium circulation to heat exchangers also fits with the strong expressions of interest from companies like Sasol in using process heat from nuclear plants as part of their industrial process.

A nuclear heat island configuration also provides a fairly direct path to a system suggestion from Jim Holm to convert existing coal fired steam plants into nuclear heated steam plants by replacing boilers with reactors/steam generators. That idea is making more and more sense to me every day. Here is a comment from Portia Molefe, the director general of the Department of Public Enterprises, that seems to confirm that my guess may not be wildly off base:

A decision on the future of the PBMR was to be made, she said. “In terms of its time scale, there has been a time shift,” she said. “We shall make an announcement shortly.”
But she indicated that the department was looking at ways of speeding up the PMBR process, not slowing it down “We are certainly not sounding the death knell for PMBR,” she said.
(Source: Nuclear strategy unclear)

The other alternative for Eskom is to invite participation in large nuclear projects from experienced, financially strong power generation companies. The expansion focused EDF is one option:

Electricite de France SA, the world’s biggest operator of atomic reactors, has South Africa among its priorities for nuclear expansion. The utility wants to operate about 10 so- called Evolutionary Power Reactors by 2020 and yesterday at an investor day in London included two in South Africa.
(Source: Bloomberg.com – SA Scraps Plan to Build Nuclear Power Plant)

There are also some German utilities that have expressed interest in bu
ilding and operating nuclear plants. Since they are currently restricted from doing that in their home country, E.ON and RWE are exapnding in places like the UK. I would imagine that they might also be interested in expanding their existing business models into South Africa; I am sure that there are a number of people in those companies with experience in doing business in that area of the world.

More information on Eskom’s cancellation decision:

• Dan Yurman at Idaho Samizdat – Eskom cancels its $12B nuclear tender
• Mininmx.com – High costs scupper Eskom nuclear plans
• Urban Sprout – eskom cancels nuclear plans
• Net News Publisher – Greenpeace has Welcomed Eskom’s Decision to Abandon Plans for Second Nuclear Power Plant in South Africa
• Capetown News – Eskom shelves Koeberg II nuclear power station