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Pebble Bed
| Date: |
08 June 2008 07:00 |
| Producer: |
Barbara Fölscher
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| Presenter: |
John Webb
Bonita Nuttall
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| Show: | Carte Blanche |
With alarm bells ringing around global warming and Eskom's spectacular failure to anticipate our power needs, many believe that the solution to the problem lies in nuclear technology, nuclear technology that is being developed right here in South Africa.
Jaco Kriek (CEO: PBMR): "This could be a breakthrough for South Africa, like Sasol."
Professor Steve Thomas (Professor: Greenwhich University): "I would pull the plug as soon as possible."
Alec Erwin (Minister: Public Enterprises): "Of course it has risks, but it's also has massive opportunities, that's why government is proceeding with it."
Martin Welz (Editor: Noseweek): "It is, to put it shortly, just simply outrageous."
Ten years ago Eskom and the South African government decided to get into the business of building and selling nuclear reactors to the world.
John Webb (Carte Blanche presenter): "Here, next to Koeberg on the Cape West Coast, is where the first demonstration plant of the Pebble Bed Modular Reactor is supposed to be built. For longer than 10 years now, South Africans have been given bits of information about the development of a high temperature, gas cooled nuclear technology which is said to have the potential to earn the country vast amounts in foreign currency. But all we've seen of the project so far has been its endless delays and mounting costs."
In 1998 we were told that a demonstration plant was going to take five years to complete at a cost R2-billion rand. A decade later and the latest estimate is that the nuclear reactor will only be ready by 2015, and the cost: 20-billion rand€¦ 10 years behind schedule at 10 times the cost.
Alec Erwin (Minister of Public Enterprises): "I know you're going to carry on because it's the style of your programme, digging and digging to find out that there's some problem here, lurking secretly in the midst of it all."
Minister of Public Enterprises, Alec Erwin is confident that the massive investment of taxpayers' money is worth every cent.
Alec: "I mean look, this has been assessed by international scientists and all sorts of other people. The risks are understood and known, the possibilities are understood and known."
Prof Thomas: "I can't see how a project that's 10 times over budget and 10 years late after only 10 years of development€¦ that surely must be telling you that something is going very seriously wrong with the project."
Professor Steve Thomas of Greenwich University was one of the panel of scientists employed by the government to give an assessment of the risks in 2002.
Prof. Thomas: "It's not just a few minor problems that you're bound to get with a new technology. Something very serious is going wrong for that level of delay and that level of cost over-run."
The report compiled by the experts has not been made public in any form and the members had to promise not to reveal their findings.
John: "So are we, the taxpayers, really informed about those risks? And do we even understand what the project involves - built around these pebbles, hardly bigger than a snooker ball€¦ the project that we are paying for?"
The nuclear industry has always been enveloped in a shroud of secrecy. Now, the Carte Blanche team has been given access to the heart of the pebble bed project: the laboratories at Pelindaba where the fuel pebbles are developed and are constantly being tested. Behind numerous security checkpoints, we find scientists and technicians excited about a technology they believe is safer than the conventional reactors like Koeberg because the radio-active material is contained inside the fuel pebbles. Dr Adi Paterson, General Manager of the development company.
Dr Adi Paterson (General Manager: Development Company at Pelindaba): "The uranium oxide, which is our nuclear fuel is in the form of these tiny kernels, about the size of a ballpoint pen tip. These kernels of fuel are then coated with four coatings, which is really the containment system that keeps all the radioactivity inside those kernels."
These scientists believe that this design is not only safer but also more efficient than water cooled reactors because it uses helium gas as coolant and can reach much higher temperatures. The performance of the gas is tested at a new facility at Pelindaba. At this reactor a core meltdown or Chernobyl type accident will be impossible and electricity production would not be interrupted for refueling like it would be at Koeberg.
Dr Paterson: "The availability of the plant is 95 percent of the time and so you don't suffer the problem of shutting down the plant when you have to refuel it because we have online refueling in the pebble reactor."
Why then, are the world's leading nuclear nations not developing this technology? The science behind the pebble bed reactor was developed in Germany in the sixties, where the first experimental reactor ran successfully for 22 years. Dr Peter Pohl worked at the plant throughout that period:
Dr Peter Pohl (Nuclear scientist): "This has only been an experimental reactor, of course, its power, 50 megawatts electrical, is not that much. But what was achieved is unique, in temperature, in burn up, in reliability - it's just fantastic."
But nuclear technology takes decades to perfect and before the second German pebble bed reactor could prove itself, the Russian Chernobyl disaster occurred and the reactor was closed down. For 10 years no one was interested in developing the technology, until South Africa bought the license to continue where the Germans left off in 1989.
Jaco: The Green Party was opposed to nuclear. They also had some technical challenges - some of the pebbles were broken."
Jaco is CEO of PBMR, the company funded largely by the taxpayer to develop the technology. He believes where Germany failed, South Africa can succeed.
Jaco: "We've changed that design so that in our reactor you don't have any components - moving components - that can break the pebbles."
While experiments on the fuel continue, the manufacturing of hardware for the reactor has started in a number of countries outside South Africa.
Jaco: "As we speak we have components that are manufactured in Spain, in Germany, and in Japan. There's hardware, there's 900 tonnes of vessels that are at the moment being worked on in Spain."
Jaco Kriek sites the dramatic increase in manufacturing and raw material prices as the biggest cause of the company's tenfold increase in costs to the latest estimate of R20-billion. We are told that PBMR will eventually earn large amounts of foreign capital for the country. But how can we trust a company with such unreliable estimates over such a long period?
Jaco: "The number that you're talking about includes the reactor, the cost of the capex for the reactor, the capital cost for the fuel, and as an organisation you can imagine 800 people, its an expensive operation."
Some would say an expensive gamble€¦
Prof Thomas: "And there has been so little public disclosure and I think I feel very personally involved when I see public money being wasted without proper public accountability."
The PBMR business plan is based on the idea that there is an international market for pebble bed reactors. They say it will sell because it can be used not only for electricity generation, but also for a number of other process heat applications.
Jaco: "The application is really steam, desalination of seawater, ultimately hopefully hydrogen."
Kriek believes that while the PBMR does not have the same capacity as large scale nuclear reactors like Koeberg, the pebble bed reactor has other features that will make it more marketable.
Jaco: "Because of its size, your construction is shorter, you can locate your generation where the energy is needed. In other words you don't need long transmission lines and you're not bound by the raw material, whether it's water, or whether its coal."
Nowhere has a satisfactory solution been found for nuclear waste. PBMR believes their plan to encapsulate spent pebbles in glass on site, is a further selling point.
Jaco: "PBMR in our technology with this pebble - this is like a battery in the reactor. It doesn't change form, there's the fission process, the radiation that takes place in this pebble, but this is stored on site and the South African government will come up with a high-level nuclear waste site where this will typically be stored after it comes out of the reactor after 80 years."
And Kriek has no doubt that there will be plenty of buyers out there, but just to break even PBMR has to sell 22 reactors by 2022.
Jaco: "We're almost marketing too much because we don't have a product yet and we are - on a daily basis - we're contacted by -whether it is to buy, whether it's people from Europe or whether it's in the US - to buy this reactor and we, if we just had a reactor now, we would have sold a lot of reactors. The US department of energy has issued an expression of interest to PBMR to potentially build eight PBMR in the US, and this is as we speak."
John: "Have you tied these people down to contracts?"
Jaco: "No, we haven't signed, purely because we cannot actually get into discussions with too many customers. So the two customers we are looking at at the moment are Eskom and the US department of energy."
But even their biggest client' Eskom seems to be covering its bets. It has only issued a letter of intent' to buy 24 reactors some time in the future. Even then they will only buy them if it's the cheapest technology available. According to minister Erwin that figure could drop to as few as 10 reactors. Professor Steve Thomas is not surprised that there are no confirmed orders.
Prof Thomas: "This is a radical new design that hasn't been built successfully anywhere before. So investors will be looking very carefully and switching on for the first time will not be adequate demonstration to them that the technology is a sound one. You have to run it for three, four, five years to demonstrate that all aspects of the design really do work."
The South African public will already pay R20-billion for the development phase of the pebble bed nuclear reactor. Who will pay if Eskom starts building the commercial reactors?
John: "But we think the experience of the entire country over the past few months provides us with an answer: when it comes to anything related with electricity, the risk falls ultimately on the consumer."
John: "Minister is it fair for the South African taxpayer to bear the cost for a technology that is ultimately experimental?"
Alec: "It's not experimental. The technology has been operated in Germany for a number of years. It is not experimental; we have already had examples of this. What we are doing is industrialising that. Now, for South Africa's public - they pay for great things that are designed to develop our technological capacity, our industrial capacity, future industrial employment in this economy and high level science and technology research. That's what governments do. So to answer your question, yes, I think it is very fair and I think it's very far-sighted and I'm quite sure the majority of South Africans will have that vision to improve the economy of South Africa."
John: "Do you think the South African public has been provided with adequate information?"
Alec: "Yes, it will be helpful if programmes like yours were a little less misleading at times."
John: "This is the White Paper on Energy Policy of 1998. In it, a promise is made to the South African people that an open public consultation will take place, based on the proper disclosure of relevant information by the government, prior to there being a decision to expand nuclear power generation capacity. Has that promise been flouted all the way through?"
A possible forum for debate would have been the nuclear summit planned for Cape Town in 2004. But government cancelled at the last moment, even though international delegates had already arrived.
Prof Thomas: "So many times I've had to tell people in South Africa what's happening with the pebble bed because those involved are simply not informing the people that are paying the bills."
In 2006 the authorisation of the first Environmental Impact Assessment on the pebble bed was overturned in the Cape High Court because of a failure to properly consult with the public. A new EIA process has been started, and we are told that the public participation will begin in August.
Martin: "The initial information we get suggests really large scale dishonesty in terms of communication with the public. And that immediately in our field of business raises the question: Why?' Why are they attempting to mislead the public? And then again, who is profiting?
When Martin Welz, editor of Noseweek magazine started investigating the financial history of PBMR he found a worrying link between role players that made it difficult to see where the money was going.
Martin: "The swing door that was occurring of executives moving from one unit to the other, and clearly being unable to be disinterested€¦ so the conflicts of interest were obvious just in terms of connectedness'."
At first Eskom was the main shareholder and promoter of the pebble bed, but this changed in 2002 when an important international investor, the American company Exelon, withdrew. A concerned Eskom board asked independent auditors to assess the project's financial viability and - as confidential documents reveal - the auditors advised the utility to also ditch the PBMR. At this point, the state stepped in to become the main shareholder. This was when the movements of the then chairman of Eskom, Dr Reuel Khoza began to raise suspicion.
Martin: "Dr Khoza seemed to wear many hats and sit on various chairs. He was the client in the form of Eskom, he was the consultant to the government who was the main funder, he had ex- corporate colleagues who were sitting on the nuclear authority, and he was a significant shareholder in the development company.
Our attempts to ask Dr Khoza about his shareholding in the companies that benefited or the multiple roles he played during that time were unsuccessful. He did not want to be interviewed, or even comment.
Martin: "We know that when those shares were sold that Dr Khoza and the company of which he was executive chairman and shareholder between them benefited by R80-million at least€¦ on that side of the fence. On the other side of the fence of course - on the client side - he is chairman of Eskom, a very influential chairman. And at the same time, as I said, he is consultant to the government on nuclear affairs who is the funder of all of this, with our money."
At that time, the government agreed to take ownership of the pebble bed project from Eskom despite the risks identified by the auditors. They promised to find other international investors, but to date, it has been the taxpayer who has forked out R8.5-billion rand for the development so far.
Alec: "Now, for Eskom, I've just explained that it was a financial risk for Eskom and that's why we moved it off the Eskom balance sheet."
John: "But you don't consider it a financial risk - government does."
Alec: "On the balance sheet of Eskom it was a financial risk. I've just explained it - for government it has all the risks of any large scale development project. Those risks mitigate over time as partners come in, so of course it's got risks, but it has also got massive opportunities: that's why government is proceeding with it."
One of the reasons why Minister Erwin believes his confidence to be well placed is because the project has the support of American nuclear company, Westinghouse.
Alec: "And for a company like Westinghouse to move pebble bed out of its research division into its new reactor division - for us that's what gives us the confidence in the technology."
But Westinghouse may have bigger fish to fry. It is competing with the leading French nuclear company Areva for lucrative contracts to supply South Africa's light water reactors. So to what extent is Westinghouse support for the pebble bed tied to negotiations for the bigger contracts? From the USA we received this statement.
Dr Regis Matzi (Senior Vice President & Chief Technological Officer): "We have invested significant amounts of cash as well as other resources into this project."
Chief Technological Officer Dr Regis Matzi says Westinghouse will continue to help make a success of the pebble bed. While Westinghouse only holds 7 percentage of the shares in PBMR at this stage, it is lending the African-based project crucial support to gain international operating rights.
Dr Matzi: "We've been helping the South Africans license the Pebble Bed Modular Reactor both in South Africa and in the United States."
Without an operating license from the South African National Nuclear Regulator and without a positive record of decision on the new EIA, the building of a demonstration reactor cannot proceed. PBMR believes both the record of decision and the license will be obtained by the end of 2010. Yet the regulator says a final design has not yet been handed over.
Prof. Thomas: "When I was a member of the international panel to review the design in 2002 we were told design was six months away. We're still being told its six months away, so I think we have got to work on the basis of believe it when you see it'."
Jaco: "Early in those years, it was a bit of thumb sucking I guess, because as a company and as a country we didn't necessarily know what was waiting for us, in terms of licensing the new technology - a first of a kind technology - so we were dealing with a first of a kind environment, and we've learnt a lot in this process. And therefore the predictability on schedule and cost is much better than it used to be in the early days."
We have been waiting since 2004 for an announcement about PBMR's final shareholding. We are told that Westinghouse may increase its percentage and also that oil sand companies in Canada and Sasol are potential investors. But Sasol says pebble bed is just one of a combination of technologies it is looking at to reduce its carbon footprint. Sasol also emphasizes that discussions are still at a very early stage. So can the government give us a concrete answer about shareholding?
Alec: "No. No, that's a matter for negotiation with the parties. What's well-known is that we are in negotiations with Westinghouse. I've already indicated IDC, Eskom and the state, and publically it's also been indicated we've just had discussions with Sasol so the exact amount of the shareholding is something you'll have to wait for the announcement comes and our target is to try and complete that by the end of May."
The end of May has come and gone. Once again PBMR has given us new targets and new dates, asking us to trust their predictions. As a technology, pebble bed may well be viable, that is clear. But the question is whether South Africa, with its limited tax base can afford the endless delays and galloping costs. Professor Steve Thomas does not think so.
Prof. Thomas: "And it's difficult for governments to withdraw when they put so much political capital into a project. So I think what the government is going to need is some sort of exit strategy - something that allows them to save face, and maybe downgrading the project to an R&D development project - I think that may be the way that the South African government can get out of this.
Against the background of rocketing energy and food prices, and the recent evidence of social unrest, it is essential to contain the cost of our energy generation in a prudent way. We need to continue asking questions, and we need to scrutinize even more closely the economics of our energy plans.
IMPORTANT DISCLAIMER:While every attempt has been made to ensure this transcript or summary is accurate, Carte Blanche or its agents cannot be held liable for any claims arising out of inaccuracies caused by human error or electronic fault. This transcript was typed from a transcription recording unit and not from an original script, so due to the possibility of mishearing and the difficulty, in some cases, of identifying individual speakers, errors cannot be ruled out.
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