The debate about whether or not we need nuclear power is raging among energy experts and policymakers. Sometimes it feels as if the nuclear build programme is a done deal and then it does not feel that way. Bidders have been asked to submit requests for information as govern- ment pushes ahead with its intention to try to fix in the ground, literally and figuratively, plans for new nuclear plants. Wisdom, it seems, will not prevail – or will it? It all depends on who you ask.

Perhaps, the wisest thing to do at the moment is to postpone the decision on nuclear and let time dictate whether it is needed or not. Recently, the World Wide Fund for Nature, the Heinrich Bohl Foundation and the Centre for Renewable and Sustainable Energy hosted an expert workshop on the economics of nuclear.

The meeting did not host any technology vendors – such as Areva, Rosatom or others – as the intention was to objectively focus on trends in the nuclear industry instead of having a conversation that was clouded by promotional speeches and details about the pros and cons of different reactor types. ‘World Nuclear Report’ international lead author Mycle Schneider was hosted by the three organisations and was asked to provide a global picture of nuclear trends and engage local energy experts.

It seems there are four options for South Africa’s nuclear programme: not to build it all; postponing the decision until there are clear signs that we are on a proper economic growth trajectory; building a full fleet of 9.6 GW, which would be the largest nuclear build programme after China’s and would require more careful consideration than has been given to date; and considering a smaller option of perhaps two units instead of six. With respect to the option to build a 9.6 GW fleet, a lot would depend on how one receives the news that South Africa’s demand has tapered down significantly and the fact that a presentation by one of the leading experts on energy in South Africa has shown a pattern of demand and gross domestic product growth distinctly separating from each other. In other words, growth and demand are decoupling, which significantly alters our understanding of the relation between energy supply, economic growth and future demand. There are clear shifts in the relation between demand and economic growth that we need to grapple with more intensely. Some of this analysis will be crystallised in the new round of the Integrated Resource Plan (IRP), which is expected to be released for public comment in the next few months.

The decline in demand witnessed in the past decade or so is largely due to price effects, structural shifts in the economy (service industries have grown, while many heavy industries have closed shop), and there has also been a switch to new types of energy and more efficient equipment. Current demand and demand in the next decade or so can be met by existing committed plants, including renewables, pumped-storage schemes, peaker plants and others.

If you consider bids for smaller coal, gas and more renewables, then we have enough. This precludes the need for either a full fleet of nuclear or a smaller version of the whole hog. And, given the story that the 9.6 GW is more a political number than a technical finding, which was pushed through during the finalisation of IRP 2010, then we should not be religious about the 9.6 GW figure.

The arguments advanced at the nuclear economics workshop demonstrated that finance remains the biggest issue with regard to the nuclear build programme. Even if we went for two units, this would cost around $20-billion. This is based on overnight costs and does not take into account finance costs or potential surcharges due to plant delays and other factors. The South African fiscus is ‘insolvent’, as it simply does not have the money to fund or provide guarantees for a nuclear plant. The National Treasury has already reached the 60% threshold for State guarantees and, if South Africa is to avoid a credit downgrade, we will have to maintain our austerity measures. Even if Eskom wants to build the nuclear plants, this is going to be difficult because the parastatal is stuck with a problematic balance sheet that is becoming an endless black hole, judging from its unending applications to the National Energy Regulator of South Africa for tariff increases and claw-backs using the Regulatory Clearing Account.

Even if vendors were to finance the programme, some would have to deal with their own impaired balance sheets. This is parti- cularly true of EDF, Areva and even Rosatom, if recent financial news reports are anything to go by. These companies are making losses. Even if, for argument’s sake, they were to come up with the money, they would not do so for nothing. Their foreign-currency- denominated financing would have to be backed by a robust long-term contract and a State guarantee. But, as has been pointed out, government’s ability to provide further guarantees is already stretched. Commercial financiers have indicated that they are unlikely to come to the party, as they view nuclear plants as high-risk operations. If they were to provide finance, commercial financiers would likely to do so after construction rather than during the construction phase.

Without the security of finance and guaran- tees, it is hard to see how the full monty of 9.6 GW can ever get off the ground – it seems the fiscal mountain is just too steep a climb.