17 September 2010
The South African government has taken the tough decision to cut its losses and cancel further investment in the Pebble Bed Modular Reactor project. While technologically sound, and potentially ideal for developing countries, the PBMR has been unable to secure sufficient investment to keep it going.
South Africa was at the forefront of developing the new nuclear technology that, its proponents argued, was safe, clean and, because it could be adopted in small-scale and modular fashion, ideally suited to the needs of developing countries.
However, the government, “after careful deliberation, analysis and review, and mindful of the fiscal constraints in these hard economic times, has had to make a decision no longer to invest in this project,” Public Enterprises Minister Barbara Hogan told Parliament in Cape Town on Thursday.
Hogan said the scale and size of the PBMR company was now being reduced to a few people, with the focus now on the retention of its intellectual property and certain of its skills, and the preservation of its assets.
Decision ‘not taken lightly’
She said the government’s decision had not been taken lightly, and that it was mindful of the impact this would have on the careers and livelihoods of the PBMR employees.
“Nor have we lost sight of the significant investment already made by government in this project and the impressive scientific advances already achieved in pioneering this particular form of nuclear technology,” Hogan said.
The minister said the government had to consider the fact that the PBMR has not been able to secure an anchor customer or another investment partner, and that further investment in the project could well be in excess of an additional R30-billion.
Over the last few years, a total of R9.244-billion had been invested in the project, of which the government had contributed 80.3%, or R7.419-billion. State electricity company Eskom had contributed 8.8%, with Westinghouse and the Industrial Development Corporation accounting for 4.9% each.
The project has been missing deadlines constantly, with the construction of the first demonstration model delayed further and further into the future. Additionally, the opportunity afforded to the PBMR to participate in the US’s Next Generation Nuclear Plant programme as part of the Westinghouse consortium was lost in May when Westinghouse withdrew from the programme.
Should South Africa embark on a nuclear build programme in the future, it would not use Pebble Bed Technology, which is still primarily in the research and design phase.
“Finally, the severity of the current economic downturn, and the strains that it has placed on the fiscus, as well as the nature and scale of government’s current developmental priorities, has forced government to reprioritise its spending obligations and therefore, of necessity, to make certain tough decisions – this being one of them,” Hogan said.
‘Care and maintenance mode’
The government had commissioned an independent high-level review of the project, with an inter-departmental task team evaluating the options available.
Several of the task team’s recommendations had been approved by Cabinet, including that the PBMR be placed in “care and maintenance mode” in order to protect its assets and intellectual property.
The company will be downsized by 75%; about 600 employees have already left in terms of prescribed procedures. Retrenchment of the remaining staff will continue, while the PBMR’s Fuel Development Laboratory will be decommissioned.
A Helium Test Facility at the University of North West will only be mothballed if the university decides it does not wish to continue using the facility. The Departments of Higher Education and Energy will seek to continue supporting nuclear graduate programmes at universities that benefited from PBMR-related investment.
However, the closing of the project would inevitably result in some leakage of skills. At the same time, Hogan said, “we do envisage the further up-skilling and training of a younger generation of scientists and technicians who have benefitted from our investments in PBMR.”
A full review and audit of the project, still to be conducted, would help to capture the lessons to be learnt from such an undertaking, and identify any outstanding steps that still needed to be taken, Hogan said.
The technology in itself ‘fully viable’
A feasibility study on the project started in 2000, and in 2003 the National Nuclear Regulator reported a positive view on the possibility of licensing the PBMR. In 2005, the PBMR’s focus shifted to work needed for licensing a demonstration power plant and the detailed design work required for manufacturing long lead-time items for the plant.
The funding given by government was intended to ensure continuation of the project, while providing a firm foundation for acquiring an anchor customer and additional private sector investment for the project.
It was originally envisaged that Eskom would be the PBMR’s anchor customer, purchasing up to 24 PBMR reactors, with a first demonstration PBMR to be built at Koeberg Nuclear Power Station site in Cape Town.
“It is absolutely clear from all the high-level reviews that have been undertaken that there is no doubt about the validity of Pebble Bed Technology itself,” Hogan said.
“The main feature of the Pebble Bed Reactor is that its safety features are inherent in the physics of the design, as opposed to add-on engineered safety features, as found on current Light Water Reactor nuclear plants.
“However, between 2005 and 2009, it became increasingly clear that, based on the direct-cycle electricity design, PBMR’s potential investor and customer market was severely restricted, and it was unable to acquire either [investors or customers].”