Video: Enlit Africa Conference 2024 where the Eskom’s Executive team addresses the decommissioning of power stations.
Opinion
- Going off queue at one of Africa’s premier energy events, Enlit Africa, which took place in Cape Town last week, newly appointed Eskom CEO, Mr Dan Marokane, said that some coal-fired power stations will need to be run for longer than their planned retirement deadlines to avoid leaving the national grid ‘vulnerable’.
- The announcement may have been a populist one ahead of the national elections which took place yesterday.
- The ruling party, the ANC, has used Eskom as part of a broader developmental state programme and job security means votes.
The announcement is also not new as parliament endorsed the life extension of coal power plants, which was proposed by the country’s Electricity Minister, Dr Kgosientsho Ramokgopa, last year in April. At the time, the country faced its biggest energy crisis where households and businesses faced up to 16 hours of load shedding (blackouts) daily. However, things have improved since then with no load-shedding events in the past two months. This is largely due to a drop in demand for power generated by Eskom as the private sector has started to self-generate and trade electricity at scale since the amendment of Section 2 of the Electricity Regulation Act by the Department of Mineral Resources and Energy (DMRE) in August 2021, which allows the operation of a generation facility with a capacity of up to 100MW without obtaining a licence from the National Energy Regulator of South Africa. It is also due to improved generation performance at Eskom coal power stations.
A 2023 grid survey study carried out by the South African Photovoltaic Industry Association (SAPVIA) and their partners reveals that 13305MW of solar PV and 19572MW of solar PV with battery storage plus 21000MW of wind and 7500MW of wind and storage are ‘shovel ready’ (construction ready) or close to it. Read more
It is estimated that in addition to the 505 923 direct jobs that will be created, 698 769 indirect jobs will result if 15% of South Africa’s electricity is generated from renewable energy across six different technologies. Read more
Specifically, the Eskom board has approved a plan to keep Hendrina, Camden and Grootvlei in use. The ageing plants were scheduled to close leading up to 2030. But the demand for Eskom power is expected to continue to drop leading up to 2030 which should accelerate the closure of ageing coal plants.
Eskom weekly peak demand outlook leading into Q1 2025. Image credit: Eskom
“We’ll continue some of our coal operations that were earmarked for shutting down. We will review that process on shorter time intervals going to 2030, but we’ll place ourselves in a position where we are not made vulnerable by early shutting down of those stations,” said Marokane.
Also speaking at the event, Eskom’s head of generation, Bheki Nxumalo, said that it’s critical to run some stations beyond their original shutdown date citing that workers lose focus if the imminent closure of the plant they work in is looming.
New JET plan?
Earlier this month South Africa said that it would provide a new timeline for the shutdown of coal-fired power plants in a bid to ensure the country remains on track to obtain funding under the so-called Just Energy Transition Partnership — a US$9.3-billion pact with some of the world’s richest nations. The new timeline is expected to be presented in next month but a national election held yesterday may usher in a new coalition government which may change things.
“What we are presenting to the CIF is an adjustment to the decommissioning plan linked to an emissions target that we have to achieve,” said Neil Cole, a finance manager at the Project Management Unit, which is overseeing the JETP for South Africa, within the presidency.
If the proposal is accepted, South Africa will secure $500 million of 10- to 30-year loans with an interest rate of less than 1% and a grace period of eight years from the World Bank-affiliated CIF, Cole said in an interview with Bloomberg.
At COP 26 in November 2021, the governments of South Africa, France, Germany, the United Kingdom and the United States of America, along with the European Union, issued a Political Declaration announcing a new ambitious, long-term Just Energy Transition Partnership (JETP) with a combined pledge of US$ 8,5 billion in funding. The International Partners Group (IPG) as it is called, aims to accelerate the decarbonisation of South Africa’s economy to help it achieve the ambitious goals set out in South Africa’s updated Nationally Determined Contribution emissions goals.
Late last year, South Africa’s Cabinet approved the Just Energy Transition Implementation Plan, but there has been a pushback from factions within the ruling party. The Secretary General of the ruling ANC party in South Africa, Fikile Mbalula, has slammed the investment partnership offer saying that the pact is responsible for the country’s blackouts. South Africa’s energy minister, Gwede Mantashe, snubbed a US1 billion green energy MOU announcement with Denmark and The Netherlands. Read more
South Africa’s failed decommissioning and repurposing of the Komati coal fired power station which was conducted from the top down instead of the bottom up, does not help matters. The shortcomings has left a bad mark on the country’s energy transition. Read more
Related news: Additional US$3.5 billion pledge for South Africa’s JET plan but pushback from labour and energy minister remain
A ‘Just’ approach
A ‘Just’ approach underpins the Plan, aiming to ensure that those most directly affected by a transition from coal – workers and communities including women and girls – are not left behind. It identifies $98 billion in financial requirements over five years to begin South Africa’s 20-year energy transition. Investment will be required from both the public and private sectors.
The funding package will be disbursed through various mechanisms over five years including grants, concessional loan investments and risk-sharing instruments. The IPG’s funding will align with the Investment Plan and be geared towards coal plant de-commissioning; funding alternative employment in coal mining areas; investments which will facilitate accelerated deployment of renewable energy and investments in new sectors of the green economy.
Related news: Vietnam signs landmark US$ 15 billion JET plan deal for a transition away from coal power
In November last year, a joint 12-month update to leaders by South Africa and the IPG summarises key technical progress that has contributed to the development of the JETP Investment Plan. It, and the preceding six-month update to leaders, also outline measures undertaken by the government of South Africa to strengthen the enabling environment for South Africa’s long-term energy transition.
The IPG’s initial $8.5 billion funding package includes:
- $2.6 billion through the Climate Investment Funds Accelerating Coal Transition Investment Plan (CIF ACT);
- $1 billion from France;
- $1 billion from Germany;
- $1.8 billion from the UK;
- $1 billion from the US;
- $1 billion from the EU
Some of this funding is already programmed while other parts of it have still to be finalised and programmed in line with the final Investment Plan. Work to programme the full $8.5 billion will continue in the coming months.
In addition to the $8.5 billion, the World Bank Board has recently approved the Eskom Just Energy Transition project which is providing $0.5 billion of financing in support of South Africa’s Just Energy Transition.
A real opportunity now exists for South Africa to take a significant step in its energy transition but will the election outcome and associated political risk of losing jobs again delay the implementation?
Author: Bryan Groenendaal
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