Plan to save Eskom to cost more than a trillion by 2030

Speaking at the African Utility Week conference in Cape Town this week, energy minister Jeff Radebe acknowledged that Eskom cannot meet South Africa’s power capacity requirements on its own.

He indicated that capacity extension under the Integrated Resource Plan (IRP) is expected to cost in excess of R1 trillion in the period up to 2030. This cost relates to the building of “new power plants plus the requisite transmission and distribution infrastructure”.

South Africans are among the highest per capita users of electricity in the world, despite the fact that roughly three million households have no access to electricity.

‘Strong signals’

Radebe noted that the Renewable Energy Independent Power Producer (REIPP) programme, initiated by the Department of Energy, has sent out strong signals positioning South Africa as an investment destination for energy infrastructure development. “We have successfully implemented bidding rounds, to which the response has been over R250 billion in investment to date,” he said.

Proposed projects at regional and national level include various interconnecting transmission grids as well as hydropower, gas, thermal, wind and solar developments.

Shift from coal

Eskom CEO Phakamani Hadebe concurred, saying that a new mindset is needed in the energy sector. “At least three of the main South African banks have confirmed that they will no longer fund any coal-powered initiatives,” he said, referring to Standard Bank, Nedbank and FirstRand. “And we are seeing a similar outlook from private fund managers.”

The world has shifted to renewable energy, he added, and although Africa is adopting renewable energy at a slower pace, “we are switching our mindset”.

Hadebe said collaborative partnerships with the private sector are the way forward for the South African energy sector, pointing out that independent power producers (IPPs) are, as a collective, an integral supplier of power to the national grid.

“Just a few months ago, we had to source power daily from Mozambique, and South Africa would have struggled to maintain power supply without that injection,” he said. “In fact, when that power supply from Mozambique was constrained, South Africa moved from stage 2 to stage 4 load shedding.”

Slow transition to low-carbon economy

The National Development Plan requires the development of 10 000 megawatts (MW) of additional capacity by 2025, against the 2013 baseline of 44 000MW, for a total of 54 000MW. In line with government’s commitment to transition to a low-carbon economy, 17 800MW of the 2030 target is expected to come from renewable energy sources, with 5 000MW to be operational by [the end of] 2019 and a further 2 000MW by 2020 leading to a combined total of 7 000MW by 2020.

However, Radebe cautioned that the transition to a low-carbon economy had to be sensitive to the potential impacts on jobs and local economies.

“We have abundant coal reserves in South Africa, and the price of local coal remains relatively low. However, this is counterbalanced by the high carbon content that coal has. The energy sector alone contributes close to 80% towards total emissions, of which 50% [is] from electricity generation and liquid fuel production alone.

“Our vast coal deposits cannot be sterilised simply because we cannot explore technological innovations to exploit the coal,” he said.

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