South Africa’s Power Giant Lays Out Plan to Move Away From Coal
Eskom Holdings SOC Ltd. Chief Executive Officer Andre de Ruyter laid out a funding plan to help the company, which generates the bulk of South Africa’s power from coal, transition away from the use of the dirtiest fossil fuel.
De Ruyter said the company is proposing a multi lender loan facility from development finance institutions that would be paid out in segments over a number of years. Mandy Rambharos, the head of Eskom’s just energy transition department, has previously said the transition could cost $10 billion.
The utility is considering 8,017 megawatts of projects, ranging from wind power to solar, hydropower and gas, he said in a presentation to the Presidential Climate Commission on Friday. The Komati coal-fired power plant will be the first to be switched and serve as a pilot project for the conversion of a number of other facilities.
Eskom and South Africa are under pressure to cut emissions of greenhouse gases and other pollutants as parts of the country are among the world’s most-polluted and the utility accounts for about two-fifths of the country’s emissions. South Africa is the world’s 12th-biggest emitter of the climate-warming gases.
The funding will be advanced on a “pay-for-performance” basis and will be paid out as projects progress, he said.
The projects being considered consist of:
- 1,566.2 megawatts of solar power
- 600 megawatts of wind power
- 4,000 megawatts of gas-fired power
- 61 megawatts of battery storage
- 1,400 megawatts from micro-grids
- 390 megawatts from pumped storage, a type of hydro power
The World Bank has expressed support and has said Eskom’s transition plans are the most developed it has seen worldwide, according to the presentation. Institutions from the U.S., U.K., France and Germany have also expressed support for them, it said.
Rolling out the infrastructure could generate over 300,000 jobs, de Ruyter said.
De Ruyter also said the country, which Eskom has subjected to intermittent power cuts for more than a decade due to its aging and insufficient infrastructure, has insufficient transmission infrastructure, especially in the west of the country. He said transmission lines take about seven years to build and estimated 117.8 billion rand will need to be invested in 8,000 kilometers (4,971 miles) of transmission lines.
In a separate presentation, Deputy Finance Minister David Masondo said there were a number of ways to resolve Eskom’s 400 billion-rand ($27-billion) debt burden, including asking for debt forgiveness at the sovereign level in exchange for meeting climate goals. An equivalent amount would then be given to Eskom as an equity injection, he said.
Other options include listing the company on a stock exchange or inviting foreign utilities to take a stake. Masondo said he isn’t in favor of shifting a portion of Eskom’s debt onto the state balance sheet or putting it in a special-purpose vehicle.
The proposals aren’t the views of the National Treasury, he said.
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