The Minister of Electricity Kgosientsho Ramokgopa has raised concerns about the difficult choices that must be made by the Cabinet regarding trade-offs between meeting climate goals and ensuring energy security in South Africa. The country committed to an ambitious nationally determined contribution (NDC) at COP26, which involves reducing carbon emissions to combat global warming. Meeting this goal requires Eskom to stick to its planned schedule of decommissioning coal-fired units, but this has affected the grid’s energy capacity and led to load shedding. Minister Ramokgopa conducted a tour of 16 power stations nationwide and highlighted the tough decisions that must be made.
NDC and Funding at Stake for SA
South Africa needs to make choices that could determine its future in terms of electrification and the economy. The trade-off is between meeting the country’s commitments on climate change by reducing energy generated from coal and ensuring energy security with an energy supply that can support business growth, development and job creation. The NDC and $8.5 billion worth of concessional funding are in jeopardy if South Africa does not meet its commitments to reduce emissions. Also, Eskom’s investment in the transmission grid to connect more renewable energy is tied to the funding.
Ramokgopa and his tour of 16 Power Stations Nationwide
Minister Ramokgopa’s concerns are evident in the state of the grid, which is facing significant capacity gaps brought on by the forced decommissioning of coal-fired units. He fears that if Eskom proceeds to decommission Tutuka, which has been performing poorly with an EAF of 26%, it could lead to plunging South Africa into darkness and undermine its developmental goals altogether. At present, the country is short of 6,000 MW just to break even and power its economy. The maths do not add up, as the minister says, due to the short-term plans to decommission power units.
He emphasized that the quickest gains could be made at Tutuka; however, Eskom is short on funds for investing in the necessary infrastructure, such as cost-plus mines. The cost-plus mines, which are partially owned by Eskom, require significant investment to expand and improve their coal quality. To improve output and performance, investments in cost-plus mines are required at Matimba, Tutuka, Lethabo, and Matla power stations. Majuba needs to invest in a milling plant, and Kriel needs to address cooling tower issues.
The Financial Conundrum
Providing Eskom with additional electric support, however, is another conundrum. Eskom’s shortfalls are putting pressure on the economy, lowering the tax revenue, growth, and employment. Eskom’s inability to invest in its cost-plus mines and infrastructure is directly linked to the financial crunch it faces. While Treasury has given Eskom debt relief, it has prohibited the energy utility from borrowing without prior approval. Minister Ramokgopa said the government might consider private investments where Eskom retains ownership but benefits from additional funds.
South Africa finds itself at a crossroads when it comes to electricity production and meeting the global commitments on climate change. Reconciling the trade-off between meeting environmental goals and ensuring energy security remains a challenging task that requires the government’s support. To become a low carbon economy, South Africa must embrace renewable energy sources and limit the use of coal. However, to meet its current energy demands, Eskom needs its coal-fired plants operational. Minister Ramokgopa’s tour has brought the severity of the capacity shortfalls due to Eskom’s decommissioning and poor performance, to the fore. The government has to reconcile this and take steps to improve the energy capacity to support SA’s economy and the environment.