Public Enterprises Minister Lynne Brown has called on Eskom to urgently complete socioeconomic impact assessments for its coal-fired power stations in Mpumalanga, five of which having been earmarked for decommissioning over the coming five years, owing to flat demand and the introduction of new Eskom and independent power producer (IPP) capacity.

Speaking at the release of a socioeconomic impact assessment compiled by KPMG Services for the Koeberg power station, in the Western Cape, Brown said the studies were required to provide an empirical basis for deliberations on the future of the stations as South Africa transitioned towards a more diversified electricity mix. She also indicated that the outcome might influence deliberations on the Integrated Resource Plan (IRP), which should be updated in 2017.

The Koeberg study offered an overwhelmingly positive assessment, estimating the plant’s contribution to the Western Cape economy over the past three years at R29-billion, while also sustaining 1 700 direct jobs and a further 14 000 indirect jobs. Koeberg is Africa’s only nuclear power station, with an installed capacity of 1 860 MW, which services half of the Western Cape’s electricity demand.

Eskom interim CEO Matshela Koko said the Koeberg study took two months to complete and that studies for the five coal-fired power stations earmarked for accelerated decommissioning – Hendrina, Kriel, Komati, Grootvlei and Camden – were currently being treated as a priority.

THINK TWICE

“We hope that, once the studies are complete and we see the social and economic impact for those plants, we will think twice and we will put all our efforts into ensuring that we don’t close these power stations,” Koko said, indicating that the board had, in 2016, endorsed a fleet-renewal strategy to extend the life of the existing power stations from 50 to 60 years.

Given South Africa’s weak economic condition Brown argued that the country could not afford to lose any jobs. “I have spoken with Eskom about this, I would like to see the Mpumalanga socioeconomic study to be the next study undertaken.”

She also indicated that South African needed to deal with the way the energy-mix transition took place through the IRP so that it did not “put Eskom on the back foot financially” – an issue that she would raise at the upcoming Inter-Ministerial Committee on Energy next week.

However, in light of the current surplus, Eskom insists that it will need to start closing units at the five stations from as early as March 2018.

To do so, social and labour plans were required prior, with two trade unions ¬– the National Union of Mineworkers (NUM) and the National Union of Metalworkers of South Africa – having already voiced opposition to the retirement of the plants. The NUM said this week that it would embark on mass protest action against the decommissioning plan, which it said threatened 50 000 direct and indirect jobs.

The retirement plan also served as the trigger for a March 1 protest by the Coal Transportation Forum, whose members blocked key roads to Pretoria as part of their protest to the Union Buildings.

“We are expected, by law, to have a social plan for those plants that may be retired. But the social plan will not be adequate without having understood the socioeconomic impacts of these individual power stations. Consequently, we are now extending this study done at Koeberg to these five power stations so that we are able to have a meaningful conversation about what to do with these power stations and to coordinate the value-chain as well,” Koko said during a presentation at Koeberg.

ENERGY-INTENSIVE GROWTH?

However, he also indicated that the timing of any closure could be influenced by demand for electricity, which has remained flat for nearly a decade, owing to weak economic growth and suppressed demand associated with electricity shortages.

Eskom intends raising export sales by 8% a year between 2017/18 and 2020/21 and increasing domestic sales by 2.1% a year over the same period. However, a failure to do so is likely to result in power station closures.

The utility recently signed a supply agreement with NamPower, Namibia’s electricity utility, and Koko would sign similar deals with utilities in Zimbabwe and Zambia in the coming weeks.

In addition, the State-owned utility had approached the Energy Intensive User Group of Southern Africa (EIUG) to discuss the kinds of electricity pricing arrangements that would enable its members to help restart idle mining and smelting activities.

“We are engaging with energy-intensive users and I recently met with AngloGold Ashanti and we continue to engaget. And the question I put on the table is: what is it in your operation that is constrained by electricity . . . let’s talk about it and let’s agree on a tariff that will allow you to ramp up production.”

The EIUG has indicated that it supports the plan and has told Engineering News Online that there is policy, legislative and regulatory space to introduce new electricity pricing arrangements.

“All our energy plans are dependent on whether we have energy-intensive growth,” Koko said.