Share

No ‘green’ light for new coal power stations

accreditation
Tina Joemat-Pettersson
Tina Joemat-Pettersson

South Africa will know by the end of the month who will be building its first independent coal-fired power stations.

However, any new coal power stations will face increased pressure from environmental groups.

Only two independent power producers submitted bids in November in the first window of the department of energy’s Independent Power Producers (IPP) programme – Thabametsi in Limpopo and Khanyisa in Mpumalanga.

Though the department wants to open another bidding window by the end of the year, environmental activists have lodged appeals against one of the projects in the first bid window and two other prospective bidders.

There is also still no clarity on how the programme fits in with pledges South Africa made in the Paris Agreement, which curbs nations’ greenhouse emissions.

However, spokesperson for the department, Maropeng Ramokgobathi, said: “The Paris Agreement will be discussed further at intergovernmental level, as well as the effect it might have on the country.”

He added that the agreement was reached after the bid process had started. But the department was adamant that all new build programmes were in line with South Africa’s emission strategy.

Ramokgobathi was coy about the details of the bidders, but it is an open secret that only the 600MW Thabametsi and 300MW Khanyisa were able to hand in bids, owing to the onerous regulations.

He said the request for proposals in the first window set qualification criteria such as proven technology, secured funding, lower tariffs than the qualification price, and compliance with environmental standards.

Ramokgobathi said South Africa’s gas-to-power IPP project was also on track. He said the preliminary information memorandum would be released shortly. The request for qualification would go out in September, and the request for proposals would go out in March next year.

For now, the war is on between coal IPPs and environmental groups.

R45 BILLION INVESTMENT IN COAL IPPs

Last month, Energy Minister Tina Joemat-Pettersson said that the preferred bidders from the first bid would be announced this month. The department wants 2 500MW of new coal-generation capacity and 3 126MW for gas in total. Projects in the first bid will have a combined capacity of 900MW at an investment of R45 billion.

The successful bidders will sign a 30-year power purchase agreement with Eskom.

The parastatal’s group executive head of transmission, Thava Govender, this week said Eskom had no input and would only become involved in negotiations once the bids had been selected.

In March, vice-president of Middle East and Africa Power at Japanese developer Marubeni, Yousuf Haffejee, told a Fossil Fuel Foundation conference in Pretoria that other interested bidders pulled out in the first round because all site-related environmental authorisations had to be secured before handing in a bid.

The IPP office set a ceiling price of 82c/kWh, and local companies had to hold at least 51% equity.

Both Thabametsi and Khanyisa started off as projects of big coal-mining companies. In the case of Thabametsi, Exxaro drove the project with French partner GDF Suez, now Engie. But after Engie pulled out, Marubeni stepped in as the lead developer, along with Kepco of Korea. Both Marubeni and Kepco hold a 24.5% stake in the project. Coal for the project will be supplied by Exxaro’s greenfield Thabametsi mine.

Thabametsi’s equity partners also include the Public Investment Corporation. It will use fluidised bed combustion technology. It hopes to be up and running by 2022 and will create 1 315 full-time jobs, according to its environmental impact assessment (EIA).

At Khanyisa, Anglo Coal proposed to build a plant at its Kleinkopje Colliery, but last year shifted all responsibilities to Saudi-owned ACWA Power. It will be fuelled by discarded coal from the colliery. Anglo Coal planned to create between 900 and 1 200 direct jobs during construction, and 100 during operation.

ACWA has also expressed interest in South Africa’s gas-to-power programme, and also developed the Bokpoort Concentrated Solar Plant in the Northern Cape.

ENVIRONMENTAL CONCERNS

The Centre for Environmental Rights (CER), representing various environmental groups, is leading much of the legal challenges against the power stations, and pressured the government to assess Thabametsi’s effect on climate change.

Thabametsi was given the green light by the department of environmental affairs in February last year, but after the CER’s appeal, Environmental Affairs Minister Edna Molewa ordered that a climate change impact assessment be added to the original EIA. The assessment is under way.

Robyn Hugo, programme head of the centre’s climate-change programme, said they expected the final assessments in September. Waiting in the wings are at least nine other potential power producers, she said.

Boikarabelo, KiPower near Delmas and Colenso in KwaZulu-Natal have all been granted environmental authorisation, but the CER has appealed against both KiPower and Colenso.

John James, CEO of Colenso Power and Energy, told Financial Mail that it would apply in the next bid window to build a R10 billion, 300MW coal-fired power station in Colenso after not having the necessary documentation for the first window.

The pressure from environmental groups and South Africa’s Paris Agreement commitments are sure to influence future bid windows. Hugo said the IPP coal project certainly runs counter to South Africa’s emissions commitments under its nationally determined contribution.

“Eskom is also in a position where it has excess power available,” she said. “There is no need for new coal-fired power in South Africa.”

TALK TO US

Does South Africa need more coal power stations?

SMS us on 35697 using the keyword COAL and tell us what you think. SMSes cost R1.50

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Voting Booth
Do you believe that the various planned marches against load shedding will prompt government to bring solutions and resolve the power crisis?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes
21% - 103 votes
No
79% - 398 votes
Vote