Eskom lays out funding plan to move away from coal
Utility is considering 8,017MW of projects, ranging from wind power to solar, hydropower and gas, CEO says
Eskom CEO Andre de Ruyter laid out a funding plan to help the company, which generates the bulk of SA’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 $10bn .
The utility is considering 8,017MW 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 SA 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. SA 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 1,566.2MW of solar power; 600MW of wind power; 4,000MW of gas-fired power; 61MW of battery storage; 1,400MW from micro-grids; and 390MW 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 US, UK, 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 ageing 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 R117.8bn will need to be invested in 8,000km of transmission lines.
In a separate presentation, deputy finance minister David Masondo said there were a number of ways to resolve Eskom’s R400bn 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 favour 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.
Bloomberg. More stories like this are available on bloomberg.com
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