Eskom CEO upbeat over convincing climate funders on coal fleet delay

Eskom CEO Dan Marokane says the power utility has managed to present a strong case to SA’s global funders under the Just Energy Transition Partnership (JETP) that its decision to delay the mothballing of its ageing coal fleet is in the country’s interest.

Marokane, who has presided over more than 100 days of uninterrupted power supply, was speaking on the sidelines of the investment conference hosted by Standard Bank, Africa’s largest bank by assets.

He allayed fears that the utility’s decision to delay the closure of its coal-fired power station would antagonise rich nations which have pledged financial support for SA’s transition from coal to renewable energy.

“They [the just transition funders] understand why we are doing it,” he said.

“They understand that the decision comes from an energy security perspective, but it also gives us an opportunity to prepare for the transition.

“We need to see ourselves launching projects that are taking us to the next phase and then we can say we will close the coal fleet,” he said.

Sanctioned

Marokane, who assumed control of Eskom in March, announced in May that the power company’s board had sanctioned the extension of Camden, Hendrina and Grootvlei power stations’ operations until 2030.

Previous decommissioning schedules provided for the Grootvlei and Camden power stations to be fully decommissioned by 2025 and Hendrina by 2026.

The UK, Germany, France, the US and the EU have committed more than $8bn to help SA reduce emissions and transition away from coal.

In 2022, Eskom decommissioned Komati, a power station operational since 1961. Situated in SA’s coal-rich Mpumalanga region, the facility was shut down with the intention to repurpose it into a renewable energy hub boasting 150MW of photovoltaic energy, 70MW of wind generating capacity, 150MW of battery energy storage system and synchronous condenser.

Mistakes made

However, Marokane said mistakes were made in how the plant was closed and the “just” element of it was lacking,

The utility hosted a delegation from the World Bank to get a sense of the impact of Komati’s closure on the local community, he said.

Marokane said the entity was playing “catch-up” in addressing the just leg of the just transition regarding Komati, and that mistakes were made in how the plant was retired, and that things will be done differently in future.

“You need to put all the transition interventions in place as you go towards the switch-over. And this is what we are trying to do now. In Komati’s case, we are doing it retrospectively, but for the rest of the stations that will be closed next, we have to start the work now.”

Komati’s mistakes must be avoided to avoid polarising society as renewable and base load energy could coexist, he said.

The decision to delay the closure of the coal plants is likely to cause SA to come under the scrutiny of Europe’s authorities.

Fair price

The EU, SA’s largest trading partner, is expected to phase in its carbon border adjustment mechanism (CBAM) from 2026 to 2034. It will initially cover imports of iron and steel, cement, aluminium, fertiliser, hydrogen and electricity.

CBAM is the EU’s tool to put a fair price on the carbon emitted during the production of carbon-intensive goods entering the EU.

The SA Reserve Bank has warned that the implementation of CBAM could slash SA’s exports 10% by 2050, wiping out about 2.6-million jobs.

Marokane said his team was scouring the world for technologies that would enable the power utility to extend the life of its coal fleet in an environmentally responsible way.

Priscillah Mabelane, chair of Eskom’s National Transmission Company SA (NTCSA), which this month officially began trading, has called on SA’s banks to innovate their funding of energy projects. This is as the entity embarks on a process to raise billions of rand needed to build 14,000km of new transmission lines in the next decade.

Malebane said that despite the previously touted R350bn price tag, the new company was still determining the financial implications.

“We are focusing on priority projects. We will be connecting about 37GW of renewable energy to the grid and that connectivity will help us to expand the network. The priority is to get the substation on board and build new transmission lines,” she said.

A variety of funding solutions were available. “Part of it will be self-funding. As a board we are engaging with the shareholder to finalise different funding models,” she said.

khumalok@businesslive.co.za