Friday, January 21

Eskom CEO sees end of crisis in coal exchange

South African state power company Eskom sees an opportunity to emerge from years of crisis by shifting from coal-fired power generation to natural gas and renewables, its chief executive told Reuters.

Eskom has implemented power outages for more than a decade in Africa’s most industrialized nation, slowing economic growth and deterring investment. It has approximately R400 billion ($ 25 billion) of debt that it covers through regular government bailouts.

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“Due to the current crisis Eskom is in, very poor plant performance, excessive debt, this gives us the opportunity to really act as the basis for a new distribution in South Africa,” said CEO Andre de Ruyter at the Reuters Next conference.

“Hopefully we can persuade people to come and set up factories here, to build components for renewable energy, which will create jobs that will generate electricity demand that will turn this challenge that we have right now from a downward vicious cycle into a virtuous upward cycle ”, he added.

Eskom operates 15 coal-fired power plants that generate more than 80% of the country’s electricity, but they regularly break down. It also runs Africa’s only nuclear power plant and a handful of small pumped storage, hydroelectric, backup gas plants and a wind farm.

But it plans to shut down some 22,000 megawatts (MW) of end-of-life coal plants by 2035, about half of its current 46,000 MW nominal capacity. The plan is to replace some of that with gas and renewables, and allow independent power producers to make up the shortfall.

The plan to move decisively away from coal has drawn criticism from Mines and Energy Minister Gwede Mantashe, a powerful figure in the ruling African National Congress and a former union leader, who in August compared it to “economic suicide.”

De Ruyter said Eskom had identified two potential gas projects: one with a 3,000 MW capacity at Richards Bay and a 1,000 MW one at its Komati coal plant that is being retired. By 2050, Eskom expects to achieve “net zero” carbon emissions through offset initiatives.

De Ruyter, who took over Eskom in January 2020, said Eskom hoped to get its “lion’s share” of the $ 8.5 billion in funding South Africa got from Western countries in a deal announced at the COP26 climate conference in November.

It will prioritize spending that money on the construction of transmission infrastructure to connect to the best solar and wind surface in the country, as well as on strengthening the distribution network to accommodate more private generation.

Eskom has been trying to improve the performance of its coal fleet through extensive maintenance, but that has not yet paid off. Reflecting the severity of the situation, De Ruyter said it could take another three to four years to see a significant change in the power availability factor of the coal units that are still in operation.

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