23 July 2018 at 10:47 am
Even without taking into account the health, environmental, and climate change costs of its pollution, Eskom’s 2017/18 financial results show that it is in dire financial trouble, largely because of the escalating costs of Medupi and Kusile and the rising coal costs. Studies support a few big interventions to drastically improve the situation.
We call for immediate action by the Department of Public Enterprises and other government departments to accelerate the phase-out of old, expensive, and non-compliant coal-fired power stations, and to stop building the last over-priced units at Kusile. Meridian Economics’ November 2017 report reached the “unavoidable conclusion” that Eskom “is still spending vast amounts of capital on a power station construction programme that South Africa does not need and cannot afford”. It found that decommissioning 3 stations and curtailing Kusile could lead to savings of between R15 and 17 billion – without affecting security of supply. The Campaign also continues to call for a meaningful programme for a just transition to a clean energy system, with social ownership to safeguard workers and communities.
The Department of Energy must urgently release the Integrated Resource Plan for Electricity and it must be least-cost. There is no room for costly private coal plants and no ‘carbon space’ for further emissions. The Energy Research Centre’s recent report demonstrates that the two proposed coal-fired power independent power producers (IPPs), Thabametsi and Khanyisa, would not only significantly raise the total energy system costs and enormously increase greenhouse gas emissions, compared to a scenario without the coal IPPs, but would have a negative impact on Eskom’s solvency, by making electricity unaffordable and “reducing the output of Eskom’s fleet, potentially accelerating the ‘utility death spiral’ in which Eskom already finds itself and putting the electricity supply industry – and thus the South African economy – at risk”.
Urgent steps must be taken to restore Eskom’s financial health. Ideally, it should be transformed into an organ of state that promotes clean, healthy, affordable energy for everyone – becoming the owner of significant renewable energy assets in the interest of all, of cheap, clean electricity for South Africans, including support for local and community ownership of renewable energy facilities.
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