NEWS

South Africa: Pretoria is pivoting back to energy realism with King Coal

For over a century, Eskom has held a monopoly on electricity supply in South Africa. However, the severe blackouts, that have notably escalated to historical highs during President Cyril Ramaphosa’s term in office, has prompted various South African municipalities to explore alternative power solutions towards liberating themselves from Eskom’s and the grip of the Department of Minerals and Energy (DMRE).

Cape Town has notably initiated a rooftop solar scheme with a feed in tariff to alleviate daytime load shedding, while the capital city, Pretoria, is pursuing a unique strategy under Mayor Cilliers Brink’s leadership that includes leasing out the Rooiwal and Pretoria West Power Stations, which were built almost 70 years ago.

Brink aims to secure 1000 MW, almost half of the Tshwane’s Municipality’s 2200 MW electricity demand through independent power stations, focusing on the dormant Rooiwal and Pretoria West Power Stations with respective nameplate capacities of 300 MW and 180 MW each.

Due to the lack of revenue from electricity sales, the city accumulated an additional debt of R1.8 billion in 2023 alone, primarily attributed to the unpredictable phases of load shedding. By the end of December 2023, Tshwane’s total debt to Eskom had surged to R4.2bn, sparking a dispute between the two entities. The ineffective reflection of costs in the tariffs of National Energy Regulator of South Africa (Nersa) compels Tshwane to sell electricity to its customers at a loss. The overall economic impact on Tshwane and the larger Gauteng province is likely immeasurable, given the missed opportunities resulting from the absence of reliable dispatchable electricity – a crucial catalyst for economic growth.

After an inspection in early 2023 revealed the potential of the Rooiwal Coal Power Plant, Brink sees the continual use of coal at this plant as a viable short-term solution. However, a capital investment is necessary to extend the plant’s design life from 60 to 70, or 80 years. The feasibility of this approach will be assessed during Tshwane’s Request for Proposal (RFP) phase. The solution will be weighed against the various alternatives proposed. Despite Rooiwal being an old plant, the plan is to lease out the land with an operations and maintenance contract. The Council already approved the first part of the process, which involves leasing the land, at the end of January 2024.

The railway is currently not in good condition, but the thinking is that an investment in this site will provide an incentive for Transnet to start improving their own performance.

The mysterious history of the Rooiwal Power Station raises questions about a past ANC administration’s decision to shut it down. Despite the potential operational lifespan extension, the city spent around R130m per year for a decade to keep the power plant idle. The power station was shut down around 2013/14 and for almost 10 years nothing occurred at the plant. There are no minutes available to trace the reasons behind the decision when the current Minister of Electricity, Dr Kgosientsho Ramokgopa, served as the then Mayor of Pretoria.

The Pretoria West Power Station, in contrast, is in poor condition, with stripped switchboards and a dysfunctional railway line. It might be more feasible to replace the old power station with other options such as natural gas, HELE coal, small modular nuclear power or a combination of solar, wind and battery storage technologies.

According to Dr Lardo Stander, the chief economist at City of Tshwane Metropolitan Municipality, and a past president of the South African Association for Energy Economics, Pretoria is not going to discriminate against any electricity source. He made it clear to me that they will even be open to new HELE Coal Power Stations, on the condition that the net zero targets are met through other offset mechanisms.

Incidentally, the city’s Climate Action Plan, a climate plan endorsed by the C40 Climate Leadership Group, and which has been approved by the Council, already intends to offset CO2 emissions through substantial “tree planting” and other decarbonisation initiatives. Both sites have grid access, but the optimal grid solution will have to be determined. Tshwane’s Energy Task Team has initiated a contract with the CSIR to study the city’s ageing electricity infrastructure.

The city remains open to various energy sources, with Dr Stander favouring the “value for money” metric over the “least cost” approach outlined in the DMRE’s 2023 Integrated Resources Plan.

Proximity to industrial parks necessitates meeting industrial demand for dispatchable energy.

The City Council, facing financial constraints, plans to lease out the power stations. Future off-take agreements for the additional energy generated will be matched to identified city clients and most likely be structured through power purchase agreements at fixed tariffs with periodic escalations, ensuring investor certainty. The executive mayor’s office is eager to conclude these initiatives before the upcoming mayoral election, underscoring their commitment to breaking free from Eskom’s monopoly. With Council approval already secured for leasing the two sites, the next step is to issue the request for proposal.

There are still technical issues to resolve, including the impact of Eskom’s unbundling, the role of Nersa, and the ability of Eskom’s system operator to implement load shedding. These aspects still need to be addressed.

The City of Tshwane wants to complete this project to bring energy security to its residents and businesses in the next 18 months.

https://www.iol.co.za/business-report/economy/pretoria-is-pivoting-back-to-energy-realism-with-king-coal-cc2653cb-fe69-4e40-bbe5-0a4eb94099bb