HomeAfrica-NewsSouth Africa's energy transition soars in the east

South Africa’s energy transition soars in the east

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Mpumalanga, historically the heart of South Africa’s coal-fired power industry, will need R60.4 billion to move to a greener tomorrow, according to the country’s presidency. With its abundance of coal mines and aging coal-fired power stations, the province faces an uncertain future as coal freezes out of South Africa’s clean future.

The architects of the country’s new energy deal, the Just Energy Transition Plan (JETP), advocate an alternative economic diversification strategy that will include not only renewable energy opportunities, but also support for jobs in tourism, agriculture, and mine rehabilitation.

The transition will change Mpumalanga’s economy forever, according to the new deal. “The provincial economy is highly dependent on coal for employment, the municipal fee base and community development activities,” the plan states.

The JETP and the investment plan released by the presidency on the eve of the United Nations COP27 climate change conference in Egypt, held from 6 to 18 November 2022, set out four priority investment areas for Mpumalanga: first , reuse coal power plants and coal mining lands; second, build economic diversification; third, help with the transition of workers and communities; and lastly, build favorable conditions for the transition.

The Komati model

The reuse of old power plants is already underway. Komati, one of Mpumalanga’s oldest power stations, was decommissioned in October in what is seen as a model for reuse.

Situated halfway between the cities of Middelburg and Bethal, Komati had been in operation since 1961 and was a minor power station in the fleet of the state utility Eskom, only generating around one gigawatt of power.

Mandy Rambharos, former general manager of Just Energy Transition at Eskom, who was heavily involved in defining the JETP deal, said the power company was learning by doing. Komati was the first step in this learning process.

He explained that Komati was being used to demonstrate how old power plants can be reused. Next in line under Eskom’s plan are the Camden and Hendrina plants, due to close between 2023 and 2025.

Shortly before President Cyril Ramaphosa published the investment plan (known as JET-IP), the World Bank approved a loan of $497 million (around R9 billion) to finance the decommissioning and repowering of Komati using renewable energy. and batteries.

Eskom plans to use the loan to install 150 megawatts of solar power, with some panels placed directly on top of old mining ash piles, as well as 150MW of battery storage and 70MW of wind power. Komati’s 193 employees have been offered alternative jobs from Eskom.

Heart of coal: Mpumalanga produces 83% of the country’s coal, and 12 of Eskom’s 15 coal-fired power plants are located in two of the province’s districts. (Jeremy Glyn)

More than a heart of coal

Lebogang Mulaisi, commissioner of the Presidential Climate Commission and head of policy for the Cosatu union, explained at a COP27 side event that Mpumalanga has much more potential than simply being the heart of South Africa’s coal sector. Mine rehabilitation, for example, can be a serious intervention, while agriculture should also play an important role in the transition, he said.

“This is not just about moving workers from one sector to another, it must be about fair wages and creating better new opportunities. Listen to the people who will be affected,” Mulaisi said.

Mpumalanga produces 83% of the country’s coal, and 12 of Eskom’s 15 coal-fired power plants are located in two of the province’s districts. About 85% of South African coal mining jobs are in Mpumalanga.

JET-IP recognizes that Mpumalanga residents suffer from the negative environmental and economic effects of the coal industry. This includes “air and water pollution and the destruction of high value agricultural land related to coal mining. A just transition is an opportunity to address both current development challenges and the impacts of a coal phase-down,” the document states.

It also says that Mpumalanga has important advantages that could support the just transition, including an existing industrial base and experienced workforce, excellent wind and solar resources, and proximity to electricity hubs and transmission infrastructure.

In setting up the JETP deal, climate commission officials consulted people in Mpumalanga, but found that people are deeply ambivalent about the green transition. They are well aware of the destructiveness of a carbon-intensive economy and the social consequences of jobs like coal shipping. However, they are deeply looking forward to the change that is coming.

Daniel Mminele, head of the President’s Task Force on Climate Finance: ‘We are working to translate the commitment into a tangible form.’ (Photo courtesy of the SA government)

Retire an aging fleet

By 2035, Eskom plans to close nine power plants, most of them in Mpumalanga, removing 15 GW of power and putting up to 55,000 jobs at risk. The JET plan states that South Africa’s aging fleet of coal-fired power plants, totaling 39 GW and with an average lifespan of 42 years, will “be retired over the next three decades, with 22 GW to be decommissioned by 2035.”

Many of these power plants are at the end of their useful lives and Eskom will have to forge a new path for power plants that makes use of existing infrastructure such as transmission lines.

“The closure of the coal fleet will directly affect some 90,000 coal workers at mines and power stations in the poverty-stricken province of Mpumalanga, where the industry is concentrated, with dire consequences for the largest number of livelihoods of workers in the sector, both in Mpumalanga and in other parts of the country,” the plan says. The entire value chain, from mining and electricity production to end-use sectors, employed nearly 200,000 people in 2020.

The closures and phasing out of coal mean no new jobs are being created in the sector, and young workers will not enter the coal mining workforce.

“Between 4,500 and 7,500 new jobs will not materialize,” the plan states. “Older workers often leave the sector before the official retirement age. Over the decade, nearly 18,500 older workers will leave coal mining and many will require social support.”

An additional 3,000 to 9,000 job losses are estimated to be attributed to declining coal demand over the 2020-30 period, especially after 2025.

Daniel Mminele, head of the President’s Climate Finance Task Force, is well aware of the economic impact of the transition and believes that no one should be left behind in the process, least of all the Mpumalanga coal workers.

“While the JETP is a strong commitment, we are working to translate the commitment into a tangible way, with favorable terms and conditions for our country that will not negatively impact future generations of South Africa,” he said.

Made with Flourish

Mpumalanga reimagined

It will be crucial to retrain workers in affected industries. Economists at the International Renewable Energy Agency said in a recent report on renewable jobs that to truly move to a new green economy, jobs cannot simply switch to electricity generation once again. South Africa’s JET-IP researchers agree: new jobs must be created in renewable manufacturing, and South Africa must invest in the industry.

So Eskom plans to train workers and open a factory at the Komati site to produce microgrids, and mobile solar power units are being built in old shipping containers. The ambition is to employ 500 full-time workers producing 900 units a year.

Eskom is also encouraging wind and solar power operators to set up shop in Mpumalanga, with its readily available transmission lines, by auctioning off surplus land. The first round resulted in contracts for 2GW of power, according to Eskom.

The architects of JET-IP believe that its results should contribute to building economic resilience in Mpumalanga communities, restoring the environment, creating better jobs and helping to ensure human capacity and capacities. But achieving this transition will require significant investments, fueled by funding already committed.

Here’s the deal: French President Emmanuel Macron (left) receives JET-IP from President Ramaphosa as US Special Presidential Envoy on Climate Change John Kerry and EU Chief Ursula van der Leyden , watch the Sharm El-Sheikh Climate Implementation Summit in Egypt. (Photo courtesy of the US State Service)

Real money

At COP26 in Glasgow late last year, European donor governments pledged $8.5 billion for South Africa’s transition. At COP27 this year, the first real money began to flow to South Africa since the deal when the country secured loan deals of 600 million euros (R10.7 billion) from France and Germany.

Funds from the $8.5 billion JETP settlement are expected to be disbursed over the next five years. Just before COP27, Ramaphosa said that around 2.7% of the funding would be in the form of grants, while the rest would be loans and concessional loans from various financial institutions, raising concerns about debt levels of South Africa.

The president said that $7.7 billion has been allocated to the power sector. Green hydrogen projects will receive $700 million and the electric vehicle sector $200 million.

But he noted that this was just a drop in the bucket: South Africa’s electricity sector will need R648 billion over the next five years for generation, storage and grid infrastructure. This includes R242 billion for wind power, R233 billion for solar power, R132 billion for transmission, R23 billion for batteries, R14 billion for distribution and R4 billion for decommissioning of coal plants, Ramaphosa said.

Yolandi Groenewald is associate editor of Oxpeckers Investigative Environmental Journalism specialized in the business and politics of climate change. This research is part of the Oxpeckers series #PowerTracker interrogating financial flows for power generation projects in Mpumalanga

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