Just three years away from its 100-year anniversary, Eskom has had a good run as the monopoly supplier of cheap and reliable power to facilitate the growth of the SA economy. But the glory days are long gone as the utility struggles to meet power demand and is burdened with an enormous R450bn debt pile.
Of course, there have been some colossal blunders — incomplete power plants Medupi and Kusile among them — which have landed Eskom in the deep trouble it finds itself in today. Regardless of these, the cold truth is that Eskom has become an anachronism.
As CEO André de Ruyter puts it: "We are arguably the last remaining, very large, vertically integrated power utility in the world. So we are an anomaly. The world of energy has changed around us and we need to change along with it."
It won’t be easy for a state-owned company that’s been centred on coal-fired power, with a dash of nuclear, for almost a century.
A "just energy transition" — the move away from coal towards cleaner technologies — is becoming a well-worn phrase globally and in SA, though one with little substance as the government drags its heels on a tangible plan of action. But it would seem that Eskom, an unlikely candidate, is leading the charge.
The utility last month set up a just transition project office, and issued two expressions of interest — one inviting the market to share ideas on repurposing old power stations generally, and the other on repowering Eskom’s Camden, Grootvlei and Komati power stations.
Camden, Grootvlei and Komati are the oldest of Eskom’s existing fleet, having been built in the 1960s.
All are nearing the end of their 50-year design life, and will face decommissioning in the coming years.
De Ruyter says Eskom wants to repurpose them in a way that can ensure a just transition for the surrounding communities, "so that we don’t disadvantage them by literally and figuratively pulling the plug and just walking away after being a core element of those economies for so many years."
There is added motivation for the project: decommissioning power stations is not a cheap exercise.
Though the actual cost has yet to be determined, it would certainly have to factor in rehabilitation of the surrounding areas, and rigorous environmental monitoring regimes will need to be implemented long after each station is decommissioned.
The costs of long-term rehabilitation place further strain on an already struggling utility, Eskom says in an expression of interest document. "As such, it is vital that innovative solutions with a win-win value proposition be sought and explored to mitigate the potential negative effects of Eskom’s decommissioning programme on all stakeholders."
Andrew Etzinger, head of risk and sustainability at Eskom, says the starting point for any repurposing proposal is financial viability. "Because of our financial position, we can’t consider a situation where Eskom incurs a liability without some revenue generation," he says.
The expression of interest documents indicate that Eskom will put forward the assets, probably leasing them, to prospective industries. First prize would be for a special-purpose vehicle to be created that attracts private funding, and in which Eskom could have a stake.
Energy analyst Chris Yelland points out that power stations, which in SA are typically built next to coal mines, already have infrastructure such as roads, schools and housing. They have skilled workers, are mostly just two hours from Joburg and, of course, are connected to the power grid. All of this would seem to make them appropriate sites for reindustrialisation.
With power stations being connected to the grid and having servitudes in place already, not to mention SA’s power-supply crisis, many repurposing proposals will probably involve new energy generation.
On the renewable energy side, there is good sunshine in Mpumalanga. Though this is not as reliable a source of solar as that in the Northern Cape, the connectivity of the Highveld to the national power grid could give a project located there an edge over one in the Northern Cape, where a grid connection would still have to be built.
There are multiple examples of coal-fired power stations making way for solar farms. In Ontario, Canada, the Nanticoke power plant — once the largest coal-fired plant in North America, and which was closed in 2013 — has been converted to a solar farm generating enough power to supply 7,200 homes. And in Holyoke, Massachusetts, the local coal power plant has made way for PV panels with a battery-storage system.
The Eskom-owned land around the power stations could also be used for wind farms. Though the Highveld isn’t known for strong winds, companies are already testing the resource.
De Ruyter has previously suggested there may be an opportunity to repurpose the power stations using natural gas, while the vacant land surrounding them could be used for wind or solar generation.
In 2017, the Tennessee Valley Authority in the US repurposed an old coal plant to build a natural gas-fired plant and, in doing so, made significant savings on the capital cost — as much as 35%, De Ruyter said in an interview with EE Business Intelligence.
Many energy experts believe gas would be short-sighted, given the pace of technological innovation and shrinking carbon budgets globally. Though cleaner than coal, gas remains a fossil fuel.
Pao-Yu Oei, head of the CoalExit research group in Berlin, says construction of a gas power plant has also been mooted as an option for Jänschwalde, an old lignite power plant in East Germany that is nearing the end of its life.
Unlike the US — but very much like SA — Germany doesn’t have gas infrastructure.
"So there will be additional lock-in for such an investment," says Oei. "Gas is only a bridge technology, maybe we could have used it 10 years ago, but now renewables are cheaper. It’s really dangerous starting to invest in gas now if you can’t get out of it for another 30 or 40 years."
When it comes to the power stations themselves, there are some assets that could be of use in repurposing plans.
Power station turbines are a source of inertia. They rotate at the same frequency as the electricity grid and, in the case of a sudden change in the power system, they can be used as a shock absorber, slowing the rate of change. It’s a key resource that the grid operator can deploy to stabilise the grid, and it will be especially useful as more and more renewables are introduced to the power system.
It’s quite possible that some of the repurposing proposals will consider this. Certainly turbines, and other grid-stabilising capabilities in these power stations, will become increasingly important as plants close and there are fewer rotating masses for the grid operator to rely on.
But the general proposals for repurposing the power stations don’t have to be energy-focused.
Oei says some old power stations in Germany now contribute to industrial tourism in the country, having been converted into night clubs, coffee bars, art galleries and the like.
Given their enormous size, decommissioned power stations could also be suitable for manufacturing activities.
Elsewhere, coal-fired power plants have also been repurposed as data centres, given that they have fantastic connectivity. Google, for example, has converted a power station into a data centre in the US state of Alabama.
Oei notes that SA is an unlikely candidate for this, as such data centres can be located anywhere and a cheap, reliable power supply is key.
But he believes an agricultural initiative is possible around Mpumalanga’s power stations.
Power stations use a lot of water and do their own water treatment, which could make irrigation possible to support agriculture.
This would require rehabilitation and cultivation of the sites, not to mention enormous funding. But it could be punted as a green new deal to development financiers, as it would create jobs and make the area more habitable.
Etzinger says the answer may not lie in a single-use solution, but rather in multiple new activities for one site.
Whatever the proposal, Eskom has made it clear that local content, skills transfer and job creation will be key considerations. After all, the point is to achieve a just transition.
While the utility is showing initiative, Etzinger says the repurposing is not Eskom’s decision to take. "This is not Eskom going it alone," he says. "We are calling for ideas in order to assess options and develop proposals."
The utility still needs to follow due process and discuss the issue with the departments of mineral resources & energy and public enterprises, the National Energy Regulator, and others.
What it means: The answer may not lie in a single-use solution, but rather in multiple new activities for one site
— What it means:
Oei says the German experience of transitioning old power stations and the surrounding communities shows that some initiatives will work, while others won’t. That’s evident in the great number of ghost towns across the European nation.
What’s key, he says, it to create a single vision and foster a "yes we can" mindset around a repurposing or reindustrialisation initiative. "That requires a lot of energy and money to kick off. If you just do a number of small things, they will be like droplets that just disappear."
Jesse Burton, senior associate at think tank E3G and researcher at the University of Cape Town, thinks it’s brilliant that Eskom is leading the charge. Unlike other transitioning countries, where some or all stations are privately owned, SA has a state monopoly in Eskom that would drive the repurposing of power stations and, perhaps a broader just transition, in a co-ordinated manner, says Burton.
"I think it will happen now that there is an organisational home for it in Eskom that will drive it. Now Eskom is thinking like an entity for the 21st century."
A just transition is much more than just repurposing old power stations, says Burton. "You are really rethinking how a whole economy works."
Still, this first step by Eskom could become an anchor for a broader just transition in the Highveld, and give the utility a chance to build up capacity in new technologies as it ends its 100-year love affair with coal.
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