Eskom

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Eskom is an electricity utility that is publicly owned by the South African government. On its website Eskom states that it "generates, transports and distributes approximately 95% of South Africa’s electricity - making up 60% of the total electricity consumed on the African continent."[1] Eskom also states that it is the world's eleventh-largest power utility in terms of generating capacity.

Eskom currently has 13 coal-fired power stations which have an installed capacity of 37 698 megawatts (MW). Three of these power stations -- Camden Power Station, Komati Power Station and Grootvlei Power Station with a combined installed capacity of 3,780 MW -- were mothballed in 1990. The Camden power station was recommissioned in 2008 along with two 125MW units at Komati and another two 200MW units at Grootvlei coming online.[2] Eskom also operates the Koeberg nuclear power station, which has a net output of 1,800 MW. In addition, Eskom has two conventional hydroelectric power stations and two hydro pumped storage schemes with a total installed capacity of capacity of 2,000 MW, all of which are used for peaking capacity.

Eskom also has four gas turbine power stations which have an installed capacity of 1,378 MW. Two of these are old open cycle gas turbine stations (OCGT’s) which run on kerosene but which are only used at times of extreme need due to their high operating costs. Two newer diesel-fuelled power stations, which were commissioned in March 2007, are used to meet peak loads.

Eskom has been called the "worst polluter" on the continent of Africa. Eskom also accounts for more than 60 percent of all the electricity generated on the continent[3]

South African government electricity plan and Eskom's 'new build' program

After years of substantial overcapacity, the recent rapid growth of the South African economy and generation constraints led the South African government to propose a massive expansion of the electricity generation system. However, instead of relying solely on the publicly owned electricity utility, Eskom, to undertake the expansion, the government directed that 30% of the new capacity be provided by independent power producers. In 2004 the South African Cabinet approved a total five-year expansion plan costing R93 billion with Eskom funding R84 billion of that. Subsequently, Eskom increased its projected electricity demand forecast from 2.3% per annum to 4% and is now planning to spend R150 billion in the five-year period to 2011-2012 in order to cater for the government's target gross domestic product growth rate of 6%. "Under the revised plan, we will deliver an additional 22 000 megawatts (MW) by 2017," states Eskom.[4]

In 2005 Eskom embarked on a massive "new build" plan which has already resulted in just over 4,500 of new capacity with plans to build a further 16,304MW by 2017. Eskom also claims that by 2026 it will "double its capacity to 80 000MW". The projected costs are staggering. Eskom currently estimates that it will spend 385 billion rand [approximately $US51 billion] "up to 2013" and a total of "more than a trillion rand [$USD397 billion] by 2026."[2]

In the wake of widespread blackouts, described by the Department of Minerals and Energy as "load shedding", the South African government re-iterated in January 2008 the need for urgent measures to increase the ability of the electricity system to cater for peak demand and allow sufficient time for necessary maintenance. Setting a target of having 15% reserve peak capacity, the government cautioned that in the absence of major changes that "the risk of risk of load shedding will remain high until at least 2013."[5]

The government also noted that "the price of electricity in South Africa is very low compared to other countries around the world. Many countries have also embarked upon large build programmes and the gap between South Africa and the rest of the world is widening.". In particular it noted that the "‘Gap’ to next cheapest [country] increased to 74% in 2007 from 30% in 2006", that "current pricing is half of the replacement value of power plant" and that "increases above inflation will be needed to fund capacity expansion."[5] To help fund the cost of the massive construction programme, Eskom has been granted permission to increase its electricity tariff by 27.5 percent in the 2008/09 financial year.[6] However, according to a 2011 BankTrack report, 25% of South Africans have no access to electricity, and 33% have only limited access. While poor urban households are forced to spend around 20% of their income on energy, Apartheid-era “special pricing agreements” give companies lower guaranteed rates. After the approval of the Medupi project in April 2010, electricity prices for households went up 137% by 2011, forcing many poor people to curtail electricity use or drop off the grid. Eskom has announced additional rises of at least 25% to finance Kusile.[7]

Eskom's commissioning of new capacity, as of April 2009, is scheduled to be:[8]

Megawatts 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 Total
Grootvlei power station 800 0 0 0 0 0 0 0 800
Komati power station 125 325 300 0 0 0 0 0 750
Arnot power station 70 30 0 0 0 0 0 0 100
Medupi power station 0 0 0 1588 794 1588 794 0 4764
Kusile power station 0 0 0 0 1600 800 1600 800 4800
Ingula (pumped storage) 0 0 0 338 1014 0 0 0 1352
Total 995 355 300 1926 3408 2388 2394 800 12566

World Bank Approves $3.75B loan for Eskom Plant

On April 8, 2010 the World Bank voted to approve a $3.75 billion loan for South African utility Eskom to build a 4800 mw coal-fired power plant. The United States abstained from voting on the measure.[9] It was the first World Bank loan to the country since the fall of Apartheid in the mid-1990s. Critics, however, were not pleased with the World Bank's decision to fund the coal plant, even though the loan had provisions for other energy technologies like wind and solar. Other countries that abstained from the vote included the U.K., Netherlands and Italy.[10]

Environmentalists Oppose World Bank Loan to Eskom

In late February 2010, climate change activists and concerned individuals from about the globe voiced their objection to the $3 billion loan that would fund two new coal-fired power plants in South Africa that would be operated by Eskom. The groups, which includes Climate Justice Now, groundWork and the Federation for a Sustainable Environment, vowed to pressure country directors within the World Bank to vote against the loan in March 2010 and also said they would revive the World Bank "bond boycott" that was launched last decade to end structural adjustment programs and anti-environmental project funded by the Bank.[11]

World Bank & Coal Power in South Africa .

In order to power the new coal plants, over 40 new mines would have to be opened up in the region. The proposed plants would also increase utility rates to consumers. Large environmental groups such as the Sierra Club have signed on to a petition that opposes the loan.[12]

Report finds World Bank did not consider externalities of Eskom Plant

A March 2011 report by the Center for International Environmental Law (CIEL), “Fossilized Thinking: The World Bank, Eskom, and the Real Cost of Coal” examined the economics underlying the World Bank’s $3 billion loan for the Eskom plant, evaluating whether the Bank adequately considered the project's impacts on human health and the environment and the likely economic costs of these impacts. The Bank’s operational policies require that such externalities be taken into account to determine whether a project’s long-term economic benefits outweigh its costs.

CIEL’s analysis concluded that the Bank failed to adequately address and quantify important negative environmental effects, such as water scarcity and quality, air quality, and transboundary impacts. Nor did the Bank fully address the public health impacts associated with the environmental consequences of coal-based power. Steve Porter, Climate Program Director at CIEL, said: “This project highlights a broader problem in World Bank funding. Because all of the costs have not been accounted for, coal projects like Eskom have been unfairly favored, which means that there has never been a real consideration of alternatives, such as wind, solar and other alternative energy sources.”

The report was released as the World Bank conducts an Energy Strategy Review process, as well as a review of the Eskom project by the Bank’s Inspection Panel. CIEL’s report calls on The World Bank to consider the social and environmental impacts of Eskom, but the Inspection Panel is unlikely to issue its report before the conclusion of the Energy Strategy Review.

World Bank Panel criticizes bank loan approval

In December 2011, an 18-month investigation by the World Bank Inspection Panel concluded that the bank insufficiently took health, water scarcity and pressures on local services into account when approving the loan, yet the decision did not violate World Bank climate change policies because the World Bank does not have explicit emission targets. The panel did say that it found the World Bank's steps to mitigate Medupi's estimated 25 million metric tons of greenhouse gas emissions lacking, and that the World Bank's statement that its partnership with South Africa will lower the country's emissions trajectory was "overly optimistic ... given that Medupi will emit significant levels of GHG emissions." The inspection panel was most critical when it came to water, finding that the expansion of the Grootegeluk coal mine to supply Medupi will result in significant water scarcity and pollution problems.[13]

World Bank approves solar energy project at coal-plants

In November 2011, it was reported that Eskom obtained $615 million in loans from the World Bank and African Development Bank to develop a 100-megawatt wind power plant will be online in 2013. The solar project is expected to be up and running by 2016. The utility has a net maximum electricity generation capacity of 41,194 megawatts, of which coal accounts for 85 percent and renewable energy less than 1.5 percent.[14]

Ex-Im Bank approves $805 million loan for Kusile Plant

On April, 14, 2011 Black & Veatch Corp. won preliminary approval for $805.6 million in financing from the U.S. Export-Import Bank for a coal-fired power plant in South Africa. The Kusile Power Station, being developed by Eskom Holdings Ltd for South Africa's Mpumalanga Province, will include six units and have a total capacity of 4,800 megawatts.[15][16]

On May 31, 2011, Eskom announced that the Export-Import Bank of the United States (Ex-Im Bank) had given its initial approval for an $805 million (R5.78 billion) loan to help Eskom continue to build the Kusile Power Station in the Mpumalanga Province. The final vote on the Ex-Im Bank’s loan for Kusile is expected in approximately 35 days after a mandatory Congressional notification period.

The South African government has indicated that it is not in a position to contribute any further funds to its Kusile and Medupi Power Station projects. In the case of Medupi, additional financing is coming from the World Bank.

The plant is expected to emit an estimated 36.8 million tonnes of CO2-equivalent per year once it is completed, the 4800 megawatt Kusile coal power plant is forecast to increase South Africa’s greenhouse gas emissions – already the biggest in Africa – by nearly 10%. In addition, it’s projected to consume more than a billion gallons of water annually and release various health-threatening pollutants into the air. South Africa has extensive coal reserves and is generating more than 90% of its electricity supply through it.[17]

Existing Eskom Power Stations

Eskom's current power stations are:[18]

Coal-fired stations

  • Arnot Power Station: 2,140 MW installed capacity comprising 4 X 350 MW units and 2 X 370MW units. The power station is located at Middelburg, Mpumalanga;
  • Duvha Power Station: 3,600 MW installed capacity comprising 6 X 600 MW units.The power station is located at Witbank, Mpumalanga
  • Hendrina Power Station: 2,000 MW installed capacity comprising 10 X 200 MW units. The power station is located at Hendrina, Mpumalanga.
  • Kendal Power Station: 4,116 MW installed capacity comprising 6 X 686 MW units. The power station is located at Witbank, Mpumalanga
  • Kriel Power Station: 3,000 MW installed capacity comprising 6 X 500 MW units. The power station is located at Kriel, Mpumalanga
  • Lethabo Power Station: 3,708 MW installed capacity comprising 6 X 618 MW units. The power station is located at Sasolburg, Free State
  • Majuba Power Station: 4,110 MW installed capacity comprising 3 X 657 MW units and 3 X 713 MW units. The power station is located at Volksrust, Mpumalanga.
  • Matimba Power Station: 3,990 MW installed capacity comprising 6 X 665 MW units. The power station is located at Ellisras, Northern Province
  • Matla Power Station: 3,600 MW installed capacity comprising 6 X 600 MW units. The power station is located at Kriel, Mpumalanga.
  • Tutuka Power Station: 3,654 MW installed capacity comprising 6 X 609 MW units. The power station is located at Standerton, Mpumalanga.
  • Camden Power Station: 1,580 MW installed capacity comprising 6 X 200 MW units and 2 X 190 MW units. The power station is located at Ermelo, Mpumalanga.

Currently Mothballed coal-fired stations

The following coal-fired power stations were mothballed in 1990 and are currently in the process of being recommissioned, which started in 2005.

  • Grootvlei Power Station: 1 200 MW installed capacity comprising 6 X 200 MW units. The power station is located at Balfour, Mpumalanga.
  • Komati Power Station: 1 000 MW installed capacity comprising 5 X 100 MW units and 4 X 125 MW units. The power station is located at Middelburg, Mpumalanga.

Proposed new coal-fired power stations

  • Arnot Power station upgrade
  • Kusile Power Station, a 4,800 MW power station which is currently under construction.
  • Medupi Power Station, a 3,152MW power station which is currently under construction.
  • Underground coal gasification plant, a proposed 2,100MW power station making use of underground coal gasification technology. Eskom said it may start designing the project at the end of 2011, and the first electricity could be delivered by March 2020, with the full station completed by September 2022. Eskom’s budget for the project is around R1.5 billion up to 2013.[19]

Nuclear station

  • Koeberg: 1,930 MW installed capacity comprising 2 X 920 MW) units. The power station is located at Melkbosstrand, Western Cape.

Conventional hydro stations – Orange River

  • Gariep: 360 MW installed capacity comprising 4 X 90 MW units. The power station is located at Norvalspont, Free State.
  • Vanderkloof: 240 MW installed capacity comprising 2 X 120 MW units. The power station is located at Petrusville, Northern Cape.

Pumped storage schemes

  • Drakensberg: 1000 MW installed capacity comprising 4 X 250 MW turbines. The power station is located at Bergville, KwaZulu Natal.
  • Palmiet: 400 MW installed capacity comprising 2X 200 MW turbines. The power station is located at Grabouw, Western Cape.

Gas fired stations

  • Acacia: 171 MW installed capacity comprising 3 X 57 MW units. The power station is located at Cape Town, Western Cape.
  • Port Rex: 171 MW installed capacity comprising 3 X 57 MW units. The power station is located at East London, Eastern Cape.
  • Ankerlig 592 MW installed capacity comprising 4 x 148 MW units. The power station is located at Atlantis, Western Cape.
  • Gourikwa 444 MW installed capacity comprising 3 x 148 MW units. The power station is located at Mossel Bay, Western Cape.

Greenhouse gas emissions

Eskom is the country's largest carbon emitter, accounting for 45 percent (230.3 million metric tons) of SA’s total CO² emissions in 2011.[20]

Eskom calls for 15 new coal mines

In July 2011, Eskom said it would need two-billion tons in new coal supplies to meet the demand of its current and planned coal-fired power stations over their operational lives. Eskom said that about 15 new coal mines, mainly in the Mpumalanga area, would have to come on line in the next two to four years, and that R100-billion would have to be invested in the domestic coal mining industry over the next seven years.

Eskom is working with State-owned logistics company Transnet Freight Rail on the construction of a heavy haul rail link between the Waterberg and existing power stations in Mpumalanga.[21]

Citizen Action

June 2011: Greenpeace dumps coal at Eskom

On June 27, 2011, Greenpeace protesters blocked one of the entrances of the Eskom headquarters with five tons of coal, to publicly demand that Eskom stop the construction of the Kusile Power Station and shift to renewables. The activists held banners calling on Eskom to clean up its act and stop coal.

The Kusile coal-fired power plant will be one of the biggest coal-fired power stations in the world, with 4,800 MW of power production, using 17 million tons of coal per year. According to Greenpeace, their action highlighted the true cost of Eskom’s addiction to coal: environmental destruction at every step, the pollution of scarce water supplies, and the destruction of people’s health and wellbeing.

Greenpeace Africa’s climate and energy campaigner Melita Steele said: “To date, Eskom’s investments in renewable energy are limited to tiny projects of 100MW of wind and 100MW of solar. This illustrates Eskom’s lack of commitment to a sustainable future for South Africa.”

Greenpeace Africa’s 2011 report, "The Advanced Energy (R)evolution", says that South Africa - as the largest CO2 emitter on the continent, and the 12th largest in the world - has a moral responsibility to address climate change, and that switching to 50% renewables by 2030 would create 150,000 direct jobs.

According to Steele, “Greenpeace has tried repeatedly to engage with Eskom about its addiction to coal and nuclear energy. Eskom has however not shown any intention of changing its tune. Today Greenpeace publicly calls on Eskom to clean up its act."[22]

November 2011: Greenpeace protests South African coal plant, 9 arrested

Authorities arrested nine people at the Kusile power station near Witbank in South Africa on November 7, 2011. Greenpeace activists chained themselves to a gate while others climbed a crane to protest dependence on coal just weeks before the country hosts a global conference on climate change. The plant is owned by the state-owned power company Eskom, the country's number one greenhouse gas emitter.[23]

Reports

Water

The 2012 Greenpeace report, "Coal's Hidden Water Cost" argues that the Medupi and Kusile power stations under Eskom construction, as well as the new coal mines being approved for them, lack a clear assessment of what the water impacts will likely be, or where the water will come from. The report also finds that local communities may lose their water rights for the mines.

External costs of Kusile

The 2011 report, "The True Cost of Coal: The monstrous price of South Africa's coal addiction" by Greenpeace Africa and the University of Pretoria’s Business Enterprises unit calculates the full costs of Eskom's Kusile Power Station, from climate change to water use, and the impact on health and the environment. It was estimated that the damage caused by Kusile will cost South Africa between R31.2 billion and R60.6 billion a year, and that just 30% of Kusile’s externality cost would be able to generate five times the coal station’s proposed power with renewable energy. Roughly 70% of the total cost was water-related.

Plants will raise local rates

According to a 2011 BankTrack report, 25% of South Africans have no access to electricity, and 33% have only limited access. While poor urban households are forced to spend around 20% of their income on energy, Apartheid-era “special pricing agreements” give companies lower guaranteed rates. After the approval of the Medupi project in April 2010, electricity prices for households went up 137% by 2011, forcing many poor people to curtail electricity use or drop off the grid. Eskom has announced additional rises of at least 25% to finance Kusile.[24]

Major financiers

The 2011 report, "Bankrolling Climate Change: A Look into the Portfolios of the World’s Largest Banks" by Earthlife Africa Johannesburg and BankTrack, researched the coal financing of 93 large banks and found that 26 were involved in financing Eskom, providing the company with 3.7 billion Euro from 2005 to 2011. The top financiers were Crédit Agricole / Calyon, JPMorgan Chase, Deutsche Bank, Barclays, and HSBC.[25] The German government-owned KfW IPEX-Bank has also provided financing to Eskom.[26]

Personnel

Contact Details

Eskom
PO Box 1091
Johannesburg 2001
South Africa
Phone: +27 11 800 8111
Website: http://www.eskom.co.za/live/index.php

Articles and Resources

References

  1. Eskom, "About Us", Eskom website, accessed June 2008.
  2. 2.0 2.1 Eskom, "New Build Programme", Eskom website, accessed May 2010.
  3. "Eskom key reason South Africa is big polluter" Donna Bryson, Associated Press, November 24, 2011.
  4. "Build Programme", Eskom website, November 2007.
  5. 5.0 5.1 South African government, "National Response to South Africa's Electricity Shortage", January 2008.
  6. Phumza Macanda, "S.Africa retail sales dip, rate rise still on cards", Reuters, June 18, 2008.
  7. "Bankrolling Climate Change: A Look into the Portfolios of the World’s Largest Banks" Earthlife Africa Johannesburg and BankTrack, 2011 Report.
  8. Eskom, " Status Report on Capacity Expansion Projects", Eskom website, accessed may 2010.
  9. "U.S. abstains on vote to proliferate coal in South Africa" Climate Progress, April 8, 2010.
  10. "South Africa wins $3.75 billion coal loan" Climate Wire, April 9, 2010.
  11. "Eskom told to charge companies fair rates ", Business Report, February 23, 2010.
  12. "Eskom's R29 billion World Bank loan runs into opposition", Business Report, February 23, 2010.
  13. Lisa Friedman, "Auditors find World Bank skipped policy steps in approving huge South African coal plant" E&E, December 2, 2011.
  14. "Eskom Plans Solar Energy Projects at Coal-Fired Plants" Jana Marais, Bloomberg, November 21, 2011.
  15. "South African Coal Plant Wins U.S. Backing Over Environmentalist Protests" Mark Drajem, Bloomberg, April 14, 2011.
  16. "Ex-Im Bank Gives Preliminary Approval For $800M Loan To South Africa Power Plant" Wall Street Journal, April 14, 2011.
  17. Andreas Spath, "US To Finance Dirty Coal Power In South Africa" Care 2 Care, May 30, 2011.
  18. "Contact Information", Eskom website, accessed June 2008.
  19. "Eskom intends building coal-to-gas power station" ESI.Africa, May 31, 2011.
  20. Suren Naidoo, "Sasol tops list of emitters" IOL News, December 7, 2011.
  21. Loni Prinsloo, "Eskom says 15 new Mpumalanga coal mines needed by 2015" Mining Weekly, July 15, 2011.
  22. "Greenpeace demands Eskom cleans up its act" My Broadband, June 27, 2011.
  23. "Greenpeace protests SAfrica coal plant; 9 arrests" Associated Press, Donna Bryson, November 7, 2011.
  24. "Bankrolling Climate Change: A Look into the Portfolios of the World’s Largest Banks" Earthlife Africa Johannesburg and BankTrack, 2011 Report.
  25. "Bankrolling Climate Change: A Look into the Portfolios of the World’s Largest Banks" Earthlife Africa Johannesburg and BankTrack, 2011.
  26. "Eskom secures €250m loan from Germany's KFW IPEX Bank," Engineering News, Sep. 10, 2008.

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