Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
South Africa’s struggling Eskom state power monopoly must delay plans to wind down its ageing fleet of coal plants if it is to stem rolling blackouts, said the utility’s acting chief, a decision that will complicate the country’s energy transition plans.
Calib Cassim said that Eskom was looking at reprieves for selected power stations that were scheduled to close this decade, as the state company tries to address the severe power cuts, known as load-shedding, that have throttled Africa’s most advanced economy.
“If we can operate these plants for another two to four years with minimal investment, and we can contribute to stopping load-shedding as quickly as possible, that’s the trajectory we’re on,” Cassim, acting chief executive since February, told the Financial Times in an interview.
But he also warned that further delays to decommissioning coal power plants would challenge the efforts by President Cyril Ramaphosa’s government to embrace clean energy. South Africa is one of the world’s most carbon-intense economies, with coal the source of about four-fifths of its energy.
Ramaphosa is engaged in a difficult balancing act to tackle South Africa’s power crisis while pledging to cut emissions to net zero by 2050. Western countries have pledged to support this shift with loans and assistance worth at least $8.5bn, which is growing as more governments make offers, but South Africa must still flesh out its plan for a “just transition”.
“The bottom line is this: if we can’t stop load-shedding in two years, extending the life of the plant by 10 years doesn’t help because it’s doing more damage to the environment,” said Cassim.
Breakdowns and looting of the coal plants have driven the collapse in the reliability of supply in recent years, and these problems triggered the acrimonious exit of André de Ruyter, the latest of several Eskom chief executives in the past decade, this year.
De Ruyter blamed Ramaphosa’s African National Congress for political interference and involvement in the looting, but was blamed in turn for not paying enough attention to the core coal fleet.
Cassim, Eskom’s chief financial officer, was only meant to serve as acting head for weeks but has had to stay in the post for months as the search for a new chief executive has dragged on.
When Cassim agreed to take on the job, “I said I will act quite reluctantly and on a short-term basis, understanding and appreciating stability from a market perspective,” he said. “Initially I thought it would be like a seven-week acting role,” he added. “But we have to keep focused as Eskom . . . we know how critical Eskom is to the economy.”
Ramaphosa is pushing reforms to liberate private investment in renewables and end Eskom’s historic monopoly.
But the pressure to keep better performing plants going for now to lessen power cuts is colliding with the financial strain that would be involved in propping up aged generation plants, as well as the environmental costs. Eskom has already had expensive state relief on huge debts.
“We’re not stopping [shutdowns], we’re just slowing down for about two to three years while we stabilise the supply of electricity,” and the process must involve “minimal capital operational requirements”, Cassim said.
At the same time as lengthening coal shutdown dates, South Africa also needs to catch up on plans to convert the old power stations to sites for clean energy, under the just transition framework. “We see at this point in time a repurposing and repowering future that needs to be agreed, signed off, and more importantly, implemented,” he said.