SAREC COMMENTS ON COAL-FIRED PLANTS DECOMMISSIONING AND MANAGING JOB LOSSES
The South African Renewable Energy Council (SAREC) comments on Eskom ‘reconsidering’ the closure of four coal fired plants in Mpumalanga.
It is a widely known and accepted fact that all coal power stations will eventually close. But not because of renewable power. In fact, Eskom has had a plan to close its coal plants since they were first commissioned.
“Coal plants have a limited life, as do the mines that feed them. Eskom’s generation license requires these plants to be decommissioned as they reach the end of their design life and become too expensive to operate and maintain, so it is completely misleading to blame renewables for this natural process,” stated Brenda Martin, Chair of SAREC.
The job losses related to coal-fired power station closure are not insignificant, and Eskom as owner and operator of those plants has had a long-standing duty to address such losses through its planning. Blaming long-standing plans for power station closure on South Africa’s 4-year old renewables programme is misleading.
Nevertheless, the Renewable Energy Independent Power Procurement Programme (REI4P) has created over 26 000 jobs in just four years. In the construction phase, over 13 000 more jobs are legally committed by the Independent Power Producers (IPPs) affected by delayed Power Purchase Agreements (PPAs). To date, IPPs have exceeded their job-creation commitments. Supply chain advantages associated with policy stability, will create the circumstances for further renewable power jobs to be created. In short, Eskom is in a position both to address coal plant job losses and to enable job creation through duly procured renewable power.
It is imperative that SA’s Renewable Energy power industry is allowed to mature in line with Ministerial determinations. This will result in fuller supply chain effects, with further direct job creation and jobs-intensive enterprise development and industrialisation potential.
“Reduced coal consumption has been part of Government’s stated policy since at least 2009 when in Copenhagen President Zuma pledged to slash the country’s polluting greenhouse gas emissions by 34% below business-as-usual levels by 2020, and by 42% by 2025,” reiterated Brenda Martin, Chair of SAREC.
In 2010, the ‘Policy Adjusted’ IRP included a reduction of coal sourced electricity from 90% to 65% by 2030. In 2012, the NDP stated that 11 000 MW of ageing coal-fired stations would be decommissioned which would reduce coal consumption. All the draft IRP 2016 scenarios provide for coal-fired plants to run up to 2050. Most of the existing coal plants are scheduled to retire by then as they reach end of life. Aligned with this, and as numerous Eskom annual reports will confirm, the Utility has been planning coal-fired power station retirements for many years.
In achieving South Africa’s transition away from coal-fired power, ensuring that policy reflects the commitment to ensuring that a just transition is achieved, is vital. A just transition will take into account that coal-fired power station closure will not happen overnight, will allow for due care to be taken so that job losses are managed, employees re-skilled where possible and new jobs created that are directly or indirectly related to SA’s changing power mix.
• The coal mining sector in 2016 employed ~80 000 people (Chamber of Mines). 50% of local coal is used by Eskom, so roughly ~40 000 people are linked to ‘Eskom coal mines’.
• Eskom itself employs 48 000 people, but less than 10% are in the generation division. There are obviously many contractors also employed at coal plants, but we are not sure how many.
• Given the overall employment at Eskom Generation and coal mines linked to Eskom of ~45 000 (excludes contractors to Eskom plants and transport companies), the claim that 30 to 40 0000 jobs are affected by 5 plants closing seems exaggerated.
• According to IRP 2010, about 10 000 MW of coal fired power plants were to be decommissioned by 2030. Kusile and Medupi coming online with about 8 700 MW would make up for most of that, so ultimately there is a very small reduction in coal usage by Eskom up to then. It seems the IRP 2016 base case assumes more or less the same, and the least cost (high RE) scenario works on the same assumption as the base case.
• Government policy to move away from coal has been clear for years. The closure of coal plants and the construction of renewables is an inevitable feature of that landscape, driven by multiple policy objectives:
• SA commitment to reduce CO2 emissions are indicated in LTMS, Copenhagen commitments and INDCs.
• South Africa’s most recent climate change commitments as indicated in the INDC, is that the emissions trajectory will need to peak by 2025 at a maximum of 614 MtCO2eq and be maintained until its gradual decline in 2035, reaching a low of 428 MtCO2eq by 2050.
• The INDC is an integral part of the internationally binding Paris Agreement South Africa ratified in 2016.
• The clear economic advantage of renewables as the lowest cost supply option.
• The advantage of relying on private investors to finance and build these plants is that public monies are freed up to focus on provision of critical public goods, such as healthcare, education, electrification of homes and the construction of a modern smart grid.
• The reduction of risk by shifting to fuel-free sources of generation, thereby protecting consumers from exposure to commodity price and exchange rate risks inherent in coal, gas, nuclear and liquid fuel plants.