/ 7 June 2024

Eskom’s decision to keep coal plants running until 2030 could cost R90 billion

Eskom Getty
The Presidential Climate Commission has warned that South Africa risks missing emissions target deadlines amid postponed coal phaseout. (Getty Images)

Postponing the decommissioning of the Hendrina, Grootvlei and Camden power stations could cost Eskom up to R90 billion, according to the state-owned entity’s chief executive, Dan Marokane.

Marokane briefed the Presidential Climate Commission (PCC) on Friday morning on Eskom’s decision to run its three oldest coal-fired power plants until 2030, later than the original decommissioning schedule.

According to Marokane, Eskom expects that revenue from continuing to run the power stations — about R102 billion — will cancel out the additional cost to the utility.

Marokane emphasised that the delayed decommission was in the interest of energy security, noting: “For us as Eskom, in looking at the programme for decommissioning power stations, we had to take into consideration the reality and the threat that still remains with regard to load-shedding.”

Eskom will continuously reassess the board-approved decommissioning timeline, Marokane said.

Eskom’s decision to keep Hendrina, Grootvlei and Camden online is a bone of contention between the power utility and the PCC, which released its first assessment of climate action in South Africa on Friday.

The State of Climate Action report notes that although there is hope that South Africa could achieve its 2030 nationally determined contribution (NDC) emissions targets, the delayed decommissioning could throw a spanner in the works.

The report cites the government’s draft Sectoral Emissions Target report, released for public comment in April, which indicates that if key policies — such as the original decommissioning plan — are not achieved, the 2030 NDC targets may not be achieved. 

Commissioners grilled Marokane about Eskom’s decision, questioning whether — in the context of increased renewable investment — future demand on the utility justifies running the power stations until 2030. They also asked about the cost to people’s health. 

Last October, the Centre for Research on Energy and Clean Air released a report which found that delaying the power plant decommissioning to 2030 and beyond would cause a projected 15 300 excess air pollution-related deaths. Total economic costs would be in the region of R345 billion, according to the report’s projections.

To assuage concerns about the delay’s climate-related consequences, Marokane said the three power plants make use of much better emissions technology compared to the rest of Eskom’s fleet.

The State of Climate Action report’s key finding is that although there are strong commitments to tackle climate change, progress is not happening at the required pace and scale.

“Key barriers hindering progress include incoherent policies, weak governance structures, insufficient finance and inconsistent actions by the government and other stakeholders,” the report states.

The report notes that only 28 of the 95 actions outlined by the National Climate Change Adaptation Strategy are listed as fully implemented or in the process of being implemented.

According to the report, climate action suffers from contradictory public positions — including on the coal phaseout — as the government “wrestles with immediate trade-offs between energy security, economic growth, the health impacts of pollution from fossil fuels and climate commitments”. 

The report also flags limited investments in the just transition, noting that tracked annual climate finance reached R131 billion a year on average from 2019 to 2021. This was an all-time high but it is still far from the average annual estimated requirement of R334 billion to R535 billion.