Eskom Insists It Has ‘Shovel-Ready Projects’ Amid Questions Over Maturity Of Pipeline

Electricity utility Eskom insists that it has a pipeline of generation, transmission and distribution projects that it could start implementing immediately should it secure access to “finance, human resources and expedited regulatory approvals”.

During a recent interview, Andre de Ruyter told that the lion’s share of the $8.5-billion in climate finance offered to South Africa should, once converted into transactions, be directed to Eskom, largely because the utility’s projects were at a more advanced stage than the alternatives and were “in some instances, shovel-ready and good to go”.

The COP26 offer, which has not been universally embraced within government, despite a Cabinet-level endorsement, is also earmarked for the stimulation of electric vehicle and green hydrogen production in South Africa.

De Ruyter’s shovel-ready assertion has been questioned by some close observers, however, who believe that much project preparation work is still required to firm up the pipeline, including projects linked to Eskom’s Just Energy Transition strategy.

In response to questions on these concerns, the utility again argued that funding, rather than project preparation, remained the main obstacle to several small and large developments.

“Examples include completed project development for small photovoltaic plants at existing power stations that already have environmental authorisations,” Eskom said, while noting that the larger projects would require a Section 34 determination.

“We are also ready to fabricate and assemble microgrids at Komati Power Station – again the financing and regulatory approvals pending.

“For our transmission projects, again we require the financing and approvals and the unblocking of access to servitudes.

“In other words, the pre-feasibility work for these projects has been completed, and we now require the financing and approvals for implementation.”

De Ruyter has indicated previously that Eskom aims to find a financial solution to enable it to invest R400-billion over the coming 13 years. This expenditure would be used to partly help close prevailing and future generation supply gaps, as well as to build the grid infrastructure needed to facilitate private investment in generation.

He is on record as stating that Eskom could add about 8 GW of mostly new renewables electricity generation over the period, during which it would be decommissioning some 22 GW of coal. The balance of the generation capacity would have to be added by non-Eskom investors.

In addition, about 8 000 km of transmission lines and new substations will be required to unlock South Africa’s “best solar and wind acreage”, while expenditure is also needed to upgrade the country’s distribution infrastructure to guarantee supply to businesses and households, while enabling embedded generators to inject energy into the network.

“So we would really like to see these transactions being implemented speedily and that we can start getting access to that money in order for us to avoid running into a time crunch like we’ve seen in the past with Eskom, with Medupi and Kusile, where we really started construction far too late and then made a number of mistakes in the process,” De Ruyter said during a recent interview.

Eskom does view life-extension of the existing coal stations to be a feasible option for closing the supply gap, but it will continue to focus on improving the fleet’s poor performance through its reliability maintenance programme.

“[We have] already extended the dead-stop dates for some of these plants.

“However, Eskom will not be able to extend the life of any coal plant, as this is not a viable option in many respects, including economically and environmentally.”

The utility dismissed suggestions of its being anti-coal, arguing that such a narrative was not supported by the facts.

“The reality is Eskom will remain a substantial consumer of coal for a very long time – the two new coal-fired power stations will remain in operation for at least 50 more years.

“However, given financial, environmental and market pressures, we are irrevocably committed to the implementation of a Just Energy Transition to steadily but responsibly move to enabling the decarbonisation of South Africa’s generation capacity.”

www.ferroalloynet.com