The shift from coal as a major source of power generation is set to plunge the industry into crisis and lead to job losses, a new report by the University of Cape Town has revealed.
The report, titled 'Coal transitions in South Africa', argues that a gradual pull-back from coal-fired power plants, and pressure to reduce greenhouse emissions, will have a negative impact on the future of the sector.
It suggests that government must find solutions to re-skill workers and limit the impact associated with the transition, particularly on towns in Mpumalanga, the country’s main coal-producing region.
"There is no question that the changing face of the South African energy landscape will have an effect on jobs in the coal mining and coal-fired energy sector," says Jesse Burton of UCT’s Energy Research Centre, who was the principal researcher on the report.
The report follows the release of government’s Integrated Resources Plan (IRP) for 2018, which outlines the country’s electricity need up until 2030.
According to the IRP, coal will account for 46% or 34 000 MW of the installed capacity mix up until the year 2030. Even though coal will be lower than the current installed base, it will still contribute more than 65% of energy volumes.
Burton says coal's gradual phasing out means government "urgently needs to find solutions to re-skill workers and limit the impact associated with the transition".
More than 90% of South Africa’s electricity produced by Eskom is currently generated from coal.
Eskom is currently building two significant coal power stations, Kusile and Medupi, which are expected to come online fully by 2022.
The report says Eskom’s coal costs have increased by 300% in real terms over the past 20 years, while demand for electricity has been dropping.
The study also argues that new renewable energy capacity is now considerably cheaper than either the new Eskom coal-fired power plants that are currently under construction, or the privately-owned coal plants proposed in the IRP 2018 that has recently been released for comment, UCT says.
"By 2050, in the power sector only Medupi and Kusile are still running, and coal makes up only 11% of electricity supply," notes the report.
Government this year signed contracts worth R56bn with independent renewable energy producers, as part of adding clean energy to the country’s energy mix.
Labour unions are fiercely opposed to the renewable energy contracts, arguing that the system is too costly and would lead to the shutting down of coal mines.
The report outlines various coal transition scenarios for the country and notes that by 2050, employment in coal mining could decrease by 28 200 workers, relative to 78 000 workers in 2015.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER