Eskom's transition from coal offers opportunities for private investors

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Eskom relies on coal for power generation, but the company is now shifting towards a renewable future.
Eskom relies on coal for power generation, but the company is now shifting towards a renewable future.
  • The Komati power station, which will shut down in 2022 will be a flagship site for Eskom's transition ambitions.
  • The lifting of self-generation threshold will impact Eskom revenue but Eskom welcomes the move.
  • Eskom has to invest R120 billion in expanding its distribution lines in order to connect new energy.

Eskom's transition from coal to clean energy offers opportunities for investors to repurpose the company's ageing fleet that is due to be decommissioned, CEO André de Ruyter said on Friday.

The Komati power station, which has been operational since 1961, has been identified as a "flagship site" for the company to demonstrate Eskom's  transition ambitions. The power station's last unit is scheduled to shut down in 2022, and the site's repowering and repurposing programme offers opportunities in the green space.

De Ruyter said as Eskom's old coal-fired power stations reached the end of their lives, the company is required to invest substantial amounts of money to allow them to meet environmental standards. He added that the move presents an "ideal economic opportunity for us to pivot from coal to a less polluting generation mix".

"The Komati site offers an opportunity to pilot the repowering of a station on existing Eskom land and pilot the implementation of renewable technologies, test grid performance," De Ruyter said at the Presidential Climate Commission.

He further stated that Eskom's problems with its coal-fired generation were well known, including the need to comply with environmental regulations. The entity has been engaging with world lenders such as the World Bank, KFW and AFD - that have all expressed interest in supporting Eskom's repurposing and repowering initiatives that would contribute to a "just transition" from coal.

With an abundance of natural resources required for solar and wind energy resources, Eskom had, according to De Ruyter, been informed by lenders that it was favourably regarded due to the country's lower risk profile compared to other countries such as India, Venezuela and Vietnam. 

"We have to invest R120 billion in expanding and strengthening our transmission and distribution grid in order to allow it to connect to new energy sources to the grid."

Eskom has a number of solar and wind projects in the pipeline that would potentially benefit from concessional funding. These include 12 solar and three wind projects.

Government last month announced that the lifting of the threshold for the exemption of licences for self-generation by companies would increase from 1 MW to 100 MW, in a move meant to boost capacity and open opportunities for private investment in power generation. 

De Ruyter said although Eskom welcomed the move, it would, however, impact the company's revenue. He added Eskom was awaiting the publication of the regulations in order to enable the company to provide clarity to investors who intend to wheel electricity into the national grid.

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