Medupi coal power plant South Africa pdf

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Medupi would become the fourth largest coal power plant in the world, adding vasts amounts to global greenhous gas emissions. Source: www.ecopolitology.org
description

The Medupi Power Station is a coal-fired power plant currently under construction in Lephalale, South Africa. The project comprises six 800 megawatt (MW) units to be provide a total installed capacity of 4,800 MW installed capacity. The plant is being built by Eskom.

Eskom is a state-owned enterprise. Established in 1923, it was corporatized from the start, being set up to run on business principles and to deliver cheap and abundance electricity primarily to mining and industry. Eskom is planning for 13,500 MW based on coal fired power plants. The two new plants, Kusile and Medupi, are already under construction and will be the third and fourth largest power plants in the world. With these two new coal power plants the proportion of coal fired baseload will increase by about 95%.

South Africa is one of the most carbon intensive economies in the world. CO2 emissions for 2004 were estimated at 440-million tonnes with Eskom accounting for more than 40% of that. In the year to March 2008, Eskom burnt in excess of 125-million tonnes (mt) of coal and emitted 223.6mt of carbon according to its 2008 Annual Report. The Mudepi and Kusile will add another 30 MMT and 35 MMT per year of CO2 respectively.


brief history

Due to power shortages, in 2007 the South-African state-owned electricity company Eskom awarded contracts to build two identical coal-fired power plants. Known as Medupi and Kusile, each plant would have a generating gross capacity of around 4,800 MW.

The combined output of the plants would represent about 25% of South Africa's power generation capacity.  Both plants are currently under construction. The Medupi power plant is more advanced in terms of construction and finance.

The first unit of Medupi is scheduled to be commissioned in mid-2012, with the last unit scheduled for commissioning by 2015. The coal for the power plant will be sourced from Exxaro Coal's Grootegeluk coal mine which will increase production by 14.6 million tonnes a year to supply the new power plant.

Medupi has attracted widespread criticism in South Africa and has already been at the center of a local and international campaign targeting the World Bank at the beginning of 2010. If the plant is built to its full specification, it will emit more CO2 than 115 countries, and contribute to the destruction of the water system in Mpumalanga where new coal mines will be opened up to serve the two new power plants.


what must happen

South Africa has abundant renewable energy resources, including onshore and offshore wind and solar power. These have been assessed by the Government, as part of the development of its climate policies.

Combined with energy efficiency measures and more decentralised energy provision, these resources offer the potential for South Africa to transition towards a low carbon power sector and economy, with appropriate financial support from developed countries.

The Government has recently introduced a feed-in tariff system designed to promote renewable energy generation. This policy is, however, at odds with the vision for power generation promoted by Eskom. It is considered a ‘fig leaf’ in South Africa, and most Research&Development is still being directed to coal (e.g. futile Carbon Capture and Storage schemes) and nuclear.

That is why the building of Medupi must immediately stop. All financial institutions involved have to stop immediately the financial services they contracted with Eskom as long they are used to buil the Medupi power station. Banks should declare a moratorium in financing new coal-fired power plants as an urgent climate protection measure. Capital should instead be directed at energy efficiency and renewable energy financing opportunities.

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The coalition of more than sixty South African groups made these points in February 2010. They argued that instead of expanding its coal/nuclear facilities, Eskom should  engage in serious demand-side management, beginning by phasing out electricity to smelters that have little linkage with the South African economy and that are capital- rather than jobs-intensive.

Concrete plans should be made for a ‘just transition’, so as to provide alternative, well-paid ‘green jobs’ – e.g. in subsidised thermal-solar geysers for every house – to those workers who are employed at the smelters. At the same time, the special purchase agreements should be disclosed to the public and opened for renegotiation.

The freed up energy should be redistributed to provide for a much larger ‘lifeline’ supply of universal Free Basic Electricity – with a rising block tariff to encourage conservation to improve spinning margins which will buy time for a switch into renewable energy technologies. By not expanding its coal/nuclear facilities and instead redistributing the electricity capacity it has, and by simultaneously switching to renewable sources, Eskom can survive the financial and electricity access crises, and help the world solve the climate crisis. At present it’s Africa’s main contributor to both crises.


location
image
active file
last update: Nov 16, 2014

sectors
energy plants - coal

banktrack contact

Yann Louvel, Climate and energy campaign coordinator, BankTrack
Juliette Renaud
, Private finance campaigner, Friends of the Earth France


working partners

Bobby Peek, Director, GroundWork (FoE South Africa)
Sunita Dubey
, GroundWork (FoE South Africa)


member groups involved

share this dodgy deal
social impact

South Africa has suffered several severe energy shocks in recent years, including rolling black-outs in 2008, which caused significant damage to the South African economy. This reflects many years of little or no investment in energy infrastructure.

However, the current proposal is seen by many as an attempt to sustain very low-cost energy supplies to South Africa’s intensive and extractive industries, dominated by a few multinational corporations (BHP Billiton, Anglo American, Arcelor Mittal and others) rather than an effort to address the underlying energy needs of communities. South Africa’s mines and smelting operations use around 40% of the country's energy, supplied under contract conditions which make it the cheapest power in the world. (currently just US$0.15/kWh, about 1/7th the price paid by ordinary residents). They export their profits, contributing to South Africa’s huge current account deficit, for which South Africa was labeled the world’s most risky emerging market by The Economist.

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Eskom and the South African Government have suggested that new coal-fired capacity will enable South Africa to guard against future energy shocks, support industry and sustain growth. This, in turn, they claim, will assist South Africa development and alleviate poverty.

In fact, the project will NOT support sustainable development and poverty alleviation, but instead will add additional costs onto ordinary South African energy customers, already facing higher charges – an average of 25% price increases from 2008-12, although in 2010 inflation was only 5% - and significant energy access challenges, including millions of electricity disconnections.

The World Bank’s own analysis suggests that support for fossil fuel and extractive projects has little benefit for poverty alleviation.

Moreover, evidence from the historical operation of South Africa’s energy system shows that whilst it is the extractives who benefit from cheap electricity, the cost of constructing the coal plant is likely to be borne by all South African citizens, which will increase rather than decrease fuel poverty. Indeed, the beneficiaries – the largest industrial consumers - are exempt from price rises because of multidecade special purchase agreements offered to them during apartheid and in the 1990’s.

As a result, this will entrenches suffering by imposing ‘cost recovery’ on people who cannot afford it, with Eskom asking for a ‘typical township household’ to face a 2009-2012 monthly price rise from R360 ($48) to R1000 ($130) (35% increase).


environment

According to the Centre for Global Development, the station would emit around 29 million tonnes of carbon dioxide per year (South African emissions in 2007 were around 452 million tonnes of CO2, according to data supplied by the International Energy Agency to the Guardian). Friends of the Earth put the annual emissions of Medupi slightly lower, at 25 million tonnes per year. Medupi would then become the fourth most carbon intensive, as well as one of the largest, power plants in the world.

The South African power sector is already one of the most carbon intensive in the world.
South Africa is currently responsible for 40% of the entire total of African emissions, with a per capita emission at around 9-10 tonnes per person; higher than that of many  European countries and ten times that of most other African countries.

Demand for coal is also likely to drive the opening and/or expansion of coal mines in South Africa, with devastating local environmental impacts. If all Eskom’s plans go ahead, including not just Medupi, but another even larger new coalfired power station at Kusile, and a range of life-extensions and expansions, then the company’s own consultants anticipate that 35 new mines will be required to support them. Recent plans to expand South Africa mining operations into sensitive environments have caused international protests.

The proposed power plant would be extremely water-hungry, taking up essential water supplies in a country where scarce water resources are already compromised by mining activities. The impacts of mining on South Africa water supplies are well-documented.

image
active file
last update: Nov 16, 2014

sectors
energy plants - coal

banktrack contact

Yann Louvel, Climate and energy campaign coordinator, BankTrack
Juliette Renaud
, Private finance campaigner, Friends of the Earth France


working partners

Bobby Peek, Director, GroundWork (FoE South Africa)
Sunita Dubey
, GroundWork (FoE South Africa)


member groups involved

share this dodgy deal
Jul 08, 2013

In July 2013 Eskom said that plant would be delayed until 2014, and fully commissioned by 2017, due to rising costs.

May 26, 2011

After weeks of protests at both Medupi and Kusile, the Medupi power plant resumed operation on Monday May 23, 2011. Kusile is only partially resumed while talks continue to end the protests. The protests began when foreigners were hired as welders while other local contacts were being ended. To read more about the protests go here.

Eskom confirmed in April that the first of six 800 MW units, Unit 6, at its Medupi coal- fired power station should start supplying power to the national grid in the third quarter of 2012. In September 2010, they acknowledged that the commissioning of the unit faced a three-month delay and that it would not be commissioned by June 2012.

In the summer of 2010, the World Bank Inspection Panel - the grievance mechanism of the World Bank- was authorized to launch a full investigation in the approved loan for the Medupi Coal plant. In particular, the investigation is centred on the alleged policy violations of the World Bank's $3.75 billion loan to Eskom. The decision was driven by the local opposition to the plant and the formal complaint filed by local NGOs. Many civil society groups commended the decision for the investigation, as many worry of the negative public health and environmental impacts, as well as impacts on community members' economic opportunities and standards of living. The Bank is currently reviewing its Energy Strategy, with the aim of putting in place a new strategy in 2011 to guide its energy lending portfolio for the next decade. The hope is that the findings from the Inspection Panel will convince the World Bank that fossil fuels must not receive limited financial resources. Click here for more information.

World Bank has already approved USD 3.75 billion in April of this year for Medupi along with USD 1.25 billion from African Development Bank. Eskom is also looking for money from US Export and Import bank and the application is under consideration.

Even if construction of parts of the plant has already begun, the Medupi project is right now at the financing stage, with Eskom looking for cash to finance its construction.

image
active file
last update: Nov 16, 2014

sectors
energy plants - coal

banktrack contact

Yann Louvel, Climate and energy campaign coordinator, BankTrack
Juliette Renaud
, Private finance campaigner, Friends of the Earth France


working partners

Bobby Peek, Director, GroundWork (FoE South Africa)
Sunita Dubey
, GroundWork (FoE South Africa)


member groups involved

share this dodgy deal
financial institutions involved
multilateral development banks
African Development Bank - international -
The African Development Bank is an African multilateral bank with mission to promote sustainable economic growth and reduce poverty in Africa.
World Bank (IBRD, IDA) - international -
The World Bank's (IBRD) and IDA constitutes two of the Five organisations that make up the World Bank Group. The IBRD aims to reduce poverty in middle-income countries and creditworthy poorer countries by promoting sustainable development through loans, guarantees, risk management products, and analytical and advisory services. The IDA is part of the World Bank that helps the world's poorest countries. It complements the IBRD
banks
BNP Paribas France - profile
  • corporate loan: Part of € 1,185 million syndicated loan (December 2009)
    ECA/Coface-covered loan to fund turbine contracts with Alstom for the Medupi and Kusile plants
    source: Idafjoe5br05n20091228
  • corporate loan: Part of $ 530 million syndicated loan (May 2009)
    Proceeds were used to fund part of the Medupi boiler contract with Hitachi
    source: Page295023?oid=292417&sn=2009 Detail&pid=295042
Commerzbank AG Germany - profile
Crédit Agricole France - profile
  • export credit: € 63.7 million (August 2010)
    ECA/Coface-covered loan used for the control and instrumentation contract supplied by Alstom
    source: Ca Cib Signs Eskom Medupi Power Deal.html
  • corporate loan: Part of € 1,185 million syndicated loan (December 2009)
    ECA/Coface-covered loan to fund turbine contracts with Alstom for the Medupi and Kusile
    source: Idafjoe5br05n20091228
  • corporate loan: Part of $ 530 million syndicated loan (May 2009)
    Proceeds were used to fund part of the Medupi boiler contract with Hitachi
    source: Page295023?oid=292417&sn=2009 Detail&pid=295042
HypoVereinsbank Germany
JPMorgan Chase United States - profile
KfW IPEX-Bank Germany - profile
  • export credit: $ 342 million (September 2008)
    Funding was used to partially finance six boilers that the Hitachi Power consortium supplied
    source: “A German bank lends 342 mln dlrs to South Africa utility”, Agence France Presse, 10 September 2008
  • corporate loan: Part of $ 530 million syndicated loan (May 2009)
    Proceeds were used to fund part of the Medupi boiler contract with Hitachi
    source: Page295023?oid=292417&sn=2009 Detail&pid=295042
Natixis France - profile
  • corporate loan: Part of € 1,185 million syndicated loan (December 2009)
    ECA/Coface-covered loan to fund turbine contracts with Alstom for the Medupi and Kusile plants
    source: Idafjoe5br05n20091228
  • corporate loan: Part of $ 530 million syndicated loan (May 2009)
    Proceeds were used to fund part of the Medupi boiler contract with Hitachi
    source: Page295023?oid=292417&sn=2009 Detail&pid=295042
Société Générale France - profile
  • corporate loan: Part of € 1,185 million syndicated loan (December 2009)
    ECA/Coface-covered loan to fund turbine contracts with Alstom for the Medupi and Kusile
    source: Idafjoe5br05n20091228
export credit agencies
Coface France
  • corporate loan: € 1,185 million (December 2009)
    Covering a 5 French banks syndicated loan
    source: Idafjoe5br05n20091228
  • corporate loan: € 63.7 million (August 2010)
    Covering Credit Agricole loan
    source: Idafjoe5br05n20091228
investment funds
Public Investment Corporation (PIC) South Africa
South Africa's biggest investment fund

image
active file
last update: Nov 16, 2014

sectors
energy plants - coal

banktrack contact

Yann Louvel, Climate and energy campaign coordinator, BankTrack
Juliette Renaud
, Private finance campaigner, Friends of the Earth France


working partners

Bobby Peek, Director, GroundWork (FoE South Africa)
Sunita Dubey
, GroundWork (FoE South Africa)


member groups involved

share this dodgy deal

The following companies are involved in Medupi coal power plant:

image
active file
last update: Nov 16, 2014

sectors
energy plants - coal

banktrack contact

Yann Louvel, Climate and energy campaign coordinator, BankTrack
Juliette Renaud
, Private finance campaigner, Friends of the Earth France


working partners

Bobby Peek, Director, GroundWork (FoE South Africa)
Sunita Dubey
, GroundWork (FoE South Africa)


member groups involved

share this dodgy deal
2014 2013 2012 2011 2010
image
active file
last update: Nov 16, 2014

sectors
energy plants - coal

banktrack contact

Yann Louvel, Climate and energy campaign coordinator, BankTrack
Juliette Renaud
, Private finance campaigner, Friends of the Earth France


working partners

Bobby Peek, Director, GroundWork (FoE South Africa)
Sunita Dubey
, GroundWork (FoE South Africa)


member groups involved

share this dodgy deal
image
active file
last update: Nov 16, 2014

sectors
energy plants - coal

banktrack contact

Yann Louvel, Climate and energy campaign coordinator, BankTrack
Juliette Renaud
, Private finance campaigner, Friends of the Earth France


working partners

Bobby Peek, Director, GroundWork (FoE South Africa)
Sunita Dubey
, GroundWork (FoE South Africa)


member groups involved

share this dodgy deal
pictures
Medupi power plant Nov 30, 2010

videos

World Bank Dirty Loan Action, Washington DC
Feb 10, 2011 - On April 7, 2010, dozens of activists in Washington DC joined with tens of thousands of concerned people around the world calling on the World Bank to reject the dirty loan, and to prevent catastrophic climate change while dealing with ensuring decent lives for the poor of South Africa.

image
active file
last update: Nov 16, 2014

sectors
energy plants - coal

banktrack contact

Yann Louvel, Climate and energy campaign coordinator, BankTrack
Juliette Renaud
, Private finance campaigner, Friends of the Earth France


working partners

Bobby Peek, Director, GroundWork (FoE South Africa)
Sunita Dubey
, GroundWork (FoE South Africa)


member groups involved

share this dodgy deal
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