Medupi coal power plant South Africa

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. The 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.

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.

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.

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 1/7^th 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).

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.