Why power stations are running out of steam in green race

09 May 2017

On 12 April 2017, the Congress of South African Trade Unions (COSATU), announced that it would be collaborating with the National Union of Mineworkers (NUM) in a campaign about the loss of thousands of jobs that would be as a result of the decommissioning of five coal fired power stations. Much of the debate centres on the reason for the decommissioning.

The signing of outstanding contracts with Independent Power Producers (IPPs) by Eskom has now become close to the centre of this controversial issue and the target of the campaign in its current form. We share in COSATU and NUM’s concerns about job loss and the common belief that only a just transition into renewable energy should be accepted by everyone. However, directing the campaign against the IPPs appears to be a knee-jerk reaction that has not considered the long term implications, as explained below.

For those who have just joined the discussion, let us look at some background information to put it all into perspective.

The government, using the Renewable Energy Independent Power Producers Procurement Programme (REI4P) program, directed Eskom to contract IPPs to provide clean energy to the national grid. This energy is obtained from renewable sources like wind and solar. The IPPs produce, at most, only 4 to 5 percent of the total electricity Eskom currently provides to South Africa. The price for renewable energies has decreased to a point where wind and solar are now the cheapest source of new build electricity generation capacity in the country.

Eskom produces the majority of their electricity from coal fired power stations, which have an operational lifetime of about 50 years before they need to be decommissioned. In countries like the United States, this number is set at 40 years. Some of the power stations that are suggested for decommissioning are currently over 50 years old and will be over 60 years old by the time they are decommissioned. The current draft Integrated Resource Plan (IRP, the national plan for electricity infrastructure) indicates that the power stations that form the centre of these intended campaigns were slated to close within the next 10 years. Eskom has stated that the closures will be ‘gradual’. It is unclear whether Eskom intends to follow the timeline proposed in the IRP or whether they will decommission the power plants ahead of schedule. Either way, decommissioning of old power plants is unavoidable and takes place for economic, health and safety reasons.

The decommissioning of the power plants could lead to the loss of several thousand jobs in the coal industry sector. In various news articles, Eskom justifies its decision by saying that it “has had to create space for the renewables by proposing to close some of the coal-fired power stations.” Is this statement justified?

From an economic standpoint, coal is on its way out of the limelight. A global trend amongst investors is developing where there is a shift from the coal industry to the more sustainable investment into renewable energy.

It can be seen again and again that executives in coal companies are selling off their shares to the local population (for example miners) giving them a false sense of ownership in a sinking ship. Above and beyond leaving the local companies with these stranded assets, they escape the obligations towards restoration that must take place at the closure of a plant or mine.

All coal power plants that are currently running in South Africa will eventually need to be closed as they will no longer be economically viable, meet climate change requirements or health and safety standards (many are already violating air quality regulations). This development is going to happen irrespective of whether Eskom signs the outstanding IPP contracts or not.

In the context of climate change and South Africa’s commitments to its own people and the world, an energy transformation towards renewable energy needs to happen rather sooner than later. In addition to the environmental benefits, renewable energy provides more jobs per unit of energy than fossils fuels. Therefore, to provide more jobs in the long term, renewable energy is the way forward.

COSATU and NUM have called for no renewable energy unless “… there is certainty that current jobs will be preserved and new jobs will be created in the renewable sector.”

We acknowledge their concerns as serious and agree that the transition to renewable energy has to be planned thoroughly and transparently. A campaign for a proper plan of this just transition will provide much better long term job outcomes than protesting against the IPPs just because Eskom has tried to convey a link between the IPPs and the coal plant closures, which are planned to be decommissioned anyway.

The question is: how is the South African government going to respond to the question regarding job loss? Does the South African government have a plan to accommodate COSATU’s and NUM’s long term concerns?

Several questions beg answering and this campaign is the perfect opportunity to begin the conversation. Now is the time to push for, and articulate, a proper plan for a just transition. This also provides a great opportunity for academic institutions, civil society and organized labour to work together towards this just transition, which will benefit workers the most in the long term.

• Iago Davids is a member of the Project 90 by 2030 Policy and research team. Project 90 by 2030 is a Cape Town based environmental NPO. For more info go to www.90by2030.org.za

[With thanks to Business Day newspaper, who used this piece by Project 90 by 2030 in their edition dated 9 May 2017 as well as online]

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