Electricity Minister’s flip-flopping could scare off investors

Electricity Minister Dr Kgosientsho Ramokgopa has created uncertainty around the government’s just energy transition strategy, which could scare off potential investors looking for certainty and long-term investments.

This is the view of Professor Mark Swilling from the Centre for Sustainability Transitions at Stellenbosch University.

The electricity minister has been on a “power station roadshow” for the past few weeks, touring power stations nationwide and engaging with their management to understand their problems better.

Following his roadshow, the minister held a press conference on 6 April, laying out his assessment of the state of Eskom’s power stations.

In this briefing, Ramokgopa showed what Swilling believes is a “clear preference” for South Africa to extend the life of the country’s ageing coal-fired power stations to increase generation capacity and limit load-shedding. 

The minister will present his position as an option to the Cabinet, who will then decide on the way forward.

---

Contradictions

Ramokgopa’s position contradicts the plans and strategies previously laid out by the government, which prioritised investment in renewable energy generation projects and a move away from coal.

According to Swilling, should the Cabinet agree with the minister’s preference, it will contradict the following renewables-focused plans already set out by the government:

• The Integrated Resource Plan (IRP) 2019 
• The National Infrastructure Plan 2050 (NIP 2050)
• The Energy Action Plan (EAP)
• The Intended Nationally Determined Contribution (INDC) to global climate agreements
• The Just Energy Transition Investment Plan (JET-IP)

All these policies, in some capacity, mention a transition from a coal-based economy to a renewables-based economy.

The IRP is “an electricity infrastructure development plan based on least-cost electricity supply and demand balance, taking into account security of supply and the environment (minimise negative emissions and water usage)”.

It sets out target dates by when South Africa’s coal-fired power stations should be closed and imposes CO₂ emission limits on the energy generation plan.

The NIP 2050 is intended to create a foundation for achieving the National Development Plan’s “vision of inclusive growth” by identifying “the most critical actions needed for sustained improvement in public infrastructure delivery”.

It specifically mentions the need to reduce the country’s reliance on coal and grow its reliance on renewable energy.

Ramokgopa had championed this plan before as head of Infrastructure South Africa and drafted the NIP 2050 Phase 2. 

The EAP aims to reduce the frequency and severity of load-shedding and, ultimately, eliminate it. The plan identifies the accelerated procurement of new capacity from renewables, gas and battery storage as one of its five key areas of intervention.

At the recent launch of the Resource Mobilisation Fund, Ramokgopa said the fund would play a critical role in assisting the government in implementing the EAP “with more drive”.

NDCs lie at the heart of the Paris Climate Accords and “embody efforts by each country to reduce national emissions and adapt to the impacts of climate change”, according to the United Nations Framework Convention on Climate Change. 

South Africa has submitted and updated its NDC, wherein it declared the country’s mitigation targets and its commitment to implement a just transition strategy.

The JET-IP “outlines the scale of need and the investments that will be required to achieve our decarbonisation commitments”, said President Cyril Ramaphosa in 2022.

Cabinet has approved the plan and envisages an investment programme of R1.5 trillion over the next five years to support South Africa’s just energy transition.

---

Investor confidence

According to Swilling, these policies are consistent and in line with one another. This consistency is good for potential investors who take a long-term view and seek certainty.

Even in a turbulent environment full of crises, this cluster of policies provided the level of certainty needed to get local and international investors to start thinking about how to mobilise the R1.5 trillion required by the JET-IP.

He is, therefore, worried that these investors may look at Ramokgopa’s stance and notice inconsistencies between his position and the Cabinet-approved policies.

He said the government should clarify its position and indicate whether it shares Ramokgopa’s preference as soon as possible.

Swilling is also concerned that Ramkgopa’s dedication to the country’s ageing coal fleet will cost the country more than if it were to focus on renewable energy projects.

He said investing money into keeping the old coal-fired power stations alive will come at an enormous cost and is not guaranteed to work.

“Plenty of funding is available for renewables at a very low cost per kWh. There is virtually no funding available for investing in coal, especially ageing polluting coal-fired power plants — and if there is, it will be very costly.”

---

Ramokgopa’s position

In his press briefing, the electricity minister said his preference for extending the life of the country’s coal-fired power stations does not undermine the government’s commitment to decarbonisation.

“Show me a country in the world with a solar base load. It doesn’t exist,” he said. “It’s not a binary question. It’s not fossil fuels or renewables – it’s both.”

He used Komati Power Station to illustrate why South Africa cannot rely solely on renewables.

As part of the Just Energy Transition Strategy, Eskom intends to decommission and repurpose three of its coal-fired power plants and fully shut down seven coal-fired power stations within the next ten years. 

One of Eskom’s oldest power stations, Komati, was decommissioned and repurposed for renewable energy generation last year, with a focus on wind and solar power. This transition lowered the base load for the station significantly.

“You remove 1,000MW and replace it with 250MW – tell me, where is the math there?”

Ramokgopa clarified that he does not intend to do away with the government’s commitment to implementing renewables but is merely concerned with the pace at which South Africa reaches its goals.