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The list of investment deals and agreements punted by President Cyril Ramaphosa after his state visit to China this week includes a hugely improbable plan to build another new 4 600 megawatt coal power station in Limpopo.
In a statement this week listing the achievements of the trip, the presidency said a number of Chinese projects in the Musina-Makhado special economic zone (SEZ) “have been prioritised for implementation”.
These are “a 4 600MW coal-fired plant, a cement plant and other metallurgical projects”.
This came only a week after Energy Minister Jeff Radebe revealed the long-awaited new Integrated Resource Plan (IRP), charting the future of energy investments in South Africa – a future conspicuously lacking in major new coal stations.
Legally impossible
It is legally impossible to build power stations in South Africa unless they correspond to the IRP’s forecasts of power needs, costs and emissions.
Section 34 of the Electricity Regulation Act calls for the minister of energy to make ministerial determinations for specific investments – based on the IRP.
The Department of Trade and Industry (DTI) confirmed the presidency’s statement and sent City Press its own summary of memorandums of agreement struck in China, with a more detailed list of the “priority” projects.
Among these, it lists the “Power China International Energy Project in Musina-Makhado SEZ”.
“The aim is to invest in the construction and operation of a 4 600MW coal-fired plant. This is a six-year project construction period,” reads the DTI summary.
Asked about the conflict betweenthis plan and the IRP, the DTI responded that “the Limpopo province is compiling comprehensive inputs on the draft IRP report that is currently out for public comments”.
“The inputs will include a request to include the proposed investment.”
“It is also important to note tha, the proposed power station is not only based on the connection to the grid, but the internal supply of the SEZ,” said the DTI.
Environmental activists and sector experts were left scratching their heads this week after Ramaphosa’s announcement.
“No one seems to know what this is about,” said Robyn Hugo, an attorney at the Centre for Environmental Rights.
The centre is already fighting tooth and nail against two small 500MW coal stations that Radebe is trying to force into the IRP through a policy adjustment that deviates from the technically best and cheapest investment path, relying on renewables and gas.
The announcement was completely “whacko”, said energy analyst and publisher Chris Yelland.
“Some people live in an alternative universe with alternative logic and regulations,” he joked.
“It is just not possible.”
Even if the planned power station was going to be privately owned, and only supply power to the surrounding companies in the SEZ, this would be illegal as Eskom is, by law, the monopoly buyer of electricity in South Africa, said Yelland.
Even if you somehow got around that, private power still has to accord with the IRP to get a licence from the National Energy Regulator of SA – and it has to accord with South Africa’s climate change commitments under the Paris Accord, he said.
That means that the Chinese investors and the Limpopo provincial government would have to convince the department of energy to massively defiate from the cleanest and cheapest IRP to make the station happen.
Ironically, Ramaphosa and his Chinese counterpart, President Xi Jinping, signed an agreement to cooperate on climate change alongside the memorandum of understanding to build a major new coal power station.
Coal 3
The size of the supposedly planned new power station is the same as the Medupi and Kusile power stations, which are both still under construction with only some units contributing to the grid.
Ten years ago, when the Medupi and Kusile stations were taking off, there had been a plan to build a third new giant coal station which was only ever called Coal 3.
In the past decade, a combination of stagnating power demand and the falling costs of renewable power has, however, eliminated all coal from the future power plans.
The Musina SEZ, where the plant is supposed to be built, has been years in the making and is intended to be a coal and metals hub, based on the presence of a viable hard coking coal deposit.
Coking coal is used in metallurgy and is rare in South Africa, where most coal is of a lower quality, suited to thermal power stations.
A “prefeasibility” briefing document – available on the dti’s website and dated May 2014 – mentions a 1 329MW coal power station, but not a 4 600MW one.
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