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Renewable-energy projects considered for Komati repowering

Article Republished By Javier Troconis

State-owned power utility Eskom is investigating the implementation of solar photovoltaic (PV), wind, battery storage and, possibly, gas power generation projects at Komati power station, in Mpumalanga, as the station is scheduled to shut down this year.

“We’ve divided this into two phases. In Phase 1, we’re looking to implement solar PV, wind and battery storage energy projects. In Phase 2, we will look at additional solar PV, wind and battery storage, and possibly gas, if we are able to transport gas to the area,” states Eskom just energy transition GM Mandy Rambharos.

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She points out that Eskom has completed in-house governance approvals for these projects, examining potential capacity, and other elements that have been assessed through the engineering studies conducted.

Eskom is now trying to find and partner with an owner’s engineer for the generation projects. Following this, the utility will release tenders for these projects.

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In Phase 1, Eskom is looking to implement about 90 MW of solar PV energy at a cost of below R1-billion, and 32 MW of wind energy at a cost of about R500-million. In total, the cost for the solar and wind projects in Phase 1 could amount to about R1.3-billion.

“We’re looking at various options to structure these projects in terms of ownership, but the most efficient option is through an engineering, procurement and construction (EPC) contract. We want to find and partner with an appropriate owner’s engineer to manage the project for us, and after this we can complete the business case and look for an EPC contractor.”

The owner’s engineer will manage the EPC contractor on Eskom’s behalf.

Eskom is also considering using concessional financing from a multilateral bank or development finance institutions, as the projects have a number of interested funders, she confirms.

“This is particularly for Komati, but also for the other power stations such as Grootvlei and Hendrina. We’re open to partnerships and getting into bilateral discussions with funders who would like to fund directly. We’re not closing the door on these opportunities, but for Komati, we’re going to use an EPC contract, owing to the need for speed of execution of the repowering projects.”

While the initial plans for the 90 MW PV and 32 MW wind generation won’t be enough to completely replace the 1 000 MW lost by retiring Komati, she stresses that Eskom is looking to fill up this remaining power grid availability.

On April 12, Eskom issued a request for proposal for leasing parcels of its land, in Mpumalanga, to independent power producers to add new generation capacity. This is to encourage and allow for investments in renewable-energy generation infrastructure and provide impetus for collaborative efforts to resolve the country’s energy crisis.

“We’re not doing a one-to-one replacement and replacing 1 000 MW with 1 000 MW at Komati – this isn’t possible with renewable-energy plants. Therefore, we need the Department of Mineral Resources and Energy’s energy projects to be expedited so that we can meet the capacity gaps.”

Rambharos notes that retiring the Komati power station – and the repurposing and repowering projects thereafter – will not result in any retrenchments of Eskom employees. The 661 employees – comprising 236 permanent employees and 292 contractors – will be redeployed within Eskom’s operations.

The power utility’s repurposing and repowering projects will also create about 874 jobs by deploying the solar PV, wind and battery storage projects, she adds.

About 250 of these jobs will be for operations, while the rest of the jobs will be created during the construction phase.

“We’re advocating for the local manufacturing of renewable-energy solutions in areas such as Mpumalanga so that we can employ people along the renewable-energy value chain.”

Financing

After the COP26 climate meeting held last November in Glasgow, Scotland, an agreement was concluded for South Africa to receive $8.5-billion from the US and European countries to help replace the country’s use of coal with renewable-energy sources.

Rambharos adds that Eskom had already received World Bank grant funding that was used to fund the studies conducted for the repowering and repurposing of Komati, as well as for Grootvlei and Hendrina.

These studies were also grant-funded through Nationally Determined Contribution partnerships.

However, concessional financing – owing to the larger amounts of funds – will be used for infrastructure development.

“We could use concessional financing for developments of the transmission grid and renewables plants. Negotiations are ongoing by the Presidential Task Team around how the $8.6-billion will be used, what the ratio of grants to concessional financing would be and what the concessional finance interest rates would be.”

She adds that Eskom does not, however, rely on these funds, as the utility is continuing bilateral discussions with funders, such as the World Bank and African Development Bank, with which it has already developed a relationship.

“It’s important to prioritise projects based on the country’s needs right now. Decarbonising the electricity sector is the quickest and cheapest way to decarbonise, as Eskom produces 41% of the emissions in South Africa. If we decarbonise electricity, this will have a positive impact on other local sectors,” Rambharos concludes.

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