A drastic reduction of coal energy supply will come at a hefty cost for South Africa, as the country grapples to cope with growing poverty levels and record high unemployment.

Menar MD Vuslat Bayoglu raised concerns about SA’s ability to afford an overhaul of the power system to suit renewables, at a time when the GDP growth rate has dropped to 0.4%. Bayoglu spoke during a panel discussion at the Coal and Energy Transition Day conference in Johannesburg on Tuesday, 18 July. 

Amongst available baseload suppliers, hydrogen is rated at as the most expensive at an estimated cost of $239 (USD) MWh, followed by nuclear power at $225 MWh, while coal is about $74 per MWh, gas is about $94 MWh. “Renewable energy is the most expensive resource,” he said. 

South Africa’s priority should be closing the gap between rich and poor and providing jobs. “Coal is the country's third biggest employer in the mining sector with more than 90 000 employment opportunities already created. We have the potential to create more jobs through coal,” said Bayoglu. “Solar panels are produced in China, and we do not produce wind turbines in South Africa. But when a coal mine is opened, we can employ between 400-800 people.” 

The Just Energy Transition plan states that R648 billion would be needed for the 2023-2027 period to integrate green energy resources and reduce coal usage.  Bayoglu noted that it was not clear where the funds would come from. 

“Despite the challenges coal’s resilient nature will see it evolve and maintain its position as a significant contributor to the world’s energy mix. Eskom needs to invest in clean coal technology through retrofitting or building power stations with carbon capture functionality to support reliable energy supply,” he adds. 

Bayoglu emphasised that the government needs to enhance private sector involvement, cut the red tape, and take decisive action in resolving the Transnet challenges.