Minerals Council South Africa member companies could deliver up to 3 900 MW of renewable energy projects worth an estimated R60-billion, which, if built, would relieve pressure on State-owned power utility Eskom and go a long way towards meeting the industry’s commitment to achieve net-zero carbon emissions by 2050.
Eskom CEO Andre De Ruyter told a Parliamentary Portfolio Committee last week that the utility needs an additional 4 000 MW to 6 000 MW of generating capacity to conduct an effective and sustainable reliability maintenance programme on its existing fleet of power stations without disrupting national electricity supply.
Minerals Council CEO Roger Baxter said on November 23 that the mining industry was involved in various stages of building plants, conducting studies, planning and applications for up to 3 900 MW of renewable solar, wind and battery energy projects that could provide Eskom some of that much-needed supplemental capacity.
“There is a pressing need for the mining industry to supplement Eskom electricity supply. But the benefits extend to diversifying supply, reducing exposure to continued high increases in prices, unpredictable supply and to reduce Scope 2 and 3 emissions in line with the sector’s commitment to reach a target of net-zero carbon emissions by 2050,” he said.
Minerals Council member companies have increased the number of renewable energy projects and the result is a 146% jump in electricity generation from the planned 1 600 MW the industry spoke about during 2020.
The licensing-exemption concession for embedded generation projects of up to 100 MW was a major factor in this increase and it is probably the government’s biggest structural reform in two decades, said Baxter.
“Renewable energy projects in the mining sector could go a long way towards easing the pressure on Eskom to the benefit of other industries and the country as a whole. These projects must be expedited through a ‘smart tape’ system. Environmental authorisations take too long and should be materially shortened.
“In addition, policy issues related to wheeling charges and surplus offtake to other users are required,” he elaborated.
Electricity prices have increased more than six-fold over a decade and are now the second-largest cost component after salaries for deep-level and electricity-intensive mines. The renewables projects, in total, will account for about a third of the mining sector’s annual electricity consumption.
In addition, the Minerals Council said the mining industry would not completely replace Eskom supply, as it would need 24-hour baseload electricity to operate mines safely, productively and efficiently, something renewable energy sources are unable to provide at present.
Eskom will remain an important large baseload supplier of electricity to mining for many decades into the future, the council said, highlighting that the sector’s 3 900 MW is “purely supplemental” and will not detract from Eskom’s critical baseload capacity.
Meanwhile, the government’s carbon tax will add billions of rands of additional expense for mining companies. A 2019 study of 18 large mining companies indicated they would have to pay more than R5-billion a year in Phase 2 of the tax.
The Minerals Council noted that renewable energy projects would reduce member companies’ exposure to carbon tax, make mineral production greener and provide a new but limited source of cheaper electricity, helping stabilise South Africa’s strained electricity supply, which is characterised by frequent and unpredictable power interruptions because of Eskom’s aging, unreliable fleet of power plants, and the inability to bring the new Medupi and Kusile plants to sustainable performances.
“The Minerals Council reiterates its support for Eskom [and De Ruyter] and the leadership team who are all doing the right things to fix and maintain Eskom’s assets.
“Their departure at this critical stage will only exacerbate the problems within Eskom and for the country at a time we can least afford any further setbacks in efforts to restore and stabilise electricity supply,” Baxter commented.