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Cabinet’s go-ahead for Coal-3 last week makes little sense from an economic perspective and will have serious implications for the environments, says Saliem Fakir, the head of WWF South Africa's Living Planet Unit.
“It is perturbing that we are embarking on a new coal-fired power plant as it seems that there are different government strategies being developed in contradication to each other. With one arm of government pushing for a low-carbon future while the other seems to be against it.
“The construction of the power station itself is reported to be estimated at a staggering R200-billion, which is an enormous amount to fork out given what has happened with Medupi. The public will have legitimate concerns of whether we will have a repeat of Medupi and these plants cost more than what has been originally projected” says Fakir. “This does not even begin to take into account the knock-on costs to the consumer or the delays in dealing with existing power plants that need to meet the requirements of higher air pollution standards”.
Electricity prices have tripled over the past five years and Eskom has been given the go ahead to increase prices by a further 8% per annum for the next five. Coal mining costs are increasing, and along with them, the cost of coal-fired power. In any case, future coal plants will have to rely on coal supplies that are less desirable – from poor quality coal in the Waterberg.
Eskom has already warned of 25% cost overruns in the building of Medupi and Kusile, along with a projected 10% per year increase in the price of coal over the next five years.
At the same time, renewable energy prices have fallen by 25% for solar photovoltaic power, 6.5% for concentrated solar power and 11% for wind power. Where coal costs are going up, renewables are coming down.
Coal-3 will, in essence, trap consumers into higher and higher electricity bills while also increasing the country’s carbon emissions.
“The estimated R200-billion to be used on Coal-3 could better be used to fast track the renewable energy build programme which would result in a faster increase of energy supply, resulting in immediate growth in our energy supply base and kick-starting our economy. Furthermore, such an investment would prove cost effective over the long term as mining costs increase. It would also reduce end costs to the consumer given that the carbon tax is likely to come through in 2015.”
“It makes solid economic sense to place greater emphasis on modular fast tracked options rather than technologies which require long lead times and have high cost overruns. South Africa’s greatest strategic challenge is the management of our long-term electricity price path and Coal-3 sets us up for a high-risk path and potential failure in this regard.”
WWF’s Seize Your Power campaign is motivating for a new paradigm for energy access, affordability and security in South Africa. Projects like Coal-3 lock South Africa into less and less flexible energy models.
“The relationship between energy generation at a utility scale and the cost to ordinary consumers is a continuous challenge and will be a growing source of contention which will be exacerbated by the impacts of inflation and the future implementation of the carbon tax. South African citizens must be empowered to participate in energy creation through self -generation. Our current model - as depicted by the announcement of Coal-3 - is based on an old fashioned and unsustainable world view.”