Greenpeace on Tuesday published a study titled "Eskom: a roadmap to powering the future" on the transition of the country's electricity sector and Eskom’s business model.
In the report, Greenpeace suggested that Eskom embark on a gradual programme to phase out its coal-fired power generation.
“A far-sighted management would plan the stepwise decommissioning of coal-fired power plants and set the course for an ambitious expansion of renewable energies in order not to be overwhelmed by developments and not to enter a dangerous downward spiral at the end of which the existence of the company is at stake,” said the report.
Greenpeace recommended that Eskom distinguish older power stations for controlled decommissioning over the next five years and their sale – expect Medupi and Kusile – in competitive auctions.
It said Medupi and Kusile should be sold in a package which would make it clear to investors that enough capital had to be raised to pay back associated loans.
“By selling the coal-fired power plants, Eskom could significantly reduce its debt burden and turn to sustainable segments of the electricity sector,” it said.
Eskom owns more than 90 percent of the total nominal generation capacity in the country comprising 45 600 MW with 15 coal power stations, 1 nuclear plant, 4 liquid fuel turbine stations, 3 pump storage schemes and 6 hydroelectric stations.
Private generators - known as Independent Power Producers (IPP)- contribute a rising share to total nominal generation capacity, mainly renewable energies.
Greenpeace urged the government to continue with the IPP programme, but let Eskom participate so that the company can grow into new businesses.
“In the future, Eskom should play just as much a role in renewable energies as it should in the construction of new flexible capacities to support renewable energies. While the IPP auction system has proven its worth in renewables, no new coal should be allowed and only a limited number of new flexible fossil-fuel plants should be put out to tender by an independent Transmission System Operator,” it said.
Happy Khambule, Greenpeace Africa's senior political adviser, said implementing these recommendations would give Eskom an opportunity to stabilise its liquidity problems, reduce its debt and become a constructive promoter of the necessary transition of the electricity sector to renewable energy in South Africa.
“Eskom's reform is almost laughably overdue; the utility is technically insolvent, inefficient, unable to guarantee security of supply, wildly unprepared for an energy transition to renewable energy and is the country's biggest emitter of toxic pollutants and greenhouse gases, which are driving us towards a climate and pollution emergency,” said Khambule.