Why the coal-fired power station IPPs can’t get going

One of the key objectives of the Life After Coal Campaign (consisting of Earthlife Africa, the Centre for Environmental Rights, and groundWork) is to discourage the development of any new coal-red power stations, which would lock South Africa into further dependence on dirty, expensive coal for decades to come, and delay the urgent need to transition to a low-carbon future. For this reason, for the past five years, the Campaign has been resisting the roll-out of the Coal Baseload Independent Power Producers (“coal IPPs”) programme, following the then Minister of Energy’s December 2012 Determination for 2500 MW of coal-red power from coal IPPs. The Determination was based on the now extremely outdated 2010 Integrated Resource Plan for Electricity (IRP), which made provision for 6250 MW of new coal from coal IPPs between 2014 and 2030.

The draft IRP published in August 2018 still contains 1000 MW of new coal-based electricity. This power is planned to come from two coal IPPs – Thabametsi (557 MW), largely owned by Japan’s Marubeni and South Korea’s KEPCO, proposed to be based near Lephalale, Limpopo, and Khanyisa (306 MW), which is proposed to be based near eMalahleni, Mpumalanga, of which the biggest shareholder is the Saudi-owned ACWA Power.

The Life After Coal Campaign contends that these power stations will never be built. One reason is that South Africa simply does not need this electricity. A second reason is that the electricity they will produce is far more expensive than other electricity sources, such as renewable energy with exible generation capacity. There is simply no legal or commercial basis for the Department of Energy (DoE) to procure, nor for Eskom to buy, the expensive electricity from these power stations.

A recent report by the Energy Research Centre (ERC) found that the coal IPPs would add some R20 billion to a least-cost energy system, in circumstances where we do not need them to meet demand and ensure security of electricity supply.

But more importantly, Thabametsi and Khanyisa are mired in multiple legal challenges that will continue for years. At least one court has already sent Thabametsi back to the drawing-board, when the Minister of Environmental Affairs was ordered to consider the climate change impacts of the Thabametsi power station, before making a decision to authorise it. The environmental authorisations for both Thabametsi and Khanyisa are currently subject to ongoing review proceedings in the Pretoria High Court. Furthermore, the financing for these projects has yet to be finalised, and the Campaign has warned the banks identified as potential financiers that these are risky projects for investment.

This is a summary of some of the legal challenges Thabametsi still faces:

  • A High Court review by Earthlife Africa and groundWork to challenge the decision of the Minister of Environmental Affairs to uphold the environmental authorisation for the station.
  • Thabametsi still has to obtain an atmospheric emission licence (AEL) from the Department of Environmental Aairs – interested and aected parties are in the process of commenting again on a revised application. If the licence is issued, it will be challenged on appeal.
  • Thabametsi still has to obtain a water use licence (WUL) – a revised application was submitted in February 2018, to which Earthlife Africa and groundWork objected – following earlier objections of January 2017. If the licence is issued, it will be challenged on appeal to the Water Tribunal.
  • Thabametsi still has to obtain a National Energy Regulator of South Africa (NERSA) generation licence – Earthlife Africa objected to this application, and made representations to NERSA at a hearing in March 2018. If issued, the licence will likely be challenged on review in the High Court.

Here are some of the legal challenges Khanyisa still has to overcome:

  • The decision to issue an environmental authorisation to Khanyisa without an adequate climate change impact assessment is currently subject to a review in the Pretoria High Court.
  • Khanyisa’s provisional AEL is subject to an appeal by groundWork.
  • Khanyisa’s WUL is also subject of an appeal by groundWork: this means that the WUL is currently suspended – although ACWA has applied to the Minister of Water and Sanitation to lift the suspension of the licence (which application will be resisted).
  • Khanyisa has yet to obtain a generation licence from NERSA – groundWork has objected to the generation licence application, and made representations to a NERSA hearing in March 2018. If issued, the licence will likely be challenged on review in the High Court.

The Campaign is challenging these projects not simply for the sake of delaying or stopping them, but because decisions to authorise and license unnecessary coal-red power stations are unreasonable, irrational, unlawful, and in conflict with the Constitution.

Contact Annette Gibbs, CER, Tel 082 467-1295, agibbs@cer.org.za

 

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