South Africa power from coal may fall to 50% by 2050

South Africa, the continent’s biggest coal producer, plans to reduce its reliance on the fossil fuel as a source of electricity to about 50 percent of its energy mix by 2050, down from more than 80 percent now.

The 50 percent goal is part of an integrated energy plan under development, according to Nelisiwe Magubane, director-general of the country’s Energy Department. The shift comes as the country invests 500 billion rand ($45 billion) in its aging energy infrastructure while seeking to reduce emissions of greenhouse gases. South Africa is currently building two coal-fired power plants that are expected to be the world’s third- and fourth-largest. President Jacob Zuma is also pushing to explore South Africa’s shale-gas reserves, potentially the world’s eighth-largest, and to develop more renewable energy.

“Whatever the scenario is, it’s clear that coal, over time, is going to play less and less of a significant roll in our energy mix,” Magubane said today in an interview at Bloomberg’s headquarters in New York.

Growing awareness of climate change is putting pressure on nations to reduce emissions, and coal-fired power plants are one of the top sources of greenhouse gases. “A large coal base is going to work out to be very expensive for us,” she said. “The fuel, going into the future, is uncertain. Not because you can’t dig it out of the ground but because of possible carbon taxes or penalties we may face as a country producing products from coal.”

Energy Mix

As coal use falls, it will be replaced by a mix of renewable energy, hydropower, nuclear and electricity from neighboring countries, Magubane said. She wouldn’t give specific goals for the different generating technologies.

Eskom Holdings SOC Ltd., the state-owned utility that generates 95 percent of South Africa’s electricity, gets about 85 percent of that from coal. It’s investing 500 billion rand to replace old equipment and build new ones through 2017, to avoid a repeat of 2008 blackouts that shut down mines for five days and paralyzed factories.

Eskom’s Kusile and Medupi coal-fired plants may be commissioned in 2015, Magubane said. The company boosted its total capacity to more than 42,500 megawatts by adding 638 megawatts of renewable power since September.

Renewable Goals

About 42 percent of new generating capacity is expected to come from renewables, Magubane said. The country has set a goal of having 3,725 megawatts of renewable energy by 2016, from almost none in 2012 according to data compiled by Bloomberg. The Energy Department in November approved 33.8 billion rand for 17 clean-energy projects.

“When it comes to the energy mix, it’s neither this nor that -- it’s everything,” Magubane said. “Every energy source is appropriate for a certain, specific application.” Investments by international energy companies may be hindered if the nation’s parliament later this year approves changes to the 2002 Mineral and Petroleum Resources Development Act that gives the government stakes in new oil and natural gas ventures.

“We’ve looked at our economic profile,” Magubane said, “and it’s clear to us that for the longest possible time, we are still going to have a resource-based economy, and a resource-based economy demands a lot of energy.” 

To contact the reporter on this story: Justin Doom in New York at jdoom1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

http://www.bloomberg.com/news/2014-01-31/south-africa-power-from-coal-may-fall-to-50-by-2050.html