South Africa’s coal IPP plant will be ready in 2022 if all goes well

Eskom, the state-owned power utility, initially wanted three large base-load coal-fired power stations, but constrained financial circumstances meant that it has now asked the private sector to provide some coal-fired base-load power.     

In the mid-2000s South African state electricity utility Eskom was looking at developing three large “six-pack” 6 x 800 Megawatts (MW) coal-fired power stations. They were called “Alpha”, “Bravo” and “Charlie” by the project planners. Alpha and Bravo became  respectively, but Charlie never got off the drawing board. Instead, the 2010 Integrated Resource Plan (IRP) proposed that the private sector provide 6,250 MW worth of base-load coal-fired power. To mitigate risk, this power will be procured in phases similar to the renewable energy programme.

Electricity capacity

Coal IPP 2015

The “onerous” bid conditions, however, meant that there were only two bidders for the first round of the coal Independent Power Producer (IPP) programme in 2015 with the evaluation of bids expected to begin in April 2016, following an initial delay in the IPP Office receiving the necessary approvals from the government to proceed. The tender should then be awarded in May 2016 with financial closure expected before the end of 2016.

Marubeni of Japan and Kepco of Korea are the co-developers of the 600 MW Thabametsi IPP project, situated near Lephalale, in Limpopo, which would be developed to produce power from coal supplied by Exxaro’s greenfield Thabametsi mine. Exxaro already supplies coal from its Grootegeluk mine to the Eskom power stations of Matimba and Medupi. The bid documentation stipulated that domestic companies held at least 51 percent of the equity and the South African equity partners in Thabametsi included the Public Investment Corporation and various black economic empowerment firms. The 600 MW is roughly what a country like Botswana, Zambia or Zimbabwe currently consumes.

The other bidder for the initial round, during which government would seek to procure 1,000 MW, was the ACWA Power-led consortium, which aimed to develop the 300 MW Khanyisa discard-coal project, in Mpumalanga. This was a project that had initially been developed by Anglo American.

Bidders were also required to have secured their coal, limestone and water supplies, as well as a grid-connection agreement with Eskom. The Thabametsi IPP bid was premised on fluidised-bed technology, which would be built on an engineering, procurement and construction basis by Doosan, of Korea.

The timeline given below shows a hypothetical timeline that would allow a 600 MW coal-fired base-load power station to be operational in 2022. The big proviso is that “all goes well” and that the project is not held up by industrial action or equipment problems.

Coal IPP