SA needs R3.9trn to transition away from coal

Money will need to be spent on closing down coal-fired plants, building renewable plants, and compensating coal-dependent communities.
Image: Bloomberg

South Africa, the world’s 13th-biggest source of greenhouse gases, will need to spend $250 billion over the next three decades closing down its coal-fired power plants and replacing them with green energy, according to a study.

In addition to closing down the country’s coal-fired plants and building wind and solar power plants, money will need to be spent compensating coal-dependent communities whose livelihoods are threatened by the change, The Blended Finance Taskforce and the Centre for Sustainability Transitions at Stellenbosch University said. Most of the money will need to come from the private sector, according to the study.

The estimate comes as South Africa, which relies on coal for more than 80% of its electricity, is in the process of negotiating $8.5 billion in climate grants and concessional loans with some of the world’s richest nations. The potential deal, announced at last year’s COP26 climate summit in Glasgow, envisages South Africa retiring some of its coal-fired power plants.

Read: Johannesburg needs $1.6bn for power supply, mayor says

“The $8.5 billion pledge can be a catalyst to unlock this $25 billion,” researchers said in the study released Thursday. “It should offer the global blueprint for transition finance.”

The deal, some details of which are expected before the COP27 climate summit in Egypt later this year, is being negotiated between South Africa and a group consisting of the US, UK, France, Germany and the European Union.

With its aging coal-fired power infrastructure, much of which is nearing the end of its design life, and an economy heavily dependent on the dirtiest fossil fuel, South Africa is regarded as an ideal nation with which to forge an energy transition deal that could be mirrored in talks with other nations. Vietnam, Indonesia and India are seen as countries that could start similar talks to those being pursued by the African nation.

Read: Rich nations offer debt guarantees on SA climate deal

Coal accounts for more than 5% of South Africa’s gross domestic product and the coal industry employs 125 000 people, each with between three and 10 dependents.

Under the plan presented in the study, the country would need to install 5  gigawatts of renewable energy capacity annually until 2050. That would create 5 000 jobs a year over the next decade in construction, operation and maintenance of the plants, the researchers said.

Wind, solar

South Africa is “home to some of the best solar and wind resources globally, offering economic opportunities through an accelerated energy transition,” the researchers said.

The researchers envision expenditure over 30 years as follows:

  • $125 billion on 150 gigawatts of solar and wind power plants
  • $18 billion on 33 gigawatts of battery storage
  • $8 billion on 5 gigawatts of pumped hydro storage
  • $18 billion on 30 gigawatts of natural gas-fired power generation
  • $50 billion on improving the power transmission and distribution networks
  • $24 billion to close the coal-fired power plants owned by national power utility, Eskom Holdings SOC Ltd., by 2040
  • $10 billion to compensate affected coal workers and to rehabilitate the environment at idled coal mines

Financing for the programme will need to come from the private sector in both South Africa and the rest of the world, the researchers said.

Government-linked institutions such as the Public Investment Corp., which oversees R2.34 trillion of mainly government worker pensions, the Development Bank of Southern Africa Ltd. and the Industrial Development Corp., should play a role the researchers said.

“The majority of the $250 billion needed for South Africa’s Just Energy Transition can be funded by private finance investing into scaling renewables and other enabling infrastructure,” the researchers said. “About a third of the funding will be needed from capital providers with a mandate that is not entirely commercial” to support the social costs of the transition.

© 2022 Bloomberg


Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in and an Insider Gold subscriber to comment.


within five years private solar and storage (for own consumption) by business in SA will have cut what the grid needs to supply them by a quarter. It is already cheaper and more reliable so the momentum is clear. Who wants to wait around and see if you still have a business by the time Eskom and government solve anything?

Government and Eskom will continue with the centralized model that leaves business exposed as the milking cow that pays and pays and pays for both their inefficiency as well as all the voters that don’t pay.

Time to break that cycle if you can, even if it means you become 80% independent.

Who determines the quantum of compensation for coal-dependent communities? What are their rights in law? Are they forced to live there? Are they slaves to a coal mine, or are they able to move elsewhere after more profitable opportunities and better life like the rest of us have to do on a daily basis? Some people are forced to emigrate in search of better opportunities because a small group with the slave mentality claims to be victims of progress.

If they own a business or title deed, the market mechanism would be able to determine a fair price for it. Now, a socialist government, acting with total disregard for the rights and property values of the rest of the citizens, stalls all progress in the field of energy security while they chase after this mirage of a “just transition”.

Everybody, including the coal-dependent communities themselves, is forced to endure load shedding, and the rising unemployment and economic hardship that goes with it, until the socialist morons figure out how to turn the elusive dream of a just transition into a reality.

This is nothing but a shortsighted and ignorant process that infringes on the rights and financial interests of the rest of the community. What is supposed to be a just transition for a small group is, in effect, an injustice to the majority. They plunder the job opportunities, property values, and economic prosperity of everyone, in order to “protect jobs” at Eskom and compensate people who voluntarily live in coal communities.

Whatever route they may choose, there will always be affected parties. That is why socialism equals stagnation and economic decay.

Good news : the prices in the shopping list are roughly double what they should be, so we only need 2 trillion rand :/

Their battery storage works out to 8,600/kWh which is more than double one buys even moderate sized storage at.
Their solar is R14/watt – again double what it actually costs for large projects.

Do these consultants get their prices from retail price lists?

You forget two things — There is a 50% markup on prices to the Guavamunts and then 50% shared between the BBBEEEEEE front man and the Departmental officials in charge !!
So ja — 4 trillion it shall be without escalations !!!

End of comments.



Subscribe to our mailing list

* indicates required
Moneyweb newsletters

Instrument Details  

You do not have any portfolios, please create one here.
You do not have an alert portfolio, please create one here.

Follow us:

Search Articles:
Click a Company: