Mining companies in SA have indicated that they have 3,900MW of renewable energy projects worth an estimated R60bn in the pipeline, but legislative and administrative constraints are acting as impediments, Minerals Council SA said in a statement on Tuesday.
It says that if these projects — which are in various stages of development such as building plants, conducting studies, planning and applications — were built, they would relieve pressure on Eskom and go a long way towards meeting the industry’s commitment to achieving net zero carbon emissions by 2050.
Eskom has installed capacity of 48,000MW but can lose as much as 15,000MW due to unplanned breakdowns at its ageing coal-fired power stations, which results in ongoing load-shedding and which is disastrous for the economy.
Minerals Council SA CEO Roger Baxter said the projects, which include solar, wind and battery energy projects, need to be expedited.
“Environmental authorisations take too long and should be materially shortened. In addition, policy issues related to wheeling charges and surplus offtake to other users are required,” Baxter said.
Among the constraints for the mining industry in approving and building its own renewable energy projects are the 18-month environmental impact assessment requirements; the lack of clarity around the use of Eskom’s transmission to send power from these plants to their mines; the sale of excess power into the national grid; and the limited capacity of transmission lines from provinces such as the Northern Cape (solar), Western Cape (wind) and Eastern Cape (wind) to supply inland provinces.
“The measures that could be employed to speed up the mining sector’s investments in renewable energy projects include the provision of emergency tax incentives, shortening environmental authorisation and Eskom related grid-tie connection processes, providing a clearer framework of wheeling on the national grid, and ensuring a shortened smart-tape process,” Baxter said.
Minerals Council member companies have increased the number of renewable energy projects and the result is a 146% jump in electricity generation from the planned 1,600MW the industry spoke about during 2020. The licence-free concession for embedded generation of up to 100MW was a major factor in this increase and it is probably the government’s biggest structural reform in two decades, Baxter noted.
“There is a pressing need for the mining industry to supplement Eskom electricity supply. But the benefits extend to diversifying supply, reducing exposure to continued high increases in prices, unpredictable supply and to reduce Scope 2 and 3 emissions in line with the sector’s commitment to reach a target of net-zero carbon emissions by 2050,” Baxter said.
Electricity prices have increased more than six-fold over a decade and are now the second-largest cost component after salaries for deep-level and electricity-intensive mines. The renewable projects in total will account for about a third of the mining sector’s annual electricity consumption.
Baxter said the mining industry would not completely replace Eskom's supply and would continue to need 24-hour baseload electricity to operate mines safely, productively and efficiently — something renewable energy sources are unable to provide now. Eskom would remain an important large baseload supplier of electricity to mining for many decades into the future. The sector’s 3,900MW would simply be a supplement.
Baxter said the government’s carbon tax will add billions of rand of additional expense for mining companies. A 2019 study of 18 large mining companies indicated they would have to pay more than R5bn a year in phase 2 of the tax. Renewable energy projects will reduce exposure to carbon tax.
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