Black Power, Green Power

The two enemies of South Africa's electrical grid

South Africa is an energy-rich territory.

With the 8th largest coal reserves in the world, of the highest quality anthracite and bituminous coal, 76% of our power comes from coal, 7% from petroleum or natural gas, 7% from hydroelectric sources, 4% from nuclear, and 6% from “renewable” sources. Our grid is a bit of a dinosaur, but the available minerals would theoretically guarantee economic self-sufficiency. Yet we are suffering a gradual meltdown which has seen over a decade of regular power outages.

This meltdown has two causes – Black Power, and Green Power. The effects of Black Economic Empowerment legislation on corruption and the retention of skilled labour are well-known, but the Green lobby overseas, as well as certain European geopolitical crises, have come together to utterly cripple us, using intensive lawfare to strike down any attempt to expand our electrical grid.

Coal is of course not without negative effects, debates over CO2 aside. According to a suppressed report by the state-owned Council for Scientific and Industrial Research, over 5000 people die from emissions-related respiratory illnesses in the highveld coal belt each year. The pollution in the air and the ground water exceeds that of most places on earth, rivalling Beijing and New Delhi.

On the other hand, shutting down coal stations is not an option. Estimates of the cost of replacing our infrastructure with “green” technology run to US$250 billion (R4 trillion), and the coal industry is currently worth 5% of the economy. Coal mining, as an essential feedstock for the global energy market, is not going away, meaning that replacing coal would displace much of the power supply economy to foreign corporations.

But foreign pressure has struck South Africa at its weakest. The weakness is the fault of our ruling party, but the coup de grace will be a crime of foreign intervention.

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Black Power

South Africa is already well behind the demand curve, and it was already known in 1998 that without investing in new power stations by 1999, South Africa would be unable to match demand by 2007. Mbeki insisted – seeing the new Fabian “Third Way” paradigm on public-private partnerships which had taken root since the Blair and Clinton administrations as the dominant mode of governance – that we aim for private investment.

What is poorly remembered by advocates of privatisation, is that at the time, there was no investment interest in South African power stations, and that private investment simply would not materialise.

When no investors showed up, the state had to recognise the engineers’ advice, by which time it was too late. The projected horizon for blackouts, 2007, proved almost a perfect prediction – load shedding became a widespread phenomenon just the following year, just in time to coincide with the Zuma presidency, upon whom the economic decline was ultimately blamed.

But by this point, all the old white engineers had been let go, even those who begged to stay on to train their replacements pro bono. The now-purged civil service was thoroughly incompetent, and infrastructure projects nationwide were grinding to a halt.

This was driven largely by the Leninist governance strategy known as “cadre deployment”, a necessary precondition of the final stretch of the first stage of Marxist-Leninist revolution: the seizure of state and capital institutions is necessary to implement full socialism.

Cadre deployment ensured all key positions were held by party loyalists, and contracts went to friends, colleagues and family. Additionally, the Black Economic Empowerment framework, which mandates corporations give their shares to black people, has resulted in a transfer of wealth to ruling party members, vast corruption, and a high cost of doing business, since any investor must give up 26% of their profit margin to local black shareholders with no skin in the game.

Over the past few decades, the ANC has managed to deploy key members into the leadership of even the main privately owned coal suppliers.

For example, take Exxaro Resources. Several members of its board of directors are either an ANC member (Mvuleni Geoffrey Qhena, Geraldine J. Fraser-Moleketi, Vincent Zwelibanzi Mntambo), or is directly related to an ANC member (Mxolisi Mgojo, son of Rv. Khoza Mgojo), while Andiswa Ndoni is a former member of the Judicial Selection Committee. Qhena in particular was chosen by the ANC to be placed in the position, which as the CEO of the state-owned Industrial Development Corporation, was a position he was well-placed to leverage. Isaac Malevu was also hired from within the IDC.

This destruction of the independence and reliability of this sector has meant that low-quality coal supply is now ubiquitous, and has been resulting in high-ash content fuel damaging our ageing reactors, many of which were brought back online by Mbeki after being mothballed in the 1980s, as a last-ditch effort to delay the inevitable. Meanwhile, our best fuel has been exported overseas.

Mbeki’s reforms did manage to somewhat balance the fiscus, but his dogmatic approach left cracks in the foundation that took years to manifest. This is not to speak of the long-term effects of BEE, AIDS policy, and his dismantling of the Hawks, parliamentary oversight and public prosecution to shield himself from the consequences of his corrupt arms deal.

Contemporaneous projections (see p.11-14 of this Financial Mail archive) of where our grid capacity ought to have sat by now put us at 80 gigawatts. Instead, it is only 44 gigawatts (p.18 of this report). In the meantime, the three decommissioned power stations were targeted for recommissioning – Camden (2008), Grootvlei (2011) and Komati (2013) - though these are now deadlined for decommissioning by 2023, 2028 and 2028 respectively. There are no replacements coming, and the threat of total grid failure is no longer a distant prospect.

Only four new power stations have been successfully commissioned since the ANC took power: Medupi and Kusile, each approximately worth 4.8 GW, the Ingula pump storage station (1.3GW - but this is storage, not generation). These have been under construction since 2012, but have run massively over budget, and once Medupi came online, unit 4 promptly exploded, ceasing its operation. Repairs of any power station require approval from the treasury. But response times are on average 77 days, which make maintenance shutdowns that much longer, and repairs difficult.

In 2014, Jacob Zuma attempted to add another power station in the form of a massive deal with Russian energy company Rosatom, which would cost approximately R1 trillion, and would have made it the biggest public sector deal in the world. It also would have lined up the Guptas to be the sole providers of uranium to the nations biggest plant for the foreseeable future. It was struck down by a civil suit in 2017, citing procedural technicalities.

On the other hand, it was promised to make up 23% of the electrical supply for the entire country, which would have meant a single contribution of roughly 13 gigawatts, nearly double the output of the previous largest-ever nuclear power station, Kashiwazaki-Kariwa. Whether this was realistic is anybody’s guess (another estimate, quoted below, put it at 9.6GW), but the justification for its cancellation – the threat of corruption, and the massive costs – turned out to have been eventualities that transpired without it, only for no public benefit.

The only serious contributions to South African power in the next several years were the doomed Medupi and Kusile. Theft, fraud and incompetence saw the original R80Bn budget balloon into the hundreds of billions, with thefts of public funds stretching into unknown quantities. Substandard steel, substandard coal, cable theft, and a myriad of embarrassing problems reduced the project to a squalid hole in the ground.

In the meantime, South Africa has continued with exporting both its electricity and its coal resources. In recent years, South Africa has exported 14.5 Terawatt-hours, just over 7% of its domestic electricity consumption (~200Twh), to neighbouring countries This is a result of the Southern African Power Pool, an agreement signed in 1996 to share power with neighbouring countries (pages 50 and 112 of this report). While this does not account for a large proportion of our electricity consumption, in a crisis such as we currently face, it is an inappropriate venture to be engaged in. 

Due to limited carrying capacity on Transnet’s main railways, which have been damaged by sabotage and metals theft, exporters have experienced a ceiling on their capacity to meet this new demand spike. Consequently, the impact on the South African market has an infrastructurally-defined supply ceiling. 

A small bit of good news is that some elements of the private sector is likely to reduce its reliance on the national grid. This follows the announcement that the state will allow private power generators to enter the market, up to 100MW, provided Nersa, the state regulator, decides (on a case-by-case basis), that the generation project is to its liking. 

After all, the mining sector in South Africa is uniquely dependent on a steady electrical supply. While this is true in general for all mining, the deep drilling architecture of SA mines requires cooling and air supply to make working conditions survivable for the employees toiling away several kilometres beneath the surface. Consequently they have held a priority in load shedding operations. But the strain in the grid has reached a tipping point, and in 2020, the mining sector successfully lobbied for the right to generate their own power at commercial scale.

The old colonial model, where no infrastructure exists beyond what is necessary to extract raw mineral resources, may be all that is left to us in a couple of decades.

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Green Power

The cancellation of Jacob Zuma’s Russian nuclear project was an enormous blow to the grid. But it was neither the first, nor the last instance of lawfare being used to shut down construction of power plants in South Africa. The incompetence and corruption of the civil service has made punching holes in our environmental impact assessment reports as easy as shooting fish in a barrel.

The 630 megawatt Thabametsi plant was cancelled in 2020, under pressure from the NGO Earthlife Africa, who cited its large carbon footprint and the impact on water consumption in Limpopo province. In this instance, it is fair to say that the cause may be justified.

But this is far from the only such case. Earthlife Africa’s effect on throttling our grid recovery is impressive. If one tallies the target output of the two projects they have so far torpedoed (9.6GW of nuclear power, 1.2GW from Thabametsi), not to mention their current cases, like the Richard’s Bay gas power project, the cost to the South African grid is nearly 11GW, or 30% of our electrical provision shortfall; larger if the Rosneft deal could be expanded to its final target of 13GW.

Earthlife Africa, a subsidiary of the Heinrich Boll Stiftung, itself a subsidiary organisation of the German governing coalition party the Green Party, has been seeking environmental lawsuits in South Africa, not just to crush coal power generation, but also nuclear. While not all of their cases have been successful, the utility of this enterprise to the EU and Germany in particular is rather easy to spot – the Germans’s Siemans wind turbine industry is set to benefit extensively, while opening up SA coal resources for export. This is not to say that Earthlife members are not sincere in their convictions, but that they are politically useful.

Green energy deals have also thrown a spanner into the works. The US, UK, EU, France, and Germany have arranged jointly and severally for a complex $8.5 billion loan package (a loan, not a gift) to South Africa to divert its coal resources from Eskom into international markets. This deal, struck at the COP26 Climate Change conference in 2021, and focused on using South Africa as a test-case for decarbonification of the electrical grid, by shutting down coal stations ahead of schedule, in the hopes of replacing them with “renewable” sources.

This R8.5 billion is far short of the R4 trillion required to achieve such a transformation, and while it has been argued to be a “seed” that will hopefully attract new investment, the trend in investment in our energy sector has markedly declined. This is far more likely to be motivated by Europe’s need to reduce dependency of Russian coal, and Europe has increased their share of our coal exports from under 4% to over 15% by the middle of this year.

At the same time as the COP26 deal was announced, Eskom announced their intention to sell several coal power stations to private suppliers, at a potential R450 billion. This was first proposed as a budget amelioration strategy in the first year of Cyril Ramaphosa’s presidency, to plug the financial gap created by Eskom’s substantial debt, which currently stands at just over R402 billion. Given the president’s continued defence of cadre deployment, and the recent scandal concerning his financial irregularities, it seems likely that these deals will contain various irregularities themselves. 

This increased demand has seen stocks at the Richards Bay terminal depleted, and increased pressure on supply lines. The war embargo has seen not only a shift from Russian supply to sources in South Africa and Australia, but an overall increase in supply to make up for the shortfall in energy generated from natural gas.  Until recently, most of South Africa’s coal exports have gone to India and Pakistan, but that is set to change, due to the Western embargo on Russia, which has seen demand increase from Western countries, and China’s embargo on Australian coal.

Due to limited carrying capacity on Transnet’s main railways, which have been damaged by sabotage and metals theft, exporters have experienced a ceiling on their capacity to meet this new demand spike. Consequently, the impact on the South African market has been limited.

But what the precise conditions of this new envelopment are remains to be seen. The attempt to attract investment in private power generation in the early 2000s fell flat, as I mentioned above. The current arrangement is ripe for gatekeeping, rent-seeking and racketeering.  

While many of their projects have sound motivations and justifications (such as the blocking of the Mabola coal mine, which would have poisoned the local water table), Earthlife Africa’s overall  philosophy and strategy is extremely flawed. As part of a broader network of similar organisations called the LAC campaign, ELA opposes any strategy aside from the use of wind and solar energy, and proposes outright ending all activities that result in the release of carbonic gases regardless of the impact that would result.

This also betrays a fundamental ignorance over the processes that produce these “renewable” resources in the first place. Lithium mining – a necessity for producing battery technology – which tends to happen in arid areas, is extremely costly in terms of water, and poisons groundwater. It also involves enormous open-cast mining operations which are highly damaging to the ecosystem. Additionally, rare earth minerals require extremely toxic and water-intensive extraction processes. These processes also release significant quantities of poisonous heavy metals into local groundwater.

This does not even include the carbon cost of the mining processes, which simply cannot be replaced with renewable processes – industrial steel and tungsten manufacturing, diesel trucks, etc. Typically, the carbon costs are calculated at the electricity production level, ignoring the extensive processes that go into producing the equipment.

The opposition to nuclear energy is also perplexing. In terms of radiation and pollution, nuclear is far safer, more energy dense, and more reliable than any of its competitor products, yet Earthlife and its fellow travellers are strictly opposed to any entertainment of nuclear energy. They are even strictly opposed to thorium reactors despite their increased safety, because of the “carbon intensive” cost of mining the mineral, while turning a blind eye to the much larger environmental costs of mining lithium, cobalt and rare earth elements.

While Western state-subsidised renewable energy projects are profitable to their economies, the alternative option of nuclear power would of course be far cheaper and more reliable for SA in the long run, especially considering that South Africa has 7% of the world’s proven uranium reserves, 45% of the reserves in Africa. It is also well-known how to dispose of the waste materials, and damage to people and the environment are limited, due to extensive modern safety protocols and the energy-density of the fuelstock, which requires far less mining.

It is hard to tell how much of this nonsensical anti-nuclear stance is due to willful ignorance and how much is a result of vested interests, but it remains a crushing challenge to the development of our economy, and that of other African nations, as Ghana knows only too well.