Does South Africa need China to save Eskom?

The answer is a definitive yes and an absolute no.

China has almost 1,5 billion citizens, South Africa has about 60 million, China is undertaking an incredible build program to add to its energy generation capacity and transmission.

South Africa would do well to use our relationship with China to supplement our efforts to keep the lights on.

What is China planning to do?

South Africa has generation capacity for about 51 Gigawatts of energy which combines coal, nuclear, solar, wind, gas and hydroelectric.

China has 2 390 GW and plans to increase that by 610 GW by 2025.

South Africa is struggling with plants that are at the end of their life and with new plants like Medupi and Kusile that are not working correctly. There are plans for adding a lot more solar but it is taking longer than hoped thanks to a range of delays from policy makers to financing challenges and construction difficulty. It results in almost 4 GW not being available which means Eskom can’t cover the peak demand in the evenings especially during winter and with the time taken to do repairs and how many repairs are needed, we often have even less available sometimes as much as 10 GW which means we need the rolling blackouts to avoid the entire system failing.

To be fair to South Africa’s generation capacity, our neighbours in Namibia, Botswana, Zimbabwe and Mozambique generate fall less and our smaller neighbours like Botswana and Namibia combined generate less than South Africa typically has that is unavailable.

But when compared to China (and most of the rest of the world) look like small producers.

It remains to be seen that China will deliver on building that 610 GW in just three years, but it is planning on building a whole lot more.

If South Africa could learn and have China assist in our much smaller build program should allow us to get it done efficiently. Whether we can avoid the issues with contracts, corruption, labour issues and potential opposition from communities will be explored further later.

Incredible scale of new projects

China will build more coal-powered plants than anyone else and has about 33 GW under construction at the moment (South Africa's entire coal fleet is 38 GW).

It will look to build 246 GW of nuclear power with 19 reactors under construction at the moment and plans for grow that to 228 reactors (South Africa has two and it generates 1,8 GW)

But their plans for adding to their wind and solar energy production is truly incredible. 450 GW are currently under construction with that rising to an expected 1 200 GW by 2030.

On that basis, South Africa would be crazy not to learn from such a comprehensive and ambitious build program.

There is another far more experimental option they are exploring which is methane hydrate, a form of methane formed under massive pressure and in freezing conditions to create what is referred to as fire ice.

The prediction is that there are huge quantities of it available under the sea in certain areas of the world with both China and Japan working to find a safe and effective way to get it from deep under the sea in its solid form to avoid the methane turning to a gas again and adding to the greenhouse effect.

Methane is the principal component of natural gas which is typically found in oil fields or shale gas areas. If they or anyone can find a way to efficiently extract this methane it would allow for a faster switch from coal.

The just transition

Methane, although a fossil fuel and potent greenhouse gas, is less polluting than coal and so finding a large and easy to extract supply will hasten the end of coal use.

It does not solve the problem of what to do with those that work in the coal industry. The UK’s transition from coal starting in the 50s and ending in the 80s saw hundreds of mines closed over a short period with little for those employed by the mines to do as an alternative.

South Africa’s coal plants are clustered around the country's coal mines and so the shift away from them will hit those regions hard if there are no alternatives.

There may be options to make them solar or wind production areas but those may be better placed on the very dry and sunny areas in the north and west of the country while wind might be best on the east coast.

The presence of most of South Africa’s transmission lines might make it a potential area to manage the grid's load distribution and large scale battery storage.

This would be nice, but the future of energy generation will be different from having large centralised generation units in favour of smaller plants created in the regions that best suit their use.

So the Western Cape might use wind, solar, hydro and nuclear while Gauteng would continue with some coal and solar while the east coast could use wind, gas and hydro.

Eskom split

Rather than a single producer we should see many types of production from individuals to companies to municipalities and new energy generation companies. Eskom’s future looks to be as a manager of the grid ensuring that enough power is being constantly fed to the grid and to transport that to where it is needed. It should not attempt to keep trying to run everything (China uses the same model to split those that generate the energy from those that transmit and distribute it).

Here again China has been adding very high voltage transmission lines to more energy with less losses over very long distances. South Africa may need only a few to connect the various regions but typically rely on most regions generating enough for their needs. During very cold winters in the Highveld you could send excess power to the region or ensure the Karoo sun charges the batteries in Gauteng for the evening peak.

So why not ask China for help?

China has an impressive track record for completing projects, but it does not mean they don’t also have issues with ensuring quality and that all contracts are above board. More recently the reluctance may come from how slow South Africa has been to respond to the growing crisis which China has been happy to point out. Loans awarded and intended for capital projects got used for operations. Trying to run a massive enterprise while relying on loans to support operations never ends well.

South Africa has two very large projects that have been shelved that were supported and promoted by Chinese investors. Modderfontein in Joburg was due to be well on its way to be a smart city to rival the biggest buildings in Sandton and to be a hub for digital industries and the playground for Gauteng’s rich and famous.

Very ambitious build timetables and questionable sustainability plans saw the local officials push back hard on the promises until the investors gave up.

More recently a special economic zone that would include up to a 3000 MW coal plant and a metal processing plant was planned for Limpopo. The Musina-Makhado project has been revised to no longer use coal, and use solar instead, but it remains to be seen if the solar option will work given the energy requirements for metal processing.

China’s human rights record

South Africans fought for centuries against oppression on the basis of race. Its constitution is one of the most progressive to protect the rights of its citizens. China does not embrace the same democratic principles and is accused of human rights abuses of the Uyghur population in the northern Xinjiang region which is also where many of the solar panels are produced that according to reports use labour practices that would not be accepted in South Africa.

Chinese debt traps

China is keen to see its infrastructure skills used to expand their influence and access to markets and resources around the world linking it to a belt and road network of ports, railways and roads to ensure it can get supplies from its supply hubs and products to its new markets. While they are typically well build and don’t involve significant budget issues, they do tend to scope for a project that is simply too large or not justified given the local demand or capacity which leaves the partner country with a large debt and an unsustainable source of revenue to fund it.

So what should South Africa do?

South Africa has a plan which was produced in 2019. The Integrated Resource Plan sets out all the challenges and the preferred ways to address them to move away from coal but in a phased process. It welcomes the rapid increase in renewables and batteries to ease the pressure with the current fleet. It accounts for breaking up Eskom and building capacity where it is most suited and for participation from more sources including partners elsewhere in Africa.

Like so many things in South Africa, the issue is quite well handled on paper but falls apart when it comes to implementation.

Managing the massive debt it has accumulated of the last decade, trying to protect the 40 000 plus work force in Eskom when it can’t afford that big a wage bill. Trying to maintain plants that have long passed their sell by date and a policy to use very expensive fuel like diesel to avoid even worse load shedding add up to where we are.

If we can accept that the future of energy is decentralised and consists of a better mix with a growing reliance on renewables while noting the critical role of baseload plants while traditionally has been coal and nuclear.

We have a credible plan, what we need is the political will and the capacity to implement it.

#BusinessUnusual tonight at 7pm with @brucebusiness and @colincullis consider if South Africa should ask China to sort out the electricity problems. South Africa has about 50GW of capacity, China's plans to increase theirs by 600GW in the next two years. South Africa should

— 702 (@Radio702) May 18, 2022

More from Business Unusual