Dragged into a pit by Eskom

by Roger Diamond

With Eskom being a spade, the mining industry a shovel, and the government digging surprising harder than it does most tasks, the pit we call our home is getting deeper by the year. Well actually, we’re all to blame for being consumers, but somehow there is something wrong when organisations that have the money, power and time to change, instead choose to ride on down into the ever-deepening pit and drag us all down with them.

As individuals we have little choice over our electricity generation. Eskom has a guaranteed revenue stream, vast logistical and intellectual resources and a planning horizon that most of us would not dream of for our own lives, yet they, in concert with the government and mining industry, have committed South Africa to the dusty dustbin of history.

South Africa has a very energy-intensive economy (energy usage per GDP unit) due to the mining industry, in particular the processing of minerals into metals, which uses the vast majority of power in the country. Eskom supplies the bulk of this power to these consumers; some do generate power themselves, although mostly this energy is ultimately simply reprocessed waste energy or compounds that was originally Eskom power, or it is in the form of coal boilers and furnaces.

With economic expansion, power demand has increased and so Eskom has installed and is installing additional power generating capacity. And their act of brilliance has been to commit the country to using coal for these new power stations. Proposed renewable and other generation options are much further behind on the construction/availability timeline and are a mere fraction (a few percent) of the output of the new coal stations alone, never mind the historical predominance of coal in our energy mix.

This dependence on coal is nothing short of stupid. Why? Coal is a finite resource. Our best coal reserves have been mined. Current and new coal reserves will be dirtier and give less energy return for every unit of energy invested to mine and process them. The lifetime of multibillion rand power stations is assured by the engineers who build them, yet coal supplies to match this lifetime are not nearly as well constrained, when considering that the current fleet of coal power stations also need to keep being fed.

This situation is bad, but when the geopolitical issues are considered, our future looks particularly bleak. Demand for coal is on the increase globally and South Africa is one of the largest coal exporters around. With increasing industrialisation in many countries, particularly China and India, coal supplies will be greedily eyed by those who can no longer meet their own demand. Two scenarios could then unfold. The more pleasant one, which we are already experiencing to a certain degree, is that the price for coal will rise and therefore electricity prices too, simply because coal miners have the choice of selling for export at a certain cost and Eskom will have to match this price. The more gloomy scenario, which has been blatantly apparent in the oil markets for decades now, is that military force will be used to manipulate market forces. In anticipation of this, China is already ramping up military development. Should you not export your energy supplies to them, they will adopt the United States’s approach and park a warship off your coastline to encourage you to sign trade agreements and sell your resources at a price which is pleasing to them. This forces the victim country out of the competitive global market, destroys currency value and prevents anything like sustainable development (where environmental and social agendas are developed along with economic ones). South Africa may be relegated to a mere energy exporting economic colony of the energy hungry juggernauts.

Where were the strategists and scenario planners when Eskom made this decision to commit our country to coal-fired power for the next few decades? Or have they already been pressured by the giant energy hogs overseas into this decision? Are we already so well down the road of being an energy colony that we will never claw our way out of the dusty coal pit?

In the short term, you can get used to higher electricity prices. In the long term, you can probably get used to intermittent electricity supply, and at extremely high prices. Solutions to this situation are deeply complex, as they involve changing the structure and nature of our society and economy, yet the choice should be simple. Indeed, clawing our way out of the dirty, dusty pit of cheap labour and mining and exporting valueable resources will be hard work, but worthwhile. The current path our leaders are taking is to make us dig deeper and harder, dragging us forever downwards to the point of no return, when the walls of the pit will finally collapse in and bury us in a history of extraction and wastefulness.