You’ll often hear that renewable energy is a nice idea, but it’s simply too expensive to be a realistic option. The choice between burning coal and switching to renewable energy is said to be a simple cost calculation — one that coal wins every time.
It’s the rationale for why Eskom is going ahead with two of the world’s biggest coal-fired plants, Medupi and Kusile. And in fact, Eskom publicly argues that our dependency on coal is necessary for the foreseeable future because it is the cheapest option.
The problem with these cost calculations is that they leave a massive amount off the balance sheet. For example, the (constantly escalating) costs of actually building the plants is included, but when it comes to the health costs associated with coal burning, the water impacts, the impacts of coal mining, and of course, climate change — well those costs simply aren’t part of the calculation. They are called negative externalities: the very real (but hidden) costs that Eskom conveniently avoids coughing up for, leaving them instead for us to pay, in the form of climate change impacts, health costs, water shortages etc.
The question is how much of the total cost actually goes unaccounted for: what is the true cost of coal power in South Africa?
Greenpeace Africa has just released a report that tackled exactly this question*, and the results are staggering. It looked at the Kusile coal-fired power plant, and aimed to put a price on many of the indirect costs that are simply ignored.
To make the numbers clearer: currently a non-industrial energy user (you and I) pays R0.52 per kilowatt hour (kWH) of electricity. Kusile’s damage cost will amount to between R0.97 and R1.88 per kWH of coal power. So if the actual damage being done by Kusile’s coal burning was included as a monetary amount in electricity tariffs, the new electricity tariff would be as high as R2.29/kWH — an increase of up to 459%!
But the best is still to come.
The researchers then asked how much renewable energy we could purchase with the externalised costs of Kusile’s power generation. In other words, if rather than paying for Kusile’s damage, we used those funds for renewable energy, how much green electricity could we put on the grid?
The answer: using only 30% of Kusile’s externality cost, we’d be able to generate five times Kusile’s proposed power generation capacity with renewables! So if we took just a third of what Kusile costs us in terms of climate change, mining, water, and health impacts, and invested it in renewable energy, we’d be able to produce 500% of what Kusile will output. Breath-taking.
One last figure I found very interesting was that water impacts dominated the externality costs — roughly 70% of the total cost was water-related. It’s just one more reason why we really need to kick our coal addiction.
Even if you set climate-change impacts aside, and you ignore health costs and the impacts of coal mining, the impact that coal-fired electricity generation has on water cannot be overlooked. South Africa is already classed as a water-stressed country, and going forward our water situation is only going to get worse.
Coal is not cheap. And yet here we have Eskom and Government going full steam ahead with coal power — it’s sheer madness. Now the government has no more faulty logic to hide behind, so tell government to increase its renewable energy ambitions and let’s end our coal addiction.
*The report is based on an independent scientific study commissioned by Greenpeace Africa from Business Enterprises at University of Pretoria (Pty) Ltd, in association with the University of Pretoria’s department of economics titled “The external cost of coal-fired power generation: the case of Kusile”.
**All figures mentioned in this post are from the report and the scientific research papers it was based on. That report and all the annexes can be found here.