BEE is more important than carbon emissions for Eskom’s renewable power stations

Eskom has an ambitious plan to repurpose four of its old coal-fired power stations, changing them to use renewable or low-carbon power generation technologies.

Experts say the project may be flawed, however, considering Eskom’s assessment of the solutions it is considering to affect this change.

Eskom issued an Expression of Interest (EOI) earlier this year, which solicited feedback from various businesses and institutions on possible strategies for repurposing the ageing Camden, Komati, Grootvlei, and Hendrina plants, all of which are scheduled to stop producing electricity by 2028.

This allows businesses to submit high-level concepts and technical solutions for how of these stations could be repurposed to use renewable energy, with each of these submissions being evaluated according to certain criteria.

Eskom spokesperson Sikonathi Manthshantsha previously told MyBroadband that Eskom is improving its reliance on renewable electricity generation via the repurposing of these power plants.

“Eskom has established the Just Energy Office, whose stated intention is to facilitate Eskom’s investments into renewable energy sources,” he said.

“Eskom has issued a request for proposals for the repurposing of at least four coal-fired power stations that have reached the end of their operational lives. Depending on the proposals received, these power stations and their remaining transmission infrastructure will be converted to run on renewable sources of energy.”

The EOI issued earlier this year allowed businesses to submit high-level concepts and technical solutions for how these stations could be repurposed, with each of these submissions being evaluated according to certain criteria.

Evaluation criteria

The technical evaluation criteria by which Eskom ranks the ideas for repurposing these power plants place different weightings on certain facets of each submission.

These are split into three sections: Technology Solution, Conceptual Business Case, and Respondent Profile, which account for 40%, 40%, and 20% of the evaluation respectively.

The Technology Solution and Conceptual Business Case sections comprise multiple criteria which add up cumulatively to reach a total out of 40 percentage points. The Respondent Profile section, on the other hand, categories businesses who submit ideas into a single category which provides a fixed percentage point figure.

These categories range from 20 percentage points for companies that fall under the “Black Women and Youth-Owned” category, to 5 points for “International submissions”.

The evaluation criteria from the EOI information document are shown below:

Evaluation Criteria Weighting
Technology Solutions Up to 40%
Low Carbon 1% – 7%
Low Water 1% – 7%
Standalone Solution 5%
Offering multiple quantifiable benefits to the National Development Plan 8%
Site-specific considerations 1% – 7%
Conceptual Business Case Up to 40%
Concept layout 1% – 8%
Risks and mitigation measures 1% – 7%
Detailed PESTEL 1% – 7%
Financial model detail and probabilities of assumptions 1% – 8%
Value chain localisation potential 1% – 10%
Respondent Profile (Only one category applies) Up to 20%
Previously Disadvantaged Institution of Higher Learning 20%
Previously Advantaged Institutions of Higher Learning 10%
Black Youth and Women-Owned Enterprise 20%
BBBEE Enterprise 15%
All other national enterprises 10%
International Submissions 5%

BBBEE valued more than carbon emissions

Note that environmental and economic factors such as “Low Carbon” and “Low Water Utilisation” are weighted as contributing from 1 up to 7 percentage points towards the cumulative maximum total of 100%.

However, Black Youth and Women-Owned enterprises can earn an additional 10 percentage points over standard local businesses towards their grand total.

This means that a submission with great potential for low carbon power generation (up to 7 percentage points earned) from an international company (5 percentage points earned) would rank lower than one with very high carbon power generation (1 percentage point earned) from a Black Youth and Women-Owned Enterprise (20 percentage points earned) – all other things being equal.

By listing its evaluation criteria that apply to submissions for the repurposing of these four power stations, Eskom has shown that the BBBEE status of a company proposing a solution is considered more valuable than the solution’s individual carbon emissions, water usage, or financial model.

We asked energy expert Ted Blom about the efficacy of Eskom’s evaluation criteria and whether this would result in the best possible outcome.

Eskom has become derailed – Expert

Blom told MyBroadband that the old power stations were the core of power generation for many years and that the neighbouring environment developed to service that core energy generation.

“Any deviation from the core purpose of these sites will result in unfathomed risk being introduced which in turn will affect energy security,” Blom said.

“From my perspective, a major overhaul of the generation side of these sites to upgrade technology and retain the core purpose of the sites would have been less risky, and would have had a positive impact on energy security.”

Blom added that Eskom’s failure to complete the Medupi and Kusile power plants properly and on time did not instil faith in a large-scale repurposing project.

“From the technical and financial fiascos at Medupe/Kusile and Ingula, I would not entrust Eskom with any further technical or financial project execution,” Blom said.

“The embedded corruption at Eskom countrywide should immediately censure any further developmental duties to Eskom.”

He added that political interference has decimated Eskom’s capacity to embark on any projects, and this could be seen in Eskom’s evaluation criteria.

“The weighting of the assessment factors is another clear illustration that Eskom has derailed from its vision insofar as there is no reference to new power output correlated to historical power output,” he said.

He said that the criteria is unsuitable and unprofessional, and will most likely result in zero benefits to South Africa’s electricity security.

Job creation and sustainable local economy are key drivers – Eskom

Eskom told MyBroadband that the Technology and Concept Evaluation Criteria – the first section with a total weighting of 40% – includes low carbon and water as well as job creation potential, thus looking at more than only environmental benefits.

“Retaining and growing economic activity in historic power station towns will eventually reduce the migration of communities to larger inner-cities and thereby reduce congestion and demand on inner-city infrastructure and spatial planning,” Eskom said.

With regards to the Respondent Profile weighting, Eskom said this encourages the demonstration of local technology solutions.

“This objective supports the current National System of Innovation and the desperate need to promote local innovation and technology solutions.”

The power utility added that the intention is to address all aspects of a Just Energy Transition – environmental, social and economic.

“Note also that the EOI process is not aimed at identifying a winning submission, it is to assess options available to the market with environmental and localisation as key drivers,” it said.

“The desire is also to create a sustainable local economy.  The solutions considered will address all aspects of the JET.”

Evaluations have been completed on 54 EOI submission and the timeline for the issuance of RFPs will depend on the appetite of local and international funders at a demonstration level.

“54 submissions have undergone technical evaluation.  The focus was on technologies at Technology Readiness Level 6 to 8 for demonstration and, amongst others, solutions which offered the most attractive localisation and sustainable development potential,” Eskom said.

“The dates in the EOI document reflect current plans which may change according to changing operational and other requirements within constraints such as environmental, financial, contractual, and legal and regulatory requirements.”

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BEE is more important than carbon emissions for Eskom’s renewable power stations