Eskom Holdings

Despite having the highest allocated decarbonisation pathway under the With less than 1% renewable generation in 2018 (including hydro), there is much opportunity for Eskom to ramp up replacement of old, unreliable coal power infrastructure with low-carbon alternatives. However, the company’s ongoing commitment to coal power, which will need permanent carbon capture and storage and other cleaner technologies to keep down emissions, and its lack of transition planning, means that it is likely to miss out on the rapidly improving economics of renewables.

Without having its own low-carbon transition plan to maintain focus on short-, medium- and long-term pathway alignment, Eskom is unlikely to accelerate its decarbonisation actions. The company’s new board, which has committed to the principles of King IVTM (a corporate governance code), could cut links between executive remuneration and new fossil fuel capacity and focus on a managed exit from coal power. Eskom’s low-carbon business projects, such as battery storage and microgrids, should be accelerated and combined with more rapid renewables deployment.

Eskom does not have a publicly available, clear decarbonisation plan. Neither does it have milestone emissions reduction targets to focus actions on decarbonisation.

Eskom is committed to coal for the foreseeable future and plans to retrofit existing coal generation with cost-effective carbon capture and storage technology. This is yet to be developed at scale. The company’s plans for new coal plants also involve more advanced coal technologies. However, these technologies may prove uncompetitive – especially as the economics of renewables advance, supported by policy levers such as carbon pricing. Eskom’s plans for low-carbon business models (such as renewables, storage and microgrids) are not yet well developed.

Approximately 91% of Eskom’s power generation comes from coal. Coal stocks are being secured for the future. The company is currently focused on improving governance and addressing issues of supply reliability. The Koeberg nuclear power station generates ~5-6% of the company’s power.

Progress made on reducing emissions intensity (1,009 gCO2e/kWh in 2013 to 926 gCO2e/kWh in 2017) was reversed in 2018, primarily because of high emissions at one of Eskom’s largest coal plants (Kendal, ~4 GW).

Eskom’s ongoing reliance on coal power, even with planned retrofitted carbon capture and storage and cleaner coal technologies, will not bring down emissions intensity fast enough for low-carbon transition alignment. Without strong management focus on low-carbon planning, it is unlikely that the company will get closer to the required decarbonisation pathway.