Uncovering the Complexities of Coal-Fired Power in Mpumalanga
The Khanyisa power station in Witbank, Mpumalanga, South Africa, was once envisioned as a crucial component of the country’s energy landscape. This proposed coal-fired power plant, fueled by discarded coal from nearby mines, was meant to provide much-needed electricity while reducing waste. However, the project’s journey has been marked by a series of challenges, legal battles, and ultimately, its eventual cancellation – a cautionary tale in the pursuit of sustainable energy solutions.
The Inception and Early Hurdles
The Khanyisa power station was initially proposed by Anglo American Thermal Coal (AATC) as an independent power producer project. The plan was to locate the plant on the site of AATC’s Kleinkopje colliery, utilizing the discarded coal from the mine to generate electricity. The project’s initial target commercial operations date was set for 2015, but various obstacles soon emerged.
One of the primary concerns was the long-term viability of the fuel source. “The amount of coal at local mines would not have been sufficient to fuel the plant for its entire lifespan,” according to the project’s initial assessment. Additionally, the project still needed to navigate a complex web of regulatory approvals from multiple government bodies.
The Deferment and Search for a New Developer
In 2013, the project experienced a significant setback when Anglo American’s regional head of strategy, Ian Hall, announced that the project would be deferred “to a more appropriate time” due to a lack of demand in the platinum market. This decision highlighted the vulnerability of the project’s reliance on a single offtaker, Anglo American Platinum (Amplats), for the plant’s entire electricity output.
Undeterred, Anglo Coal continued to explore the commercial options for the project. The company recognized the potential of its discarded coal resources, estimating that they could support a 300- to 450-megawatt power plant for 40-50 years. However, Anglo Coal made it clear that it had no intention to finance, build, or operate the power station itself, instead seeking an independent power producer to take on the project.
The Entry and Exit of ACWA Power
In the search for a new developer, Saudi Arabia’s ACWA Power expressed interest in the Khanyisa project. In 2015, Anglo Coal transferred all duties and responsibilities related to the Khanyisa project to ACWA Power, which planned to bid the project under the Department of Energy’s Coal Baseload Programme.
ACWA Power’s involvement brought renewed momentum to the project. The company proposed increasing the approved capacity from 450 megawatts to 600 megawatts and submitted a bid for a 300-megawatt discard-coal project in Mpumalanga under South Africa’s baseload coal Independent Power Producers (IPP) Programme.
However, the project’s journey took another unexpected turn when Nedbank, one of the South African commercial banks considering financing the project, announced in January 2019 that it would no longer fund coal power producers. Nedbank cited its commitment to “green” funding, responsible lending, and sustainability initiatives as the driving factors behind this decision.
Legal Challenges and the Final Nail in the Coffin
The Khanyisa power station project faced a series of legal challenges from environmental advocacy groups, which ultimately proved to be its undoing.
In 2017, the North Gauteng High Court ruled that a climate change assessment must be conducted prior to the authorization of any new coal-fired power station in South Africa. This ruling cast doubt on the future of Khanyisa, as well as other proposed coal projects like KiPower and Colenso.
Environmental justice organization groundWork, represented by the Centre for Environmental Rights, subsequently instituted two court applications in the Pretoria High Court, challenging the decisions of the Minister of Environmental Affairs and the Department of Environmental Affairs to authorize Khanyisa without a full assessment of the plant’s climate change impacts.
In 2020, the Department of Environment, Fisheries and Forestry (DEFF) ruled that Khanyisa’s environmental authorization had lapsed in October 2018, and that the activities undertaken by ACWA in relation to the project were unlawful. The Centre for Environmental Rights stated that without a valid environmental authorization, ACWA could not legally commence building the power plant or reach commercial or financial close under the Coal IPP Programme.
In a May 2021 order, the Pretoria High Court agreed that the environmental approval for the Khanyisa power station had expired. The court’s decision, according to the Centre for Environmental Rights, was “effectively the final nail in the coffin” for the proposed coal plant, as ACWA could not legally proceed without a valid environmental authorization or water use license.
The Broader Implications and the Road Ahead
The cancellation of the Khanyisa power station project is part of a larger shift in South Africa’s energy landscape, driven by both legal challenges and the changing financial landscape for coal-fired power.
Three of the major South African commercial banks, Nedbank, Standard Bank, and FirstRand, have announced their withdrawal from financing Khanyisa and the Thabametsi power station project, citing their commitments to sustainability and the transition to renewable energy.
The Life After Coal/Impilo Ngaphandle Kwamalahle campaign, a joint effort by EarthLife, groundWork, and the Centre for Environmental Rights, has been instrumental in opposing investment in new coal-fired power stations and mines, accelerating the retirement of South Africa’s coal infrastructure, and enabling a just transition to renewable energy systems.
As the Khanyisa project fades into history, it serves as a cautionary tale for the challenges faced by coal-fired power in a rapidly evolving energy landscape. The lessons learned from Khanyisa’s struggle can inform the development of more sustainable energy solutions that prioritize the needs of communities, the environment, and the broader transition to a low-carbon future.
Embracing a Sustainable Energy Future
The demise of the Khanyisa power station project highlights the growing importance of addressing climate change impacts and the need for comprehensive environmental assessments in the planning and development of new energy projects in South Africa. As the country continues to grapple with its energy challenges, it is clear that the path forward must prioritize renewable and sustainable energy solutions.
The Joint Action for Water blog is committed to exploring the intersection of water, energy, and community engagement, offering practical advice and advocacy strategies to drive meaningful change. By sharing the lessons learned from the Khanyisa experience, we can empower communities, policymakers, and stakeholders to make informed decisions that prioritize environmental sustainability and social justice in the pursuit of a clean energy future.
