Solar System in South Africa: Miners Cut Eskom Costs with Renewables

South Africa's mining firms are accelerating investment in renewable energy as they seek to diversify power sources, cut costs and meet decarbonisation ​targets, marking a shift after decades of reliance on state utility Eskom.

Anglo American and Sibanye Still water are among the firms reducing their dependence on a national grid ‌dominated by ageing coal-fired power plants that has struggled in recent years to keep Africa's most advanced economy running.

However, executives say Eskom-supplied baseload power would remain part of the energy equation for years to come even as renewable power usage grows.

South Africa currently generates more than 80% of its power from coal, with renewables accounting for only around 10%.

Anglo American is one of the companies partnering with independent power producers to develop renewable projects.

In 2022 ​it formed a 50-50 joint venture with EDF power solutions, a subsidiary of France's EDF, to provide renewable energy to its units Kumba Iron Ore, diamond producer De ​Beers, and former subsidiary Valterra Platinum.

The venture, Envusa Energy, currently generates 520 megawatts of power — 280 MW of wind and 240 MW of solar — ⁠representing 30% of Anglo mines' energy consumption.

Its project pipeline is 1,500 MW, with ambitions to be generating 3,000 MW by 2030 for Anglo's sites and other industrial users.

"You're looking at somewhere ​between 20% and 30% cheaper on the renewable side if you're just looking at wind and solar," Envusa CEO Nicole Mason said.

"The next projects that we are focusing on are a couple of ​really strong wind projects as well as a number of behind-the-meter solar plus battery projects."

Sibanye, which met roughly 99% of its platinum group metals energy needs and 88% of its gold electricity demand through Eskom last year, has opted to buy renewable power through short and long-term supply deals rather than owning generation assets.

It has so far contracted 835 MW of renewable energy capacity, of which 164 MW is ​currently operational.

By the end of 2028, about 64% of total energy demand at Sibanye's South African operations is expected to be supplied from renewables, CEO Richard Stewart said, sharply cutting reliance ​on Eskom.

"Our secured renewable energy portfolio is not only about reducing carbon emissions and enhancing energy security; it is also a business imperative that is expected to deliver meaningful cost benefits," Stewart said.

He added renewable ‌power should cost ⁠20% to 30% less than forecast Eskom tariffs.

Still, Eskom will remain crucial for the foreseeable future, Stewart said. "Renewables are intermittent by nature, battery storage technology is still developing, and Eskom supplies essential baseload power," he said.

Source: Reuters