Founder: Turnaround Talk
Since the beginning of the Energy Crisis, which has only intensified since 2020, a strong case has been made for the urgent implementation of a comprehensive business turnaround plan at Eskom.
The economic impact of the energy crisis is increasing in its severity every year. An article by the Daily Investor shows that elevated levels of load-shedding so far in 2023 could cost the South African economy R1.6 trillion in lost economic activity – R400 billion more than last year.
However, this is not the current case for the renewed calls regarding Eskom’s turnaround plans. A recent report by the Centre for Research on Energy and Clean Air points out that the decommissioning delays of certain power stations could result in 92 000 deaths.
Damming report
CREA is an independent research group founded in Helsinki, Finland.
The News24 article points out that, earlier this year, CREA released a report indicating that the air pollution from Eskom’s coal power plants could cause 79 500 people to die from 2025 until the dates they are due to be shut. This study assumes that the decommissioning schedule in Eskom’s Emission Reduction Plan (ERP) of 2022 will be followed. The ERP introduced some delays to decommissioning – compared to the schedule in the Integrated Resources Plan of 2019.
In the latest study, CREA indicated that if coal power plant decommissioning – scheduled to have begun by 2030 – is delayed by eight years, then 15 300 people will die from air pollution-related health impacts.
The authors of the report indicated that both studies use the same modelling results and framework, which makes the numbers comparable. Considering the difference between the decommissioning schedule in the IRP 2019 and Eskom’s ERP of 2022, the authors put forward that there would 92 000 deaths over the remaining lifetime of the power plants.
Delayed decommissioning
The News24 article points out that, of the 15 300 deaths from the delayed decommissioning, 6 200 are estimated to be related to exposure to particles in the air like dust, soot or smoke; 3 500 would be related to exposure to nitrogen dioxide; and 5 700 related to exposure to sulphur dioxide.
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The health impacts from delayed decommissioning include 9 300 new cases of asthma in children, and 22 000 pre-term births, and people suffering from diabetes, strokes and diseases that impact lungs and airways like emphysema and chronic bronchitis.
The article adds that, to arrive at these projections, CREA modelled the dispersion of pollutants from Eskom’s power plants, using the power utility’s emissions data. The researchers used an industry-standard model to do this.
“We then used existing scientific research on the increase in different health risks associated with exposure to air pollutants, combined with high-resolution population data and South African health data to assess the health impacts of the emissions from each plant,” explained one of the report’s authors Lauri Myllyvirta.
CREA then projected the health impacts based on different scenarios for the shutdown of plants. “If decommissioning is delayed, the emissions and health impacts of each plant continue longer into the future, resulting in higher cumulative impacts over time,” said Myllyvirta.
The researchers also projected the economic cost linked to the health impacts to be R340 billion.
“We estimated the economic cost of these health impacts using costs per case of different illnesses from scientific literature, adjusted for South Africa’s GDP and income levels. We also projected these impacts into the future, taking into account expected population growth and ageing, changes in health status as well as economic growth,” said Myllyvirta.
Dr Amanda Brand, from the Centre for Evidence-based Health Care at Stellenbosch University’s Faculty of Medicine and Health Sciences, found the methodology used to be sound, given that the projections are based on well-informed and transparently reported assumptions and other peer-reviewed studies. However, the one drawback is that the report does not shed light on some of the potential limitations of the research.
Energy crisis
News24 previously reported that Eskom intends to delay the decommissioning of old power plants that were due to be shut down by 2030 to provide some relief as the country faces an energy crisis. The plants that should be shut down by 2030, according to the Integrated Resources Plan of 2019, are Camden, Hendrina, Grootvlei, Arnot, Kriel, and Komati. Komati’s last unit was decommissioned in October 2022.
The researchers estimate that because of Komati’s decommissioning, 220 deaths from air pollution were avoided between 2020 and 2023. The decommissioning also helped avoid other health impacts, such as 760 asthma emergency room visits, 190 new cases of asthma in children and 360 pre-term births, among others.
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News24 reports that at a recent sitting of Parliament, Electricity Minister Kgosientsho Ramokgopa stressed that the delayed decommissioning is to help deal with the energy crisis. “… There is a need for us to delay the decommissioning as we resolve the energy deficit.”
Ramokgopa said that a modelling exercise is being conducted to determine the various impacts of the delayed decommissioning. For now, it provides a “degree of relief” for load shedding.
Who is Eskom answerable to?
In a typical company, the above risk would not take place as shareholders would be reticent to become involved in a scandal of this magnitude.
However, Eskom is far from a typical company. So, who is Eskom answerable to? The short answer to that question is Government, and in non-election years, that is where the buck stops. However, is this scandal another nail in the coffin for what is proving to be an extremely challenging 2024 General Election for the African National Congress?
Urgent intervention is needed, and the best minds in business rescue, business turnaround and corporate renewal – both locally and abroad – are required in order to stop this unnecessary carnage.
