Strategically Important Developments Eskom PBMR Transnet May 2007 Strategically Important Developments in the Republic of South Africa INTRODUCTION The Department of Public Enterprises (DPE) together with the Department of Environmental Affairs and Tourism (DEAT) is working towards streamlining the Environmental Impact Assessment (EIA) procedures within South Africa, such that these do not delay the completion of critical infrastructure development initiatives which are of particular importance to economic growth within the country. It was perceived that many of those critical infrastructure development projects underpin the attainment of the economic growth targets as enshrined in the Accelerated and Shared Growth Initiative for South Africa (ASGISA). For a development to classify as a Strategically Important Development (SID), it is considered that it should possess a demonstrable or potentially significant contribution to the national economy. This acknowledges the over-riding importance of the economic growth targets as enshrined in the ASGISA. However, in the South African context, other possible characteristics may also contribute to the classification of a proposed development as a SID. These include the potential for Broad- Based Black Economic Empowerment (B-BBEE), and perhaps also the contribution to a regional or local economy, as opposed to the national economy. The first of these is self-evident, while the second addresses the desire to ensure economic development in specific areas of South Africa. The existing portfolios of the eight State-owned Enterprises under the DPE These are Alexkor; Denel; Eskom; the Pebble Bed Modular Reactor (PBMR); Broadband InfraCo, South African Airways (SAA); SAFCOL; and Transnet were considered, and SIDs were identified within the development programmes of three of these (Eskom; Pebble Bed Modular Reactor and Transnet). A decision was made to generate a document providing basic details of the SIDs as exist currently, within the portfolios of these three State-Owned Enterprises (SOE). The present document represents the result of that effort. It is intended that this document should constitute the kernel of a larger and more comprehensive listing of the details of all SIDs within South Africa, in due course. This will require the addition of details on all other SIDs in the country, as may be identified in the future. Eskom Strategically Important Developments Eskom: Descriptions of Strategically Important Developments INTRODUCTION Reliable electricity supply is a prerequisite for stability and prosperity and it is Eskom’s job to ensure it can supply sufficient power to meet rising demand. Government’s plan for 6% economic growth includes investments by energy-intensive industries. Continued pressure on supplies is therefore inevitable. Ever-increasing demand for electricity in an expanding economy has brought the era of excess capacity to an end. Eskom’s net generating reserve margin is lower than the internationally accepted range of 15 to 18%. Our power stations are aging. In many cases, refurbishment is necessary to extend their economically useful life. Continued high load factors at the stations (required to meet demand) put severe stress on all parts of the plant as they are frequently required to operate outside initial design parameters. These loads require a high level of planned maintenance. To meet these challenges, the Eskom budget for bigger generating and transmission capacity has been stepped up from R97 billion to R150 billion. The return to service of mothballed stations and the commissioning of two new open cycle gas turbines will increase generating capacity in the short term, enabling Eskom to keep pace with growing demand. However, Eskom will only be able to build up its reserve margins to acceptable levels when new base-load stations are completed. New construction of such large items of infrastructure requires a long lead-time. Eskom will therefore have to manage a system with tight reserve margins for the next four to five years. Additional generating and transmission capacity has to be urgently constructed to meet rising electricity demand across South Africa’s growing economy. Consequently, the R97 billion capacity expansion programme budget, approved in 2004, has been increased to R150 billion, driven by a change in electricity demand growth assumptions from 2,3% to 4,0%. The new budget, approved by the board and our shareholder, covers the five years to 2012. The expanded programme is designed to meet the challenges of electricity reliability and availability and is now aligned to 01 Eskom: Descriptions of Strategically Important Developments INTRODUCTION government’s target of a 6% GDP growth between 2010 and 2014. In terms of the revised plan, Eskom will now deliver an additional 22,000MW by 2017. Eskom has always prided itself on its environmental planning and management and initiated environmental impact assessments (EIAs) before they were legislated in South Africa; using them as an essential tool in the design of projects and informing long term environmental management plans. EIAs continue to play a critical role in providing objective information to inform the investment decisions in Eskom at a project level. Eskom and South Africa still benefit from the EIA work undertaken for plants such as the Matimba coal fired power station, the Drakensberg pumped storage plant and the Koeberg nuclear power station. Eskom is currently involved in a many EIAs for a range of developments. Each of these requires exhaustive public participation processes and close liaison with provincial and national environmental authorities. Nevertheless the EIA process does introduce uncertainty to project lead times, as public appeals, the review of decisions and other legal challenges can stretch EIA timelines out to the stage where project viability is threatened. The most critical Eskom SIDs are listed in the following pages, following a map showing their location. 02 Strategically Important Developments Map indicating location of Eskom SID EIAs (Generation and Transmission Projects) 03 Strategically Important Developments Name of the Development: Medupi Coal Fired Power Station Previously known as Project Alpha/Charlie (Matimba-B) Location of the Development: Local Area: Lephalale Province: Limpopo Owner of the Development: Eskom General Purpose of the Development: This project is the first new baseload power station of between 4500MW and 5400MW that will be constructed in Lephalale. Maps showing the location of the development Description of the Key Features of the Development and its Surroundings: The study area is located approximately 10 km east of Lephalale in the Limpopo Province. Within the study area eight farms were nominated for investigation during the Environmental Scoping Study, for the establishment of a new power station and ancillary infrastructure. The climatic regime of the study area is characterised by hot, moist summers and mild, dry winters. Sediments and volcanics of the Waterberg Group and Karoo Supergroup underlie the study area. The study area falls within the Mogol River Catchment, which drains into the Limpopo River to the north. 04 Strategically Important Developments Reason for the Strategically Important Nature of the Development: The Medupi facility is the first of the large coal-fired power stations to be constructed in the 21st century. Constraints on electricity availability in South Africa imply that this is an unusually strategically important development. Phases for the Development: [1] EIA Scoping Report: Completed [2] Full EIA: Completed Contact Details for Further Information: Name: Deidre Herbst Company: Eskom Holdings Limited (Eskom) Position Generation Environmental Manager Telephone: Office: 011 800 3501 / Cell: 083 660 1147 E-mail Address: [email protected] 05 Strategically Important Developments Name of the Development: Gas-1: Ankerlig OCGT (Atlantis) Location of the Development: Local Area: Atlantis - Cape Town Province: Western Cape Owner of the Development: Eskom General Purpose of the Development: This project is the first new peak load power station of total output 1,050MW that will be constructed in the Western Cape. Maps showing the location of the development Description of the Key Features of the Development and its Surroundings: This project is the first new peak load power station of total output 1050MW that will be constructed in the Western Cape. Reason for the Strategically Important Nature of the Development: In 2005, Eskom commissioned an EIA process for an Open Cycle Gas Turbine (OCGT) power plant in Atlantis. The EIA was completed late in 2005 and a positive Record of Decision was issued in December 2005. The generating capacity of the OCGT power plant was based on an annual electricity growth of 2.6%. However, in March 2006, it was established that the growth rate was actually 4.0%. In order to meet the higher growth rate, Eskom is proposing to expand the OCGT power plant (which is currently under construction) by adding four additional OCGT generating 06 Strategically Important Developments units, each with a capacity of 150MW, hence providing a total of 1,050MW of generating capacity at the Atlantis OCGT site. In addition Eskom is investigating and proposing the installation of an off-site, dedicated electricity supply for the Koeberg Nuclear Power Station at the Atlantis site, consisting of three 65MW units. Phases for the Development: [1] EIA Scoping Report: Completed Contact Details for