Eskom hopes to announce green financing for coal transition at COP26

South African power utility Eskom is still seeking funding for its shift from coal to greener fuels, but hopes to announce a deal at next year’s COP26 climate conference after talks with lenders including the World Bank, its chief executive said on Thursday.

Eskom, which generates 90% of South Africa’s power, has a R488 billion ($29.3 billion) debt burden and has imposed intermittent blackouts, denting economic growth and hurting investment.

The utility is in talks over funding with local and international developmental finance institutions, including the World Bank, and has received letters of support in principle, Andre de Ruyter told Reuters on the sidelines of the Joburg Indaba mining conference.

“There are both many local and international development finance institutions that are prepared to offer entities such as Eskom with funding linked to accelerated decarbonisation,” said de Ruyter.

Eskom is still engaging on how those transactions would be structured, but hopes to make an announcement at the COP26 climate summit to be held in Glasgow in November 2021, he said.

Eskom is modelling options to repurpose its aging power stations into renewable or gas power plants and use vacant mining land for wind or solar farms, said De Ruyter.

Up to 12,000 megawatts (MW) of Eskom’s installed capacity will need to be decommissioned in the next decade, according to South Africa’s energy plan.

“We would be able to reduce the interest burden while also contributing to an improved emission profile and ultimately also creating jobs as we erect these renewable plants,” said De Ruyter.

“If we simply pull the plug on the old coal-fired power stations that have reached the end of their design life… then we will leave those communities in the lurch and that is not what we want to do.”

De Ruyter expects to see the first benefits of Eskom’s power station maintenance programme by April next year and a reduced, but not eliminated, risk of power cuts by September 2021.