Cape Town - Eskom intends on investing R1bn over the next five years in underground coal gasification (UCG) research projects, according to the Sunday Times.
UCG is a mining method of converting in-situ coal reserves into gas, which Eskom plans to use as a feedstock for power stations, the publication reported.
The technology, according to Eskom, could more than double the current recoverable coal reserves and has huge potential to produce economic, social and environmental returns.
Steve Lennon, Eskom group executive of sustainability said the parastatal had been looking at UCG for over a decade.
"What we’ve seen as we’ve undertaken this research is that UCG has great potential in South Africa in several areas," he was quoted to have said.
"It will allow us to open up coal reserves that are not currently mineable,” Lennon said.
Sasol New Energy and Eskom have signed a research agreement to jointly explore the full value chain of UCG technology development, the state-run firm announced on Monday.
Eskom generates approximately 95% of the electricity used in South Africa and approximately 45% of the electricity used in Africa.
There is a growing role for gas in the country, given the deficit in access to electricity, Eskom CEO Brian Dames said in March.
"Gas infrastructure is also cost-effective and quick to construct, and so we see gas, both natural and unconventional gas, as a potential game-changer for South Africa and for the region, in terms of providing a cleaner energy mix going forward."
The National Energy Regulator of SA said in April that South Africa is a good place for firms to invest in the gas market, especially as electricity prices are on the rise.
Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.