Exxaro has big power ambitions

Johannesburg - Exxaro, South Africa's biggest coal supplier to utility Eskom, said it plans to generate up to 5 000 megawatts (MW) of power within eight years to ease the region's chronic power shortages.

Thomas Garner, the head of Exxaro's energy growth unit, said the company had signed agreements with four equity partners to jointly act as independent power producers (IPPs) to generate half of the megawatts in coal-fired baseload power.

"Exxaro will supply the coal, but it will also participate in the investment as an independent power producer, so it would be a co-partnership in electricity generation," Garner said on Wednesday.

The remaining 2 500 MW would come from renewable energies such as wind, solar and coal-bed methane gas, Garner said.

Africa is battling to keep its lights on and meet the rising power demands of a growing population, but years of underinvestment have led to power shortages, including in South Africa, the continent's biggest economy.

South Africa's power regulator wants IPPs to provide 30 percent of new generation in a country that has experienced power rationing since state-owned Eskom suffered a near-collapse of the national power grid in January last year.

Under South Africa's plan, some additional 4 500 megawatts will be produced by IPPs and delivered into the system by 2014. Eskom has yet to identify the producers.

"Depending on how the regulatory framework pans out, the power could be supplied to the national grid, sold to private clients or even distributed via the Southern African Power Pool (SAPP)," Garner said.

The coal-based power would be produced in northern Limpopo province, for which a new mine would be opened.

Solar power would be generated in Limpopo and the Northern province, and Exxaro would seek to establish wind farms on the coutry's western coast, Garner said.

Exxaro, a diversified mining firm that also produces zinc, mineral sands and other metals, has established an alliance with South African firm Promethium Carbon to produce power from wind, but is still seeking partners for other projects.

"In the long term we are talking at least 500 MW in wind," Garner said.

Prefeasibility studies for the various projects were under way, he said. Exxaro is also working on proving the economic feasibility of methane gas in neighbouring Botswana, which, if successful, could be used to produce power, he said.

- Reuters