Eskom to Decide Fate of Older Coal Stations by September

Why It Matters

The outcome will shape South Africa’s energy transition, influencing investment in renewables, gas‑to‑power and grid stability while determining the pace of coal phase‑out. It signals to investors and policymakers the viability of meeting the Integrated Resource Plan’s 2030 targets.

Key Takeaways

• Eskom will decide fate of five old coal stations by September
• Decision hinges on securing 6 GW new capacity from renewables, gas, storage
• Only half of awarded renewable projects built, risking 2029‑30 supply
• Winter outlook shows 6 GW surplus and 341 days without load shedding
• Diesel spend fell to ~$340 million, boosting profit and credit rating

Pulse Analysis

South Africa’s power utility Eskom is at a crossroads as it prepares to determine the future of five legacy coal plants by September. The move reflects a broader shift in the country’s energy policy, driven by the Integrated Resource Plan 2025, which calls for a massive influx of renewable, gas and storage capacity to replace aging coal. Eskom’s winter outlook, buoyed by a 6 GW surplus and a record 341 days without load shedding, suggests short‑term stability, yet the utility admits that only about 50% of the solar and wind projects awarded since 2019 have been built. This construction lag threatens the 2029‑30 supply adequacy window, making firm contracts for dispatchable gas‑to‑power and large‑scale batteries critical.

The IRP2025 targets roughly 10.3 GW of solar PV, 7.4 GW of wind, 3.7 GW of storage and 6 GW of gas by 2030. Achieving these milestones will require accelerated financing, streamlined permitting and robust offtake agreements. Gas‑to‑power, in particular, is seen as the linchpin for integrating intermittent renewables while maintaining baseload reliability. Eskom’s cautionary stance—keeping the coal stations operational until replacement capacity is contractually secured—highlights the delicate balance between decarbonisation ambitions and the need to avoid supply disruptions.

Financially, Eskom’s performance shows encouraging signs. Diesel spend on its open‑cycle gas turbines fell to about $340 million, a $1.42 billion reduction from 2023 levels, contributing to a 2.1% rise in pre‑tax profit and a 1.6% EBITDA improvement. The utility’s first credit rating upgrade in more than a decade underscores growing investor confidence. Moreover, the rollout of 600,000 smart meters and the removal of load‑reduction schedules for over 340,000 customers signal a maturing grid. The September decision will therefore not only dictate the fate of coal assets but also set the tone for South Africa’s renewable investment pipeline and its long‑term energy security.