Energy access and prices

South Africa has suffered several severe energy shocks in recent years, which cause significant damage to the South African economy. This reflects many years of little or no investment in energy infrastructure. Eskom and the South African Government have suggested that new coal-fired capacity will enable South Africa to guard against future power shortages, support industry and sustain growth. This, in turn, they claim, will assist South African development, and alleviate poverty.

However, the Medupi project will not support sustainable development and poverty alleviation but will instead add costs onto ordinary South African energy customers. Over the last decade, South Africans faced repeated electricity price increases as well as significant energy access challenges, including millions of electricity disconnections and periodic load shedding. Despite the progressive production at Medupi power station, Eskom is still failing to address power shortages due to numerous defects.  

While the extractive sector benefits from cheap electricity thanks to multi-decade special purchase agreements, the cost of constructing the coal plant is likely to be borne by all South African citizens. A 2018 report from the Energy Research Centre at the University of Cape Town states that the cost overruns at the new coal-fired plants contributed to the rapidly increasing electricity prices. Between 2011 and 2021, the average yearly electricity price increase has been close to 10%. In addition, South Africa’s mines and smelting operations use around 40% of the country's energy and export their profits, contributing to South Africa’s huge current account deficit.

Health 

A 2006 report by Eskom, which it was forced to disclose after the Centre for Environmental Rights filed a Promotion of Access to Information Act application in 2014, contained information about the health aspects of the Medupi power plant. It stated that when operational, Medupi would be responsible for 1.4 deaths and an additional 144 hospitalisations per year, among those living within 25 km of the power station. Several studies underlined the consequences of the Medupi pollution including premature deaths, chronic bronchitis, and asthma. 

Health risks due to air pollution could be decreased if flue gas desulphurisation (FGD) technology, known as scrubbers, was installed. Scrubbers indeed allow for a reduction of sulphur dioxide (SO2) emissions and were a condition of Eskom’s loan agreement with the World Bank. Yet Eskom failed to install the ZAR38 billion FGD equipment and in July 2021, the World Bank approved the extension of the FGD implementation deadline from 30 June 2025 to 30 June 2027. According to Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air, the emission-compliance exemptions sought by Eskom will cause a high number of premature deaths and therefore constitute “a health and economic burden that far exceeds the costs of the equipment required to comply with the standards”. 

Working conditions 

The project has been subject to several strikes over the years, with workers demanding better working conditions and wages, and complaining about discrimination. A strike in March 2015 led to contract termination of 1,000 employees.  

Alleged disturbance and destruction of graves

The construction operations of the Medupi power station are also linked to the alleged destruction of graves. A memorial site was created in 2016 to allow affected families to commemorate their deceased. 

Climate change 

Medupi’s annual carbon dioxide emissions are projected to be somewhere between 25 and 30 million tonnes, making it one of the most carbon intensive power plants in the world. Actual figures are difficult to establish, as the plants’ carbon dioxide monitor broke in 2017. The most recent annual emissions report does not include a carbon dioxide estimate - neither do any of Medupi’s monthly emissions reports. Eskom assumes the plant’s greenhouse gas emissions will rise in the coming years. 

The World Bank funded Medupi’s construction despite widespread criticism from environmentalists and Bank member states. The funding allowed Eskom to build the plant - in spite of the Bank’s commitment to clean energy - and directed investment away from renewables.

South Africa has begun decommissioning coal power plants in order to move towards a just transition. Yet less than 10% of the country’s energy capacity comes from renewables. Demand for coal from power stations such as Medupi is also likely to drive coal mining expansion in South Africa. The Medupi power plant is expected to consume around 15 tonnes of coal per year. If all Eskom’s plans go ahead, the company’s own consultants anticipate that 35 new mines will be required to support them. 

Eskom has paid billions of dollars in loan and penalty fees to the World Bank, diverting funds that could be used for renewables development and further jeopardising the company’s commitment to clean energy. Eskom claimed to be seeking international carbon credits for Medupi, but did not sign any agreements to offset its emissions for the plant, which will continue to operate for decades.

Water resources 

The Medupi power plant is also extremely water-hungry, taking up essential water supplies in a country where scarce water resources are already compromised by mining activities. The plant has been built in the water-scarce region of Lephalale in the Limpopo province. The Mokolo Dam is currently providing the water supply for all agricultural, mining and power generating activities in the vicinity. The capacity of this dam is insufficient to meet the water requirements of the Medupi power plant. Eskom’s current licence allows the company to take 10.9 million cubic metres of water a year from the dam, and the FGD equipment is expected to generate an additional demand of 4.5 million cubic metres a year. 

The investigation report of the World Bank inspection panel, dating back to November 2011, confirms that the plant will put additional strain on water consumption and create additional pollution risks. 

To address industrial water needs, the Mokolo and Crocodile River Water Augmentation Project (MCWAP) plans to increase pipeline capacity from the Mokolo Dam from 13.5 million to 50.4 million cubic meters of water per year (Phase 1) and to construct a pipeline of approximately 130 km to transfer water from the Crocodile River (West) to the Lephalale area (Phase 2A). However, this water augmentation project is expected to have significant effects on farming water resources. The MCWAP-2A obtained an environmental impact assessment (EIA) authorisation from the Department of Environmental Affairs in December 2018 but the decision was appealed by Earthlife Africa and Groundwork. 

Illegal sand mining

The significant amount of concrete needed to build Medupi also caused disproportionate sand mining activities in the lower Mokolo riverbed, close to Lephalale. Local farmers argued that sand mining put the health of the river and crop irrigation at risk. According to Groundwork, just under 500 000 m3 of sand were extracted to build Medupi. Moreover, the World Bank Inspection Panel already acknowledged in 2011 that the allegations of harm caused by sand mining on ground water availability were credible.  

Corruption

In 2015, a Japanese company called Hitachi paid USD $19 million to the US Securities and Exchange Commission (SEC) to settle charges for improper payments to the South African government. The company paid USD $6 million to Chancellor House, an investment company managed by the African National Congress (ANC), South Africa’s ruling party. In return, Hitachi won contracts to install boilers at Medupi and another power plant. When pressed, the ANC claimed the sale of Hitachi’s stake in Chancellor House had “put the matter behind us.” Hitachi, for its part, said it did not know that Chancellor House was a front for the ANC, a claim disproven by a report uncovered by the SEC, in which Hitachi noted that Chancellor House was a “politically preferred” company.

Delays and malfunctioning

Less than two weeks later the completion of the power plant’s last unit on July 31, 2021, a hydrogen explosion damaged one of the plant’s production units. Eskom suspended nine employees for “procedural noncompliance” and apologised to the public for its inability to meet local energy demand. 

The Medupi plant’s construction was repeatedly delayed and subject to design defects. In 2022, the African Development Bank, one of the project’s main funders, conceded that the plant “will not show a financial benefit over its lifetime.”