ACEO’sjourneyfromcoaltogreenenergy

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Episode summary

Exxaro entered the renewable energy space in 2012 when it won a wind IPP (Independent Power Producer) contract. Exxaro is adopting a proactive stance in responding to climate change and ESG (Environmental, Social and Corporate Governance). While coal is still considered the largest source of energy worldwide, renewable energy is much cheaper. The main thing that has slowed renewable power adoption is battery storage.

Mxolisi believes that Eskom with its current business model will not survive. It lacks the competitive pressure needed to transform its business. Unbundling Eskom is the right approach. The generation side of the business is struggling, while transmission and distribution is doing well. The unbundling will liberalise the market allowing IPPs to supply the transmission business directly. This should enable smaller, decentralised, smart grid systems to proliferate. IPP generation will likely develop closer to where the power is required.

South Africa has a social issue in that it must help transition workers who are currently in the coal power ecosystem into other areas, as this energy source is being phased out. The transition to renewables must include a systematic roadmap to reskill and redeploy these workers. It is therefore not practical to take a “flip the switch” approach to renewable energy adoption.

The business of today and the potential business of the future have always been in conflict due to the required capital expenditure. Exxaro has the responsibility to create a sustainable organisation for the future and have a positive social impact. Exxaro is purpose driven, in that they are trying to make the world a better place.