Opportunity for electricity generation from discard coal at the Witbank Coalfields
Thesis (MDF)--Stellenbosch University, 2014.
ENGLISH ABSTRACT: Coal export mines in the Mpumalanga Highveld region of South Africa generate growing volumes of discard coal estimated to be in excess of a billion tonnes. It presents a significant pollution hazard. Discard coal has a usable carbon content that can be used in the generation of power through the application of fluidized bed combustion technology. The objective of this study was to evaluate its potential as an economically viable fuel source for generation of electricity at the Witbank coalfields. This study was motivated by advances in fluidized combustion technology and significant changes in the South African electricity market in recent years. A holistic approach was adopted considering regulatory policy, market, technical, environmental and economic factors in the use of discard coal as an alternative fuel source. The policy and regulatory environment was assessed from the perspective of the private sector as project developer and the most likely source of funding, given government’s funding constraints. An evaluation of the future pricing structure of electricity, energy resource mix, demand growth, future development of the coal market, production of discard coal and the cost of coal was conducted. Levelised cost of electricity methodology was used to conduct the economic feasibility for comparison with the cost of Eskom’s pulverised coal technology for its new power stations. The study found that generating electricity from discard coal presents a significant commercial opportunity as its levelised cost of electricity was found to be lower than Eskom’s levelised cost of electricity for its new power stations. Plant sizes of 125 MW to 1 000 MW were considered. For plant capacities of about 500 MW and larger, the cost of electricity was found to be competitive with the current average electricity price taking into account the cost of transmission/distribution and interest charges. This is on condition that the electricity is sold to Eskom or wheeled through Eskom’s grid and sold to third parties. Otherwise, plant capacity will be limited to the maximum demand from large local users, which is expected to be considerably less than 500 MW. Currently there is no regulatory certainty on wheeling mechanisms and charges and it is an area where major policy development is required. The development of a project could be hampered by policy uncertainty and because of Eskom’s monopoly position as single buyer. The favourable results and findings of the economic evaluation conducted during this study warrant further detailed feasibility studies.