UPDATE 3-South African power generation plan keeps coal in the mix

South Africa's plans to boost electricity generation over the next decade will be a mix of renewable energy and coal power, Energy Minister Gwede Mantashe said on Friday, as nationwide power cuts entered a third day.

The long-awaited Integrated Resource Plan published on Friday replaces a previous blueprint that had not been updated in almost a decade, holding back badly needed investment in new generating capacity. Mantashe said the new plan supported a diversified energy mix and could be a catalyst for economic growth.

South Africa's power generation problems have resurfaced this week with the first power cuts in around seven months, underlining the challenge President Cyril Ramaphosa faces in reviving the country's economy and rescuing struggling state power utility Eskom. The new energy plan has provision for 1,500 megawatts (MW) of new coal power, 2,500 MW of hydropower, 6,000 MW from photovoltaic, 14,400 MW from wind and 3,000 MW from natural gas.

South Africa's power generation is currently dominated by coal, which accounts for more than 80% of output and makes the country one of the top-20 emitters of carbon dioxide worldwide. By 2030, coal would account for 59% of electricity volumes, with 8% from hydro, 6% from photovoltaic, 18% from wind and 1% from gas and diesel, the plan showed.

The life of the Koeberg nuclear power plant will be extended, but there are no plans for a large-scale nuclear expansion of the type championed by former president Jacob Zuma, Mantashe said. "Ours is not to be a lobby group for particular energy technology," he told a news conference.

Analysts said the plan did not represent the least-cost generation mix but was an effort to appease different interest groups by giving each a stake in planned new capacity. Chris Yelland, a Johannesburg-based energy expert, said the inclusion of new coal capacity was a deliberate attempt to placate vocal coal lobbyists.

But he also said those coal plants could never materialise as international and local banks are growing increasingly reluctant to lend to coal projects because of environmental concerns. ESKOM'S TROUBLES

Eskom resumed power cuts on Wednesday after unplanned breakdowns at some of its generating units reached more than 10,500 MW of its roughly 45,000 MW installed capacity. Those breakdowns show how fragile South Africa's power system remains despite some improvements in plant performance earlier in the year.

Eskom said it would cut up to 2,000 MW of electricity from the national grid on a rotational basis on Friday, more than the 1,000 MW Acting Chief Executive Jabu Mabuza had said was planned at a briefing on Thursday. "Since the media briefing last night, we have had a major setback as we have lost additional capacity from Medupi power station," Eskom said in a statement. "This means that the power system has deteriorated further creating an additional shortage of generation capacity of about 1,500 MW."

Eskom said Medupi units 3, 4 and 5 had gone offline late on Thursday due to coal and ash handling issues, compounding difficulties caused by the failure of a conveyer belt at the power station on Saturday. Medupi and sister project Kusile will be two of the world's largest coal power stations when complete, but they have been dogged by huge cost and time overruns.

They are major reasons why Eskom has debts of 440 billion rands ($29.7 billion) and why it is reliant on government bailouts for its survival. Debilitating power cuts in February and March pushed the country's first-quarter economic growth into contraction and raised the likelihood of the country losing its last investment-grade credit rating from Moody's.

Moody's is scheduled to review the rating on Nov. 1.

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