Beyond the acute project management and workmanship problems it has experienced, the P11 billion disaster that is Morupule B Power Generation and Transmission Project has received a thumbs-down from both an Oxford University think tank and the United Nations body on climate change. The latter states in forthright language that the power station should be shut down.
In the judgement of the United Nations Framework Convention on Climate Change (UNFCCC), Morupule B is deserving of such fate because it belongs in a category of power stations (sub-critical) that are a serious environmental hazard.
The Stranded Assets Programme at the University of Oxford’s Smith School of Enterprise and the Environment puts Morupule B in the category of “stranded assets” which it defines as “assets that have suffered from unanticipated or premature write-downs, devaluations, or conversion to liabilities and they can be caused by a variety of risks. Increasingly risk factors related to the environment are stranding assets and this trend is accelerating, potentially representing a discontinuity able to profoundly alter asset values across a wide range of sectors.”
According to the School, coal provides 40 percent of the world’s electricity, with 1,617 gigawatts of global capacity. Of this capacity, 75 percent is subcritical, 22 percent supercritical, and three percent ultra-supercritical. It says that subcritical is the least efficient and most polluting form of coal-fired generation as it requires more fuel and water to generate the same amount of power, and creates more pollution as a result. The average subcritical coal-fired power station (SCPS) emits 75 percent more carbon pollution than an average advanced ultra-supercritical – the most up-to-date form of coal-fired power station – and uses 67 percent more water. While the average age of all coal-fired power stations globally is 21 years, ultra-supercritical power stations are considerably younger, with an average age of just five years.
“The international community needs options for addressing the most significant contributors to anthropogenic climate change. One option, presented publicly by Christiana Figueres, Executive Secretary of the United Nations Framework Convention on Climate Change, is the closure of subcritical coal-fired power stations. To limit global emissions to a level consistent with a 2┬░C future, it is necessary to close a quarter or 290 gigawatts of subcritical generation worldwide by 2020,” the School says in its latest report titled “Stranded Assets and Subcritical Coal: The Risk to Companies and Investors.”
The objective of this research is to provide investors with the information required for screening, engagement, or divestment actions on the basis of exposure to the SCPS assets at most risk.
“SCPS assets are not identical, and investors (and companies) need the tools to identify which portfolios have assets with more (or less) exposure to environment-related risks,” says the report, adding though that where, as in the case of Botswana, governments have a significant stake in SCPS portfolios, “it is generally thought that they would be less likely to introduce policies that would directly strand their own assets.”
The research estimates that by 2025, the levelised cost of imported hydropower is expected to become lower than domestic coal-fired power, and the levelised costs of wind and solar are also expected to fall significantly. (Levelised cost means the net cost to install a renewable energy system divided by its expected life-time energy output.)
“These technological advances will be augmented by the introduction and escalation of carbon taxation,” it adds.