The government is planning 3,000 MW of gas-fired electricity as part of the new energy push

  • The government plans to launch a procurement process for 3,000 MW of gas-fired power generation.
  • The National Energy Crisis Committee has recommended that the government procure 9,500 MW of new capacity by 2024.
  • Some of the new capacity will be procured on an emergency basis.
  • For more financial news go to News24 Business front page.

The government plans to launch a procurement process for 3,000 MW of gas-fired power generation, with the most likely options being the use of power ships or a floating LNG terminal.

The new gas generation plants will be built at Richards Bay and/or Mossel Bay.

Ironically, a 3,000 MW gas-to-power proposal to the national energy regulator was rejected by SA (Nersa) in December more than a year ago.

The National Energy Crisis Committee (Necom), which met for two full days this week, has recommended the government procure 9,500MW of new capacity by 2024.

This also includes new pumped storage plants and additional publicly procured renewable energy, batteries and gas generation.

Some of the new capacity – around 775 MW – will be procured on an emergency basis.

While the committee’s presentation, unofficially circulating on Friday, makes no specific reference to motor vessels, there is strong support in the government for a motor vessel contract lasting three to five years.

A previous emergency procurement initiated by Mineral Resources and Energy Minister Gwede Mantashe in July 2020 ended largely in disaster as only three projects reached financial closure. The specifications covered a 20-year shippable power contract.

It is believed that the tender was aimed at allowing the Turkish company Karpowership to make an easy profit. However, the award of the contract has been the subject of legal disputes with unsuccessful bidders for over a year.

Karpowership has also not yet received all permits, including environmental releases and port permits.

Since power generated by motor ships is extremely expensive, it is usually carried out in emergencies in an environment where a country is at war or in a failed state. The government is now interested in exploring a short-term energy ship contract.

SA has been in stage 5 and 6 load shedding for several weeks due to Eskom’s high rate of asset failures.

All in all, taking into account all the levers and mechanisms at its disposal and the ongoing work on the Kusile mega coal-fired power plant, the crisis management team assumes that the national grid will have an additional 29,757 MW by 2024 and beyond.

In the Necom presentation unofficially distributed on Friday, however, there was no mention of securing diesel supplies for Eskom. This is believed to be a matter still under discussion by Eskom and National Treasury.

Eskom’s diesel-powered open-cycle gas turbines can reduce load shedding by two levels. But Eskom said in December it had run out of funds to buy diesel. Burning diesel is the only immediate way to increase energy supply.

The Crisis Committee noted that most potential interventions would take several months to become operational, with a difference likely to be felt in 18 months to two years.

The committee also identified a significant list of interventions that would transform the energy supply. Among those that he believes can be completed by the end of 2023 are: Eskom sources energy from neighboring countries and from existing producers with spare capacity; the expansion of solar systems on the roof; private sector embedded generation projects and market incentives to reduce electricity consumption.

Among these, Kusile’s completion by the end of the year appears very optimistic and will likely require environmental exceptions to set up a makeshift chimney.

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