South Africa’s big plan in the field of natural gas




Power outages have become commonplace in South Africa. At the same time, the country wants to wean itself off coal, which produces more than 80% of its electricity, and makes it the world’s 12th largest source of greenhouse gases.

Most power plants in South Africa are nearing the end of their lives. Each year for the next decade, it is planned to decommission an average of about 1,000 megawatts of capacity, which is an ideal opportunity to begin overhauling the power system. The question is how.

The government intends to reduce emissions to zero by 2050. His energy plan calls for the construction of many solar and wind power plants. But there are common doubts that these projects can happen quickly enough or reliably enough to replace coal. Thus, the controversial fossil fuel remains part of the planned energy mix: natural gas.

“Electricity will have to be replaced,” said Minister of Mineral Resources Guede Mantashe on June 11 during an interview in the Mozambican capital Maputo, where he suggested that new pipelines could be built to produce more natural gas from the country’s offshore fields. “Gas is an alternative,” he said. “It could change the game.”

PLANS to use natural gas to produce at least a quarter of nearly 12,000 MW of additional capacity by 2030 are hotly contested. Fuel produces less than half of greenhouse gases than coal, but replacing the dirtiest fossil fuel with cleaner will make the task of emitting to South Africa difficult.

Funding for gas plants can also be hard to find. Some development finance institutions, which are major sponsors of many energy projects in Africa, are reviewing their investment mandates to eliminate fuel. South Africa may have to rely on companies like General Electric Co. and Exxon Mobil Corp., which have expressed interest in developing new gas projects.

“Gas is seen as a bridge to South Africa’s transition from coal energy, while allowing the country to support the goals of the economic generation through industrialization,” says Shridoran Pili, director of risk advisory at Eurasia Group. “I don’t think renewables in South Africa can be scaled to the level if they give the same opportunity to replace base load generation in the same way as gas at this stage.”

Coal capacity
Coal capacity

Elizie Cézanne, CEO of General Electric in sub-Saharan Africa, sees current capacity and the cost of batteries as the main limiting factors for the expanded use of green energy.

Restrictions largely on renewable energy have been seen in California, where last year in the state two days of outages occurred when the worst heat wave in 25 years overflowed the grid. The state is investing in battery storage to provide reliable power.

But some say the problem will be solved as battery storage technology develops and costs fall over the next few years. The risk is that South Africa will not be able to reap the full benefits if it is shut down to relatively new gas infrastructure and fossil fuels.

“From an economic point of view, it doesn’t make sense to build much more new coal or gas – even operating existing coal is becoming more expensive than building new sunlight in the late 2020s,” says Emma Champion, a BloombergNEF analyst. She says she does not expect a significant increase in electricity demand over the next decade, so it would be wiser to continue existing coal-fired plants for longer, while adding renewable capacity rather than developing gas projects.

According to Sabine Dal’Ohm, CEO of Siemens AG’s South African division, there is technology to recover lithium batteries. “Gas seems to be a transitional technology,” she says. “But I believe, looking at what the coal is going through, that financing these assets will be more difficult.”

Recent efforts to develop new coal projects in South Africa have been thwarted by litigation or lack of funding.

Andy Kalitz
Andy Kalitz

Andy Kalitz, elected secretary general of the International Gas Union in Switzerland — a trade group advocating for gas use — says South Africa needs fuel to reverse its economic situation and cope with a 33% unemployment rate.

“The first priority in South Africa is to ensure a secure energy supply, secondly, more affordable electricity and energy prices, and thirdly, to combat climate change. It is impossible to do without gas, ”says Kalitz, who previously worked as an electrical engineer at Eskom Holdings SOC Ltd. – the country’s state energy company, and later – CEO of LNG Canada. “Let investors decide on the risk of assets falling into disrepair.”

PLANS for the development of gas stations date back to 2015, but they fell as the administration of then-President Jacob Zuma turned to nuclear power plants.

Gas returned after the ruling African National Congress forced Zuma to step down and replace him with his deputy, Cyril Ramaphos. In March, the government selected the Turkish Karpowership as the preferred bidder for the supply of about 1,220 MW of electricity from floating gas-fired power plants, a contract worth about $ 16 billion over two decades. But the campaign’s environmental permit applications were rejected amid resistance from environmental activists.

Eskom, which supplies about 90% of South Africa’s electricity, plans to convert existing turbines from diesel to gas. It is also considering restoring some decommissioned plants for fuel use. It says funding options remain available.

South Africa already imports gas from Mozambique through pipelines to chemical and fuel plants operated by Sasol Ltd. Massive new gas fields have been found off the coast of Mozambique in northern Cape Delgada, although their development has been delayed by Islamist insurgents.

South Africa is also looking to extract more of its own gas. French giant TotalEnergies SE is considering developing a field off the south coast of South Africa that contains about 1 billion barrels of gas condensate. The government says the Karu semi-desert region also has potential for shale gas reserves.

“In an alternative universe, energy derived from fossil fuels such as coal and oil could be eliminated immediately,” Mantashe told lawmakers on November 18. “We are committed to a fair transition and have started investing in clean technology to transition economies with high or low carbon, while ensuring security of energy supply.”

Now read: Eskom’s plan for 146 billion rubles departs from coal



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