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

  • The government plans to start a process of acquiring 3,000 MW of gas generation power.
  • The National Energy Crisis Committee has recommended that the government acquire 9,500 MW of new capacity by 2024.
  • Part of the new capacity will be acquired in case of an emergency.
  • For more financial news, go to News24 company 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 deployment of electric ships or a floating LNG terminal.

The new gas generation facilities will be located in Richards Bay and/or Mossel Bay.

Ironically, a 3,000 MW gas proposal to SA’s National Energy Regulator (Nersa) more than a year ago was rejected in December.

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

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

Part of the new capacity, about 775 MW, will be acquired in case of emergency.

While the committee submission that was being circulated unofficially on Friday does not specifically refer to electric boats, there is strong government support for an electric boat contract with a limit of three to five years.

A previous emergency procurement launched by Minister of Mineral Resources and Energy Gwede Mantashe in July 2020 ended mostly in disaster with only three projects reaching financial closure. The specifications were for a 20-year dispatchable power contract.

It is suspected that the tender was designed to allow an easy victory for the Turkish company Karpowership. However, the award of the contract has been in litigation for more than a year due to the loss of bidders.

Karpowership is yet to obtain all its approvals, including environmental clearances and port approvals.

Since power generated by electric ships is extremely expensive, it is usually done in an emergency in an environment where a country is at war or a failed state. The government is now interested in exploring a short-term electric boat contract.

SA has been on stage 5 and 6 discharge for several weeks due to Eskom’s high plant failure rate.

All in all, taking into account all the levers and mechanisms at their disposal, as well as the ongoing work at the Kusile coal-fired mega-plant, the crisis committee believes that by 2024 and beyond the national grid will have an additional 29 757 MW.

However, in Necom’s presentation that was unofficially released on Friday, there was no mention of the assurance of diesel supply for Eskom. This is believed to be an issue still under discussion by Eskom and National Treasury.

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

The crisis committee noted that most of the possible interventions would take several months to come into effect, with a difference likely to be felt only 18 months to two years from now.

The committee also named an important list of interventions that would make a difference in energy supply. Those it believes can be completed by the end of 2023 include: Eskom buying power from neighboring countries and existing producers with excess capacity; the expansion of solar energy on the roof; private sector integrated generation projects and market incentives to reduce electricity consumption.

Among these, completion of Kusile by the end of the year looks very optimistic and is likely to require environmental waivers to get a temporary chimney up and running.

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