A black-empowered consortium that includes companies with extensive gas-to-power experience has made a formal submission to the Department of Mineral Resources and Energy (DMRE) in which plans for power generation plants capable of adding between 300 MW and 3 300 MW to South Africa’s grid within 12 to 36 months are outlined.

The offer has been made in response to a request for information (RFI) released by the DMRE in December in an effort to inform an upcoming ‘Risk Mitigation Power Purchase Programme’, which will seek to address an immediate supply deficit of 3 000 MW with solutions that can be “grid connected in the shortest time at the least possible cost”.

The closing date for the RFI was January 31 and the DMRE has given itself a month to evaluate the proposals and design a procurement process.

Engineering News has not yet been able to confirm the number of submissions made ahead of the RFI deadline, nor what solutions have been proposed. It is understood, however, that the DMRE received a strong response, with hundreds of potential bidders having descended on the Centurion headquarters of the Independent Power Producer Office at the end of January to hand-deliver their proposals.

​One of the responses seen by Engineering News is an offer made by a consortium named Mhlathuze Energy, which derives it identity from the Zulu name for the river that meanders through Richards Bay, in KwaZulu-Natal – the proposed location for its project.

The consortium includes black economic empowerment company Phinda Power (a member of the Newlyn Group), Japanese multinational Marubeni and liquefied natural gas and gas-to-power specialist Golar Power.

Mhlathuze Energy’s proposal provides for the rapid deployment in Richards Bay of 300 MW (up to a maximum of 1 200 MW) of emergency power generation capacity that could be operational within 12 months of financial close.

The solution would involve the deployment of General Electric- (GE-) supplied mobile aeroderivative gas turbines. The solution would require the importation of liquefied natural gas (LNG) supplied through a floating storage regasification unit (FSRU) and the construction of the LNG marine import infrastructure.

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​In June 2017 Italian oil and gas company ENI committed to investing $10-billion on the building of Coral South, a floating liquified natural gas (FLNG) project off the Rovuma basin in Mozambique, the world’s first ultra-deep-water FLNG facility. 8

In June 2019, Mozambique LNG (led by US-based Anadarko) committed $20-billion on the development of integrated offshore and onshore gas fields, through LNG, in the Rovuma basin, east of Palma, and in December 2019, Rovuma LNG (led by ExxonMobil and ENI) is expected to commit $30-billion to develop the same.

Each of these projects marked the largest investment of its kind in Africa, only to be overtaken by the next. The chance for Mozambique to grow its $14-billion economy and repay its government debt, now sitting at 100% of GDP, is a once-in-a-lifetime opportunity.

Standard Bank, which is heavily involved in Mozambique’s gas sector, says the Rovuma LNG project alone has the capacity to boost GDP by between $15-billion and $18-billion per annum and contribute $5-billion annually to the fiscus and create 323,000 employment opportunities – with LNG as a whole potentially facilitating real GDP growth of 8% to 10% over the next 30 years.

While it is not yet clear to what extent South Africa will benefit from a new source of LNG – prices will have to be negotiated on competitive terms – local companies can benefit from the sheer volume of work underway in the northern neighbour.

“A $128-billion capex spend over a decade is a major opportunity for SA business to physically supply the projects (and associated investments),” says Paul Eardley-Taylor, southern Africa head of oil & gas at Standard Bank.

“SA could export goods and services to Mozambique, investors could form companies in partnership with Mozambique nationals,” he says.

There will also be opportunities for SA human capital working on the LNG projects and other domestic gas investments as employees, contractors, manufacturers, service providers and consultants.

Standard Bank has committed to finance part of the Anadarko project (which has been acquired by French petrochemical giant Total) and also plans to finance part of the ExxonMobil project due to be announced later in 2019.

This could then see South Africa’s Export Credit Insurance Corporation, a dti subsidiary, underwriting part of this investment, Eardley-Taylor says.

“This could secure market access for SA companies of over $500-million. And the same could apply if SA companies are involved in Rovuma LNG.”

At a recent Mozvest conference held in Cape Town, speakers noted the limitations of Mozambique’s infrastructure to handle projects of this nature.

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​The acting head of the Independent Power Producer Office (IPPO), Advocate Sandra Coetzee, says “time is of the essence” for finalising South Africa’s gas-to-power (GTP) plans in light of the prospect of possible electricity supply shortages arising from the underperformance of Eskom’s coal fleet.

Coetzee, who was appointed in July, says gas will definitely play a role in South Africa’s transitioning electricity system, as it offers the flexibility required to complement variable renewable energy plants. In addition, GTP plants can be built relatively quickly and have lower emissions than coal-fired stations.
Speaking at a seminar hosted by Nedbank and EE Publishers, she acknowledged that gaps remained in South Africa’s gas policy framework and indicated that Eskom’s weak financial position also posed procurement challenges, with the utility remaining the single buyer of power produced by independent power producers (IPPs).

In addition, South Africa did not have sufficient domestic gas resources to supply GTP plants, as well as existing and future industrial users, and had yet to build the infrastructure needed for the import and processing of liquified natural gas (LNG).

However, the imminent promulgation of the updated Integrated Resource Plan (IRP), together with the fact that a ministerial determination was already in place for the procurement of over 3 000 MW of GTP capacity by 2030, meant that South Africa was not entirely constrained by the absence of a coherent framework.

The draft IRP envisages the first 1 000 MW of GTP capacity being introduced into the South African grid by 2024, with a further 2 000 MW to be added by 2027.

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Bulk liquid storage operator Bidvest Tank Terminals’ (BTT’s) R1-billion mounded liquefied petroleum gas (LPG) storage facility in Richards Bay, KwaZulu-Natal, is set to house the largest tanks in the world and is expected to greatly enhance LPG supply in Southern Africa once completed, the company has indicated.
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The facility will store LPG on behalf of independent LPG specialist Petredec, which ships the fuel from the US and the Middle East. LPG is produced as a by-product in the oil refining process.

Petredec sought an import facility specifically on South Africa’s East Coast, and Richards Bay was seen as the most suitable port to handle this capacity. Being able to receive larger shipments also makes product handling more cost effective, reducing overall logistics costs.

The port is also on Petredec’s shipping route and in close proximity to the main rail and road logistics routes going inland, particularly as most of the LPG will be used in Gauteng, the Free State and the North West. This logistics infrastructure is also of high quality.

The project, currently under construction, was initiated at the end of 2017 and is slated for completion in July 2020. It is expected to increase LPG supply in South Africa by 200 000 t/y, half the country’s current consumption of about 400 000 t/y.

Replacement Energy Source
BTT and Petredec are confident that there is demand for LPG, BTT MD David Leisegang tells Engineering News.

The companies believe that the greatest demand will stem from LPG’s use as a replacement energy source, such as a substitute for wood or paraffin for heating and cooking. The use of these energy sources is still quite prevalent in South Africa, especially in informal settlements and areas where there is not any reliable access to electricity.

Leisegang emphasises that the health benefits of LPG are “considerable”, compared with the energy sources mentioned, as are its safety credentials, as “many of the fires in informal settlements are [the result of] cooking with these sources of fuel”.

LPG has been identified by the World Bank as the most environment friendly of all fossil fuels; therefore, the facility is expected to assist in providing a viable, reliable, safer and more environment- friendly energy alternative.

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Energy solutions company Novo Energy on Friday launched a R130-million large-scale natural gas compression facility at the Highveld industrial park, in eMalahleni, Mpumalanga.

The facility provides cleaner, and more reliable and cost-effective energy, compared with coal and other petroleum products.

At the launch, CEO Andri Hugo said the facility would play a significant role in helping to unlock South Africa’s power constraints, while also reducing carbon intensity.

“South Africa is a coal-based economy with about 77% of electricity generated from coal and a large portion of transportation fuels derived from the same source. Add to that the large percentage of industrial processes that use coal and you have an entire industrial sector built around cheap coal and electricity.

“But we depend heavily on imported resources for our hydrocarbon supply and this has resulted in exposure to international energy supply uncertainty, issues of reliability and price volatility,” he pointed out.

He added that although South Africa’s gas market is small, accounting for only 3% of the energy mix, the inherent benefits have the potential to change the economy by stimulating economic growth, development stability and job creation.

“Africa has been blessed with an abundance of resources, including minerals, energy, natural resources and human capital. A combination of these, through industrial activity, can address most of the socioeconomic challenges we face.

“Natural gas will play an important role in our energy mix through power generation, thermo-industrial applications and transportation and the vast natural gas discoveries on the continent will provide the key to unlocking our gas economies,” Hugo further pointed out.

Novo business development manager Justin Austin, meanwhile, said natural gas was the simplest hydrocarbon available, making it suitable as a feedstock for fertilisers, plastics and energy applications.

Natural gas can also be used as a heating fuel for industrial, commercial and residential applications, steam generation and direct heating applications, natural gas-run vehicles and power generation, he pointed out.

The eMalahleni gas compression station is Novo’s thirteenth – and its largest – such facility.

Austin said the most important application for natural gas going forward would be for power generation in remote locations, especially for remote mines that do not have grid accessibility and are using diesel as an energy source.

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The UK yesterday hit a milestone of running without coal power for three days in a row – the longest coal-free period in the country since the 1880s.

It started on Saturday morning and ended on Tuesday, according to National Grid, hitting a total of 72 hours and 10 minutes.

Without coal on the grid, 33 per cent of the UK’s electricity came from gas, 20 per cent from windpower and 24 per cent from nuclear.

Then there was 8 per cent from imports from France and The Netherlands, 7 per cent from solar, 6 per cent from biomass, 1 per cent from hydropower and 1 per cent from pumped storage.

Coal accounted for less than 7 per cent of Britain’s energy mix last year and the government is to phase-out the fossil fuel completely by 2025.

Hannah Martin, Head of Energy at Greenpeace UK, said in response to the coal-free days: “As coal power is phased out to prevent environmental disaster, and nuclear power phases itself out through economic disaster, the government would be wise to support the cleanest and cheapest energy sources, onshore wind and solar.”

"Offshore wind has proven to be popular and able to provide affordable clean energy, as well as skilled jobs and fair bills. As we have more and more days without coal, we need to make sure it is replaced with the renewable technologies of the future."

UK power generator Drax may be able to end its coal-fired power operations ahead of the government’s 2025 deadline.

The company’s CEO believes Drax’s biomass and gas-fired power operations, coupled with battery storage, are capable of replacing any coal closures ahead of time.

“We’re exploring options for repowering our remaining coal units to use sustainable biomass and gas which we believe could help us to become coal free even earlier than the 2025 deadline,” Drax chief executive Will Gardiner said. 

Drax has converted three of its six power plant units to burn wood pellets and plans to convert a fourth unit to biomass later this year. Drax said it could replace the remaining two units with gas plants and up to 200 MW of battery storage. 

You can track the live mix of renewables, fossil fuels or imports used in Britain's energy mix through the University of Durham's website at www.durham.ac.uk/dei/dashboard

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The Western Cape Government's bid to secure cleaner forms of energy received a boost due to a R10 million grant from the United States Government through its Trade and Development Agency (USTDA).

Liquefied Natural Gas (LNG) is a key component of a lowest cost energy scenario for the country. This USTDA grant will further develop the opportunity for LNG in the province through a feasibility study on the demand and potential impact of LNG importation at Saldanha Bay. The study will also provide a preferred model for the importation of LNG for gas-to-power electricity generation capacity and for industrial, transportation, commercial, and domestic uses. The grant will be administered through GreenCape who will select a US firm (as required by USTDA) to complete the study.

Minister Winde said: "I would like to commend the USTDA for funding this initiative. We must reduce our reliance on coal and make better decisions for our environment, and our economic future. Natural gas has the potential to play a key role in our plan to grow our alternative energy sources and this study supports the Western Cape's objective to secure a reliable and affordable energy supply. This is also why we are prioritising the growth of our oil and gas sector as part of our Project Khulisa strategy. We are also immensely proud of GreenCape for securing this vital piece of work. Their reputation as South Africa's leading energy advisory and support body is growing from strength to strength."
According to Lida Fitts, USTDA's Regional Director for Sub-Saharan Africa: "USTDA is pleased to support this project, which will help increase access to affordable, reliable energy in South Africa. At the same time, this project will create opportunities for U.S. businesses in one of South Africa's growing sectors."

Mike Mulcahy, CEO of GreenCape, added: "Natural gas has a critical complementary role to renewable energy for power generation in a lowest cost, low carbon, energy future for South Africa. GreenCape is grateful to USTDA for their support in exploring and unlocking these opportunities."

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​The pursuit of piped gas into South Africa from Mozambique could unlock South Africa’s gas economy, says investment and projectdevelopment company Fortune Capital.
Referring to the African Renaissance Project (ARP), Fortune Capital CEO Nhlanhla Magubane explains that the project is a 2 600 km cross-border terrestrial gas pipeline project, which will transport gas from the offshore and onshore basins to all Mozambique’s major cities, special economic zones and South Africa at a capital cost of $7-billion.

“The indispensable essence of this project is that it provides the potential for South Africa to have energy security, economic growth and development, as well as environmental sustainability. Currently, the project is in an exploratory phase and we are involved in project planning,” he says.
Magubane adds that Fortune Capital’s focus is mainly to ensure that the gas gets to South Africa so that it can stimulate the independent power producer (IPP) market, and the domestic and industrial markets.
“This project will be a game changer for the region, stimulating industrial growth, providing clean and affordable energy, and reducing carbon emissions.”
The prefeasibility study was finalised in February and the findings were positive and determined that the project is fundable, says Magubane. He notes that the final feasibility study started mid-year and will point the project towards the start of construction in about a year’s time.

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South Africa’s State-owned Industrial Development Corporation (IDC) has approved R218-million in loan finance to support the further development of a natural gas resource in the Free State through the creation of a 107-km pipeline network and associated gas processing facilities.
The funding, which remains subject to the fulfilment of certain conditions, will be used by Tetra4, the natural gas subsidiary of JSE-listed energy company Renergen, which is also planning to raise a further R145-million in equity finance to implement the project.

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