With a fall in gas prices and a stagnant economy, gas-fired power plants may not be as attractive an option as they were a few years ago, but they will still form a vital part of South Africa’s energy mix in future, believes Siemens.
Siemens Southern and Eastern Africa CEO Sabine Dall’Omo said gas as an industry had the potential to unlock a new wave of industrial development in Africa, but it could still take some time for this to happen.
“As we went into the assessment of establishing a gas industry in South Africa, the gas price dropped significantly and all of a sudden there were new input costs we needed to consider. I think gas-to-power will definitely go ahead, although it has been delayed for now.”
Dall’Omo said that while foreign investors were seeking investment opportunities in the gas industry elsewhere in the world, it was vital to keep the momentum about gas going in South Africa and to continue to encourage investors to remain interested.  She said Siemens was not overly concerned about the delays. “We will see it through.”
“South Africa has a good setting to have renewables as a baseload. The power mix could come from coal-fired power stations, ideally modern, upgraded ones like Kusile and Medupi, and a significant chunk of renewables for the peak, and then have gas-fired power stations overlaying this as a portion of the base, with the rest available for peaking,” suggested Dall’Omo. 
Unlike nuclear and coal-fired plants, gas-fired power plants can be quickly powered up and down to meet fluctuating demand, she says.
Open-cycle gas turbine power stations can be built in less than two years and combined cycle plants in less than three years. A 600 MW gas-fired combined cycle power plant can produce its first power within 18 months.​
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Energy Minister Mmamoloko Kubayi expressed her support on Tuesday for the country’s proposed gas-to-power programme, assuring delegates to a conference in Cape Town that government intended proceeding in line with the existing “vision and policy objectives” for gas infrastructure.
“Over the past few months we have indicated our indication to launch gas infrastructure development though the Section 34 determination under the Electricity Regulation Act, in pursuit of an initial 3 700 MW of power plants,” Kubayi said in an opening address to the Gas to Power Conference.
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Her speech came amid significant uncertainty about the future of South Africa’s independent power producer (IPP) programmes, owing to Eskom’s refusal to conclude power purchase agreements (PPAs) for 37 outstanding renewable-energy projects and fresh questions about the legal standing of the Ministerial determinations providing the framework for the procurement of new generation capacity.
Kubayi made no reference to the status of the gas determination, but confirmed recently that all determinations would need to be reviewed in light of the recent ruling by the Western Cape High Court, which set aside two nuclear determinations as “unlawful and unconstitutional” on the basis that they had not been subjected to public consultation ahead of concurrence by the National Energy Regulator of South Africa (Nersa).

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Alternative energy company Renergen on Wednesday announced a 24% increase in the natural gas reserves held at subsidiary Tetra4’s Virginia project, in the Free State.
The Alt-X-listed group’s R4.8-million drilling and exploration activities uncovered total net proven and probable reserves of 100-billion cubic feet of natural gas, up from the 81-billion cubic feet reported in 2015.

Leading South African financial institution Standard Bank has confirmed that it is keen to participate in the funding of South Africa’s gas-to-power (GTP) programme and that it is eagerly awaiting the release of the project information memorandum, outlining government’s preferred procurement model.
The Department of Energy (DoE) envisages the development of 3 700 MW of new gas-fired power generation, with 3 100 MW to be developed by independent power producers (IPPs) and the 600 MW balance in a public-private partnership with State-owned companies.

​Standard Bank head of power Rentia van Tonder tells Engineering News Online that the bank, which has been a major funder of Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) projects and which is supporting participating bidders for the first coal baseload IPP bid window, is keen to participate.
That said, she expects the GTP programme to raise a number of funding considerations, with government’s IPP Office showing a preference for a “bundled” offer that integrates the infrastructure required to import gas, including a floating storage regasification unit, and the power generation projects.

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On 20 July, Avon Peaking Power started full commercial operation of its 670 MW power plant, located in Shakaskraal, 65 km North of Durban in KwaZulu-Natal Province.
The Open Cycle Gas Turbine plant consists of 4 units and is jointly owned by ENGIE, black majority owned Legend Power Solutions, Mitsui and the Peakers Trust representing the local community. The plant lay-out allows for flexibility with regards to future conversion using gas-fired technology and as such is part of South Africa’s gas-to-power development plans.
Arnaud de Limburg, CEO of Avon Peaking Power, commented: “The construction of the Avon and Dedisa power plants demonstrate the strength of the partnership between the South African government and the private sector. The start-up of Avon, only a few months after Dedisa will be instrumental in supporting South Africa’s industrial growth ambitions. The plants will provide much needed power and energy security during peak demand periods. They will equally benefit the socio-economic development of the communities surrounding each project.”
Mohamed Hoosen, Chairman of Avon and Dedisa Peaking Power, commented: “The success of Avon and Dedisa Peaking Power paved the way for the IPP model in South Africa. Continuing with this pioneering spirit the project intends to enter its next development phase as an anchor load for gas conversion through the DOE driven introduction of natural gas to South Africa. Interestingly Avon and Dedisa benefits the ramp up of renewable power projects by compensating for their intermittency.”

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Mozambique's long-delayed offshore gas project with Italy's Eni could be approved within months, sources close to the deal said, sparking investments with the potential to transform one of the world's poorest countries into a major energy player.
Mozambique made one of the world's biggest gas finds in a decade in 2010 but negotiations with operators Eni and U.S. firm Anadarko have dragged on for years due to disputes over terms and concerns about falling energy prices.
But Eni has in recent weeks struck deals with contractors and Mozambique's government which could help it to make a final investment decision (FID) on Oct. 31, industry sources said.
Eni declined to comment. The company's Mozambique concession is split between two huge gas fields, called Coral and Mamba. Eni has previously said it expects to make FID on Coral this year and Mamba in 2017.
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Gas prices are at their lowest in 14 years. Many African countries are adopting gas as their primary power source as they seek industrialisation within environmental constraints.
Global engineering firm Siemens is at the forefront of this African energy revolution.
In Egypt, Siemens has orders to supply three natural gas-fired combined cycle power plants, each with a capacity of 4,800 MW for a total combined capacity of 14,400 MW.
It is part of an €8 billion wind and gas energy order that will boost Egypt’s power generation by 50%.
Algeria is expanding its capacity from 11,000 MW to 26,000 MW by 2022, and Siemens is supplying gas turbines for two power plants which will generate over 2,000 MW to power five million homes.
In Nigeria, Siemens supplied and financed a 459 MW gas turbine power plant.
What this demonstrates is that a determined government can overcome electricity constraints very quickly with the support of private sector expertise and technology.
South Africa is no exception, and could have thousands of new megawatts through a gas to power programme that can be implemented in two to three years.
SA urgently needs new sources of reliable clean power.

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In March 2016, an energy consortium signed a cooperation agreement to construct a pipeline that will stretch from Mozambique’s massive offshore natural gas fields to northern South Africa. Though the deal is just an early step toward the pipeline’s actual completion, it could be a sign of progress to come for both countries’ energy sectors. The consortium responsible for building the pipeline comprises Mozambique’s Empresa Nacional de Hidrocarbonetos (ENH), South Africa’s SacOil, the Netherlands’ Profin and the China Petroleum Pipeline Bureau. In their agreement, which builds on an initial deal struck in December 2014, the four companies committed to the funding needed to complete the project’s pre-investment and engineering studies, as well as the pipeline’s construction and operation. According to project estimates, the 2,600-kilometer (1,600-mile) pipeline will cost approximately $6 billion.

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The government is planning a gas-to-power programme that will contribute 3 126 megawatts of electricity.
The National Treasury last week said the move would lead to R64 billion of investments in port, pipeline, generation and transmission infrastructure in Richards Bay, Coega and Saldanha Bay.
Building on the momentum and success of the renewable energy Independent Power Producer (IPP) programme, the mooted gas programme will see more private capital injected in the electricity sector.
The Treasury said the Department of Energy was developing a gas utililisation plan, which would take a 30-year view of the gas industry from a regulatory, economic and social perspective.
Chris Bredenhann, PwC Africa oil & gas advisory lead, said the gas-to-power programme was aligned with the country’s integrated resource plan and the government’s stated intention to reduce our carbon footprint, increase the share of natural gas in the energy mix and encourage the development of a natural gas industry in South Africa.
Energy mix
“The gas IPP programme is also an important element of our energy mix, as it provides an opportunity to create generation capacity in a very short time frame – it does not require the long lead times and construction periods associated with large-scale generation projects like big coal or nuclear builds,” Bredenhann said.
As the government prepares to launch the gas-to-power programme, comparisons will be made with the successful IPP programme for renewable energy, through which the government procured 6 377MW of electricity from the private sector since the programme’s launch in 2009.
Approximately 2 045MW of the procured electricity capacity is connected to the national electricity system.
“There is significant interest in the gas IPP programme from project developers, both large and small. This was demonstrated by the large number of responses submitted to the Department of Energy on the request for information that was issued mid-2015,” Bredenhann said.
“The gas IPP programme is however more complex than the renewable energy programme, as it is exposed to a number of additional components and risks. These include gas supply, receiving and regassification infrastructure, transmission and distribution infrastructure, supply risk, price risk and foreign exchange risk,” he said.
Such matters would be addressed in a request for qualifications that would be issued during the course of this year, which would provide the procurement framework against which developers would be required to bid, he said.
“The success of the programme will therefore depend on the design of the procurement programme and the evaluation of the bids received,” Bredenhann said. There were several potential gas sources, “but the initial gas will be in the form of imported liquefied natural gas. Domestic shale gas and coal-bed methane are future options that may be explored, as are potential offshore gas developments and piped gas from Mozambique,” he said.

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In Southern Africa, the South African branch of multinational steel manufacturer ArcelorMittal, is seeking an eligible independent power producer (IPP) to construct an 800MW gas-fired power plant at its steel works plant in Saldanha.
This is according to the Chief Executive Paul O'Flaherty, who advised that this move is necessary to ensure the survival of the business, Reuters reported.

According to Reuters: “ArcelorMittal, which is reviewing its Saldanha operation partly due to high electricity costs, is willing to take as much as 220MW of the plant's capacity and the company is in talks with other industrial users and the government to sign long-term contracts for the rest.”O'Flaherty told Reuters that the development of this power plant is vital for the survival of Saldanha, adding that state-owned power utility Eskom's increasing tariff prices was not feasible for the long-term growth and development of the company.
Electricity accounts for nearly a third of costs at Saldanha, the company's newest and only export-focused plant, compared with less than 10 percent for the rest of the company.
Confirming that ArcelorMittal South Africa would not own the project, O'Flaherty said: "An environmental impact study is underway on our land.”

With efforts to save its own power costs, the steel manufacturer has been supplying structural steel for wind towers and concrete-reinforcing bars for foundations over the past few years.

In 2014, the firm was in the process of finalising the upgrade of its Plate Mill to produce plates of up to 11 tonnes of steel. It was then that the company announced plans to increase its presence in the wind energy sector by expanding production of the heavy plates needed for wind towers.
At the time, Jan Kotzé, product manager for Plate & Renewable Energy Projects at ArcelorMittal South Africa said: “We are undergoing discussions with some of the major international wind tower makers like Nordex, Siemens and Vestas to supply steel for more wind farms in rounds two and three of [the South African] government’s renewable energy initiative.
“ArcelorMittal South Africa’s role in round two of the wind energy programme is to supply steel for 20 wind towers to a Vestas Wind Farm called the Grassridge Wind Energy facility situated in Eastern Cape.
He added: “The total requirement for these towers were 3,000 tonnes of steel where ArcelorMittal South Africa have provided 2,200 tonnes and the remaining 800 tonnes have been imported from Gigon in Spain.”
The development of wind energy projects forms part of the South African government’s Integrated Resource Plan that aims to supply a total of 3,725MW of renewable energy by 2016 and 17,800MW by 2030.

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