Western Cape wants gas independent power producer programme implemented
The Western Cape is lobbying national government to initiate a Gas Independent Power Producer programme as a matter of urgency to tackle the energy crisis.
This comes as Eskom, which supplies virtually all of SA’s energy, continues to struggle to meet demand largely due maintenance issues and poor management. The power utility’s substations, which are meant to help meet peak demand in times of constrained electricity supply, currently run on diesel which the DA says is an unaffordable and environmentally unfriendly source of power. According to a recent report by the Daily Maverick, Eskom which is struggling with mounting debt of R440bn which it cannot service from revenue plans to spend up to R4.32bn on diesel for gas turbines to keep the electricity supply on until December.
An LNG feasibility study funded by the US Trade & Development Agency confirmed that it is practical to import the gas at Saldanha Bay, on the West Coast about 105km outside Cape Town. This is based on projected market demand for LNG, the performance of the underlying assets of the project, and its overall socioeconomic benefit to the Western Cape.
David Maynier, the Western Cape MEC for finance and economic opportunities, said at the weekend the national government programme to import LNG and build gas-to-power plants has stalled for the past four years, owing to a lack of movement on broader national energy policy.
“The recently released Integrated Resource Plan 2019 supports the development of gas infrastructure and new gas-to-power capacity, as well as conversion of existing gas to power, going so far as to describe unconstrained gas as a ‘no regret’ option. However, there has been little urgency from national government to begin implementation,” said Maynier.
The Western Cape had been actively promoting the importation of LNG for several years. “I will, therefore, be writing to the minister of energy Gwede Mantashe requesting him to initiate the Gas Independent Power Producer programme as a matter of urgency, and to ensure that one of the identified sites for gas importation is Saldanha Bay,” the MEC said.
The southern African region, in particular Mozambique which has a pipeline to SA, could be the major supplier of gas to SA.
According to a PwC report, although some slowdown in demand growth is expected as global economic conditions soften, particularly in China, LNG orders are not going to decline any time soon. The biggest consumption gains are expected to come from Asia and Africa.
“A large part of the renewed interest in natural gas is driven by global environmental initiatives like the 2015 Paris Climate Conference. Because natural gas emits about 50% less CO₂ gas than coal and about 30% less than oil, it is viewed as an attractive transition fuel, a placeholder until renewable options are perfected and become more cost-effective.”
Furthermore, the PwC report points out that LNG is a buyer’s market especially with an excess of natural gas on the market.
Clarification: November 11 2019
An earlier version incorrectly stated that the Western Cape government was interesting in importing gas. This story has been corrected to reflect that the Western Cape government is mainly focused on the Gas Independent Power Producer programme.