Power ships are not the answer
The flaws of electricity procurement from these floating power plants outweigh the benefits
SA committed to reducing greenhouse gas emissions in the Paris Accord, but the technologies to achieve the targets were not specified. In addressing the energy needs of the country, the government intends increasing gas use. Will SA benefit from power ships anchored off the southern coast?
Commitment to climate change abatement requires the country to reduce its use of coal. Projections that greenhouse gas emissions will peak in 2020-2025, plateau for a decade and decline thereafter are unachievable.
Gas used in the power ships is a polluting resource too, though less so than coal, which gives off twice the amount of carbon dioxide emitted by gas in producing the same amount of electricity. Countries like the UK managed to reduce their greenhouse gas emissions by substituting coal with gas when nonpolluting renewable energy was in its infancy.
Fossil fuels risk being stranded, but that is clouded by the unenforceable nature of global environmental agreements and the actions of individual countries. It has been projected that by 2040 global trade in coal will drop to 0.1% of the 2017 levels, while gas will increase to 1.7%. It is therefore unlikely that the ban on fossil fuels will be effected in the 20 years that power ships will be in operation.
Some countries are developing extensive coal infrastructure — Indian company Adani is developing a coal mine, a railway system and a harbour in Australia to import coal. Such projects are unlikely to be abandoned in the near future or before the sunk costs are recovered. The fossil fuel lobby in SA argues that the country must continue with electricity generation that provides reliable and affordable electricity from proven sources like coal for sustained economic growth. Theirs is a powerful voice.
In the power ships’ favour is that the generation infrastructure is already in place. This avoids construction crises like the delays, escalating costs and technical failures experienced at Medupi and Kusile. The process of commissioning power ships is short and suits SA, which is suffering frequent blackouts.
However, the lead time argument downplays delays from licencing requirements like environmental impact assessments. Karpowership’s units may not be operational within two years as claimed by the authorities if regulatory compliance is not achieved.
The impact of the power ships on economic growth is mainly premised on electricity supply without the complementary growth in manufacturing, installation and servicing of replacement components that occurs in the renewable energy sector, such as at Atlantis.
Activities in the renewable energy sector are more diverse, create a wider spectrum of jobs, and have greater impact on the economy than power ships that come fully equipped from foreign countries. Local content in manufacturing and jobs is unenforceable when power ships are used.
Another concern is the source of gas fuel. Karpowership partners with Shell for fuel supply and this creates security of supply risks for SA, which does not have domestic gas supplies. Exposure to fluctuating global gas prices also results. Disagreements with partners can result in power cuts like those implemented by Karpowership in Sudan after the country failed to pay.
Electricity prices from emergency procurement from power ships are bound to be high. In Zambia, Karpowership had a two-year contract and charged $0.1673/kWh, while Eskom had a one-year contract and charged $0.0600 — $0.19/kWh. These prices also indicate that build-own-operate contracts are not necessarily cheap. SA will pay higher prices for the 20 years of supply from the power ships.
The department of mineral resources & energy needs to fully explain the terms of the contracts and guidelines for all procurement processes in the energy mix. Failure to be transparent and accountable raises the fear of unilateral decision-making and corruption. Reasons for choosing the costly power ship technology and ignoring advice from other stakeholders need to be explained.
As a small-scale contributor to the energy mix, the flaws of electricity procurement from power ships outweigh the benefits. The length of the contract is also too long for emergency procurement. The target must be sustainable generation.
• Maqanda, a chemistry lecturer at the University of Fort Hare, is completing an economics PhD at Rhodes University.
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