South Africa Plans Two Gas-Fired Power Plants

South Africa's Department of Energy has announced that it has chosen sites for two new LNG gas-fed power stations, marking a significant new shift in the country’s energy balance in favour of gas.

The chosen sites are on the south coast at Coega, near Port Elizabeth, and at Richards Bay on the east coast. Both have deep-water ports and Industrial Development Zones.

In the longer term, a further gas-to-power project is expected to be put out to tender also at Saldanha Bay, on South Africa’s west coast, where there is a new generation Industrial Development Zone, known as a Special Economic Zone.

Delegates at a natural gas conference in Cape Town on the evening of October 3 were given details of the so-called LNG Independent Power Producer procurement programme (LNG IPPPP) plans.

A policy document has been published which will form the basis for procurement. Companies wishing to participate will be required to establish special purpose vehicles (SPVs) to bring on board local partners, as the South African government is committed to promoting black-owned and run businesses.  These local partners will hold 35% of the equity in each of the gas-to-power projects.

Prospective bidders will be asked to develop an integrated gas-to-power installation at each of the sites.  These will include the supply of the gas, a floating storage regasification unit, port infrastructure, a pipeline to deliver the gas to the new power plant, as well as the construction of the plants and its connection to the national grid.

There will also be the possibility of supplying gas to residential and commercial customers.

A Request for Qualifications will be issued in November, and pre-qualified bidders will receive a Request for Proposals in August 2017.

The Coega power project will be 1,000 MW while Richards Bay will be twice the size at 2,000 MW.  

The LNG IPPPP projects are designed to spur industrialisation and serve to stimulate exploration of South Africa’s native gas resources.

Energy minister Tina Joemat-Pettersson (Photo credit: South African government)

South African energy minister Tina Joemat-Pettersson said in the document that the new initiative “is expected to build significant anchor gas demand in the South African economy, while indigenous and/or more regional gas supply is being developed, and will over time supplement imported LNG”.

Her ministry will handle the procurement, while South African power utility Eskom will be the customer.

A speech by Joemat-Pettersson was read at the South African Gas Options conference by her colleague, trade and industry minister Rob Davies.

“The vision for gas in South Africa…takes into account the anticipated gas market and potential for indigenous or regional gas with a 25-year planning horizon,” Business Day newspaper quoted Davies as saying.

“The Preliminary Information Memorandum outlines the policy framework for the country which guides the procurement process, gives a high level overview of the existing gas market including existing potential for gas consumption in different ports of the economy, and describes the projects.”

Davies also said that his own department has a gas industrialization programme, and is working on an action plan to boost the use of gas by industry and the residential market.

Most of South Africa’s existing natural gas supply comes from Mozambique, along a pipeline which was constructed by energy and chemicals conglomerate Sasol.  

John Fraser, Pretoria