Given recent regulatory changes, the South African energy environment is now supporting behind-the-meter and distributed power generation projects.

South African companies should follow Mozambican cement factory Limak Cements SA’s example by investing in on-site natural gas power generation to ensure a stable and reliable energy supply.

Limak recently inaugurated a 4.8 MW on-site gas-to-power plant in Matola, Mozambique. The project, which is part of the Turkish-owned group’s global initiative to achieve its environmental goals, is supplied by the Mozambique natural gas company Matola Gas Company (MGC), and provides Limak with an economical, stable and reliable source of electricity.

Energy project developer Gigajoule points out that reliable electricity supply is even more important for South African firms that are, unlike their Mozambican counterparts, regularly exposed to rotational power cuts or curtailment. Converting the favourable regulatory changes to projects on the ground does however depend on more natural gas becoming available to the South African market, it states.

“Irrespective of the source of the power being wheeled, a South African user will be subject to loadshedding unless it is generated on-site behind-the-meter,” the company says, adding that the Electricity Regulation Act (ERA) has been “liberalised” to allow South Africans to generate power on-site or to procure up to 100 MW of power without going through the National Energy Regulator of South Africa’s licensing process.

The change to the ERA is considered a fundamental and positive shift in the paradigm and opened a world of opportunities for South African industries to increase their power availability, while potentially decreasing embattled Eskom’s burden.

The significant increase in the private procurement of energy from solar and wind sources, is likely to see State-owned Eskom’s tariff structure “start reflecting the true cost of being on standby when the wind doesn’t blow, or the sun doesn’t shine”.

Essentially, Gigajoule says that users with on-site generation need to balance their renewable energy and be logical about it. Other than the fact that the cost of Eskom energy is likely to increase, behind-the-meter on site generation or provision of available power is the only way to mitigate against load shedding or curtailment, especially considering that Eskom is obliged to loadshed all users when the system becomes unstable.

This is irrespective whether the generation source may be from other off-site suppliers independent of Eskom.

“This means that the only way to ‘loadshed-proof’ oneself is to generate power on-site behind the municipal, or Eskom, meter, rather than to buy power that needs to be wheeled across the system, unless exceptions are made” the company says.

The concern is that the high price and environmental impact of LPG and diesel make it unfavourable options, which has been subsequently worsened by supply constraints in the region.

“Realistically, this leaves only one alternative – natural gas,” Gigajoule states.

Natural gas is used globally to provide both a stable source of power, but also to balance and support the large-scale implementation of renewable energy generation projects and their intermittent nature.

Natural gas technology, Gigajoule says, is also seen as the “best solution” to decrease coal dependence in the short term and reach net-zero milestones.

However, Gigajoule laments that several hurdles to this alternative route remain, as the South African market currently has limited access to cleaner burning fuel, like the natural gas being used by Limak.

While South Africa has access to the Pande Temane fields, in Mozambique, which currently supply petrochemical company Sasol and other inland customers, the Pande Temane fields have reached a production cap, with an uncertain remaining lifespan and it does not serve significant pent-up demand.

Currently, there are almost 100 MW of potential on-site gas-to-power projects being pursued in KwaZulu-Natal, Gauteng, and the Nort West, and there are projects that have been approved by some municipalities that are investigating gas-to-power facilities within their local distribution network.

However, none of these projects can progress until additional natural gas becomes available, Gigajoule stresses.

As such, the company is encouraging the adoption of projects similar to the Beluluane Gas Company (BGC) project, under development by Gigajoule, MGC and global petroleum business TotalEnergies.

BGC is a liquefied natural gas importation terminal in Matola, Mozambique, and has been in development since 2016.

“BGC will have sufficient capacity to supply natural gas to the region, to meet the full capacity of the Republic of Mozambique Pipeline Company (Rompco) pipeline, the 865 km transmission pipeline connecting Pande and Temane in Mozambique, to South African gas users, as well as the Mozambican industrial and power generation market,” says Gigajoule.

Rompco started transporting 120-million gigajoules a year in 2004 for Sasol’s consumption, to inland South African customers and to the Mozambican market. Since 2004, the quantity of natural gas supplied via Rompco increased to 180-million gigajoules a year, where it has since reached a cap owing to production limitations.

Recent communications and publications from the gasfield operator indicate that the Pande and Temane fields will start to decline between 2025 and 2028 with a depletion date of the early 2030s, meaning that South Africa is facing a so-called gas cliff if alternative supply options are not developed in earnest.

Gigajoule’s BGC project will be able to alleviate the desperate need for gas from early 2026, which the company says should open the doors for many Limak-like projects across the South African industrial and mining landscape.

https://www.bgc.co.mz/