By Sabine Dall'Omo
The South African government’s bold bid to procure energy from gas could position the country as an African gas leader.
The Department of Energy (DoE) says development of South Africa’s gas industry could be anchored on the demand from its imminent gas-to-power programme. This makes gas-to-power a milestone not only for power generation but also for South African industry to access a natural, cleaner, and cheaper fuel to drive economic growth and industrialisation. It could position South Africa as an African gas leader, ready to take advantage of the continent’s rapid discovery and adoption of gas.
The DoE’s gas-to-power independent power producer (IPP) programme plans to procure 3 126 MW of energy, and the department says it is an opportunity for the private sector to partner with government.
Consortia of bidders will have the opportunity to bid for the programme in the ports of Saldanha, Richards Bay and Coega, according to the DoE. The department estimates that private-sector investment related to the gas-to-power programme will be R64-billion over the next four to five years, including port, pipeline, power generation and transmission infrastructure investment. A further 1 500 MW of gas-to-power has also been approved by the National Energy Regulator of South Africa.
South African government policy and planning are now aligned behind gas, and rapid implementation of gas-to-power will be enabled with private-sector technology, experience and investment. There will never be a better time for South Africa to adopt gas as a reliable and cost-effective source of power.
Gas-to-power is a proven technology deployed in thousands of installations worldwide, reliably delivering power and ensuring security of supply at competitive prices for peak demand periods. It is quick to install and has a favourable carbon footprint.
Gas power becomes even more competitive as coal prices rise, gas prices fall and carbon taxes are implemented. Gas can be used as a less expensive alternative to diesel to meet peak demand, as a very flexible supply to complement fluctuating power supplied by South Africa’s renewable-energy sector or for baseload power.
In its September 2015 study, 'South Africa’s big five bold priorities for inclusive growth', McKinsey says natural gas would not just diversify South Africa’s energy mix but also unlock new industries. Decisive moves to encourage investment in gas-to-power would position South Africa well for downstream manufacturing and for servicing a burgeoning sub-Saharan African gas sector.
The capital costs for gas-turbine power stations are much lower than their coal and nuclear equivalents. Gas-fired power plants can be quickly powered up and down to meet fluctuating demand. This means gas can increase the flexibility already provided by South Africa’s existing hydropower capacity and pumped-storage schemes.
Open-cycle gas-turbine power stations can be built in less than two years, and combined cycle plants in less than three years. Because gas-turbine power stations tend to be smaller, the benefits of localisation can be spread more evenly around the country.
Gas is a reliable power source. It will also add to South Africa’s reserve capacity and contribute to improving grid stability, while reducing carbon emissions. It is a critical existing proven technology and forms the basis of industrial development in its own right.
An unpublished study by Econometrix suggests that, if gas were to generate an additional 8 600 MW of electricity, gross domestic product could potentially grow by R645-billion, with the creation of possibly 1 720 000 jobs – if the increased power supply is supported by the right economic policies.
The Department of Trade and Industry's 2015 Industrial Policy Action Plan refers to the profound potential for transformative gas industrial policy and calls for "ongoing work to develop a roadmap for gas-based industrialisation". The National Development Plan includes gas in its proposed energy mix, and gas-to-power generation featured in President Jacob Zuma’s 2016 State of the Nation address and in Finance Minister Pravin Gordhan’s recent Budget speech. Further, the 2013 update to the 2010 Integrated Resource Plan explicitly recognises the case for gas-to-power infrastructure.
Eskom currently runs four open-cycle gas turbine power stations with a combined capacity of 2 400 MW. The biggest two are Ankerlig, in Atlantis, Western Cape, with a capacity of 1 327 MW, and Gourikwa, in Mossel Bay, with a capacity of 740 MW. They currently run on diesel, at vast expense.
Based on last year’s load factor, the capital cost of converting Ankerlig and Gourikwa to run on gas could be recouped through savings on diesel in less than a year and both plants would be 10% more efficient.
New combined-cycle gas-turbine power stations produce less than half the carbon dioxide (CO2) emissions of new coal plants (388 kg/MWh, compared with 947 kg/MW for coal). Gas-to-power produces 30% less CO2 emissions than the diesel or petrol equivalent.
Record Breaker
A new power station built by Siemens in Düsseldorf, Germany, and commissioned in January recently broke three world records as the most efficient and environment-friendly gas-fired power plant on earth. The Düsseldorf facility burns natural gas at an overall efficiency rate of 85% and is helping Düsseldorf to reach its goal to become climate-neutral by 2050.
Compared with the average emissions of European Union coal-fired power plants, the plant saves about 2.5-million tonnes of CO2 each year – equivalent to the amount emitted by 1.25-million passenger cars, each driving 15 000 km.
The turbine at the heart of the plant has output equivalent to 22 jumbo jet engines and provides a world-first 600 MW from a single unit. Its 61.5% electrical efficiency is also a world record.
The plant's 300 MW heat extraction is being used to provide urban heating for Düsseldorf homes – the greatest ever harvested from a single gas turbine.
At the heart of the Düsseldorf facility is a modern Siemens combined-cycle gas turbine power station engineered for low life-cycle costs. It is robust and flexible and suitable for peak, intermediate or baseload duty.
In South Africa, government has a key role in the unlocking of the full potential of gas, including regulation to encourage investment, the facilitation of infrastructure investment and skills development.
South Africans would do well to look at the thousands of gas-fired turbines in service internationally, delivering hundreds of thousands of hours of reliable service at low environmental cost, as well as to economies we should aspire to emulate. Globally, 20% of electricity is generated by gas. In South Africa, the figure is close to zero. But it looks like we might be about to start catching up.
* Dall’Omo is CE of Siemens Southern and Eastern Africa