With a fall in gas prices and a stagnant economy, gas-fired power plants may not be as attractive an option as they were a few years ago, but they will still form a vital part of South Africa’s energy mix in future, believes Siemens.
Siemens Southern and Eastern Africa CEO Sabine Dall’Omo said gas as an industry had the potential to unlock a new wave of industrial development in Africa, but it could still take some time for this to happen.
“As we went into the assessment of establishing a gas industry in South Africa, the gas price dropped significantly and all of a sudden there were new input costs we needed to consider. I think gas-to-power will definitely go ahead, although it has been delayed for now.”
Dall’Omo said that while foreign investors were seeking investment opportunities in the gas industry elsewhere in the world, it was vital to keep the momentum about gas going in South Africa and to continue to encourage investors to remain interested. She said Siemens was not overly concerned about the delays. “We will see it through.”
In an interview with Engineering News Online, she said gas had numerous advantages. It is a cleaner energy source, which consumes significantly less water than coal-fired or nuclear power stations.
“South Africa has a good setting to have renewables as a baseload. The power mix could come from coal-fired power stations, ideally modern, upgraded ones like Kusile and Medupi, and a significant chunk of renewables for the peak, and then have gas-fired power stations overlaying this as a portion of the base, with the rest available for peaking,” suggested Dall’Omo.
Unlike nuclear and coal-fired plants, gas-fired power plants can be quickly powered up and down to meet fluctuating demand, she says.
Open-cycle gas turbine power stations can be built in less than two years and combined cycle plants in less than three years. A 600 MW gas-fired combined cycle power plant can produce its first power within 18 months.
According to a 2015 McKinsey study ‘South Africa’s Big Five: Bold Priorities for Inclusive Growth’, the development of South Africa’s natural gas industry could boost the country’s gross domestic product by as much as R250-billion by 2030, and create up to 328 000 direct and indirect jobs.
“In these times, we cannot just do commercial propositions. As leaders of companies, we need to think of society. If you don’t enable society to be productive, they will not be able to pay for your goods in future,” said Dall’Omo.
Meanwhile, given the tough times facing businesses in South Africa, Siemens is also considering expanding its operations further in the rest of Africa.
“We are also looking into venturing into other countries from South Africa. We’d like to keep South Africa as a service hub for exploration into other African countries, as it has a unique value proposition in having available developed capabilities in auditing and law.”