South Africa Remains Wary Of Investment In Gas To Power - Africa’s premier report on the oil, gas and energy landscape.

South Africa Remains Wary Of Investment In Gas To Power

Dikobe Ben Martin, MP

Mozambican gas is viewed as costly LNG option, which can’t even compete with nuclear
By Toyin Akinosho

Natural gas remains at the bottom of the pile among fuels in consideration for firing electricity plants in South Africa in the next twenty years.

The latest draft of the Department of Energy’s Integrated Resource Plan (December 2013) takes cognizance of the vast recent increase in natural gas reserves in fields offshore Tanzania and Mozambique-next door – but considers that their distance “would lead to higher costs, closer to the LNG price”. The 114 page document remarks: “There may even be an argument that suggests South Africa would be better served to allow this gas to be liquefied and then import it as LNG rather than increase energy dependency on one source of gas”. The assumed price of LNG in the document is $10/MMBTU.

The plan proposes ‘base case’ capacity of 3,550MW of electricity from combined cycle gas turbine (CCGT) plants, compared with 6,660MW from nuclear and 9630MW from Solar PVs by 2030.

If shale gas is found in huge commercial quantities in the country’s arid Karoo basin, the IRP suggests, gas may become a more substantive fuel of electricity plants. In this scenario, the price of gas is expected “to decline as the scale of the shale development increases”, the document says. “For the purposes of the scenario the price of shale is assumed at the $10.2 per gigajoule (GJ) mark in 2025 but decreases annually to allow of $6 per gigajoule in 2035. This provides an insight to the tipping point where gas would replace coal-fired generation not only for mid-merit operation but also base-load generation”.

Some analysts criticize the plan for failing to grasp the full extent of the economic, environmental, construction and operational benefits of natural gas. They point to increasingly cheaper cost of construction of gas fired power plants, to such level as between $0.8- and $1.3-million per installed megawatt, depending on technology.  But the document’s argument is that even if these plants were cheaper than that of coal or nuclear power stations, the cost of the fuel is important.

Still the document is a work in progress.

The Integrated Resource Plan (IRP) 2010-30 was initially promulgated in March 2011, as a “living plan” which would be revised by South Africa’s  Department of Energy (DoE) every two years. The current draft is an update of this document now in debate nationwide.  Comments received by closing date of 7 February 2014 will be considered in preparing a final draft IRP 2010 Update which will be submitted to country’s Cabinet for final approval by March 2014. The approved document will then be promulgated and be published in the Government Gazette.

Click here for full details of the December 2013 version of the South African Integrated  Resource Plan


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