Publications
Partners
Cape Town - Although gas-fired power stations offer a speedy solution to South Africa’s electricity supply problems, it could take a considerable amount of time to add the gas to power option to the electricity grid.
Speaking to Fin24 on the sidelines of the African Utility Week, Siemens South Africa CEO Sabine Dall'Omo said the supply chain for the procurement of gas for power generation is a complex one.
“It’s not about just setting up a power station. You have to source liquid natural gas (LNG) from somewhere, which then needs to be regassified. Then a power plant needs to be built that can run for 15 to 20 years, while the component is traded in US dollars, so the currency also plays a role.”
The most important aspect of gas procurement is its price and how to factor it into the electricity tariff, said Dall’Omo.
The government regularly mentions the importance of including gas in South Africa’s energy mix. It has been included in policy documents such as the National Development Plan and the Industrial Policy Action Plan and, more recently, in President Jacob Zuma’s State of the Nation Address and Finance Minister Pravin Gordhan’s Budget Speech this year.
Government policy stipulates that 3 126 MW of baseload energy generation capacity is needed from gas-fired power generation to contribute towards energy security. The gas required for such power generation will be from both imported and domestic gas resources.
South Africa’s Integrated Resource Plan, which was due to be updated in December last year, is supposed to give a guideline on how a gas-to-power programme would work.
For instance, if an independent company is in control of all elements of the gas-to-power chain it may be better placed to mitigate the risks involved. Government could also stipulate that a state-owned entity such as Transnet be involved, in which case Transnet would need to provide a regassification facility available to importers of LNG or gas-to-power developers.
According to a research paper by the legal group Norton Rose Fulbright, clarity is still required on Transnet’s intended role in the development of the required LNG import infrastructure. “It is likely that Transnet’s final plans in this regard will depend on the procurement framework to be developed by the Department of Energy,” the paper said.
Dall’Omo said Siemens would like to be more involved in South Africa’s gas-to-power programme than merely supplying equipment.
“Siemens’ gas-to-power project in Egypt is a good example of how we’d like to be involved,” she said.
Siemens is currently building three natural gas-fired combined cycle power plants in Beni Suef, Burullus and New Capital in Egypt, which will generate a total capacity of 14.4 GW in the country.
