No role for large-scale gas power in South Africa: Meridian

June 20, 2022 Siyabonga Mtangana

South Africa’s plan to build large-scale, gas-fired power plants as it transitions away from coal has become outdated with renewable technologies becoming cheaper and pressure mounting to curb its carbon emissions, a Meridian Economics study has found.

An energy blueprint for the country, released three years ago, envisions as much as 3GW of electricity being generated from natural gas — which isn’t produced domestically in big quantities — by 2027. That figure could rise, with proposals under consideration to use gas to add emergency supply to the grid. Government is also looking for a partner to help it start a state-owned gas trader and has taken steps towards setting up import terminals for the fuel.

Power generated from gas on a large scale would cost 40% more and result in seven times more emissions than securing it from peaking plants that burn the fuel intermittently to complement renewable energy output, Meridian’s analysts wrote in a report published on Monday. “There is no role for large-scale, gas-fired power generation in the South African power system for the foreseeable future,” they said.

Eskom generates about 80% of South Africa’s electricity from coal-fired plants that have been poorly maintained and are reaching the end of their lives. The state power utility’s inability to meet demand has resulted in rolling blackouts since 2008.

Rich nations have pledged US$8.5-billion in grants and cheap loans to help the country migrate to cleaner forms of energy. South Africa is the world’s 13th biggest source of greenhouse gases.

Using gas could potentially threaten the transition and expose exports to higher carbon-linked taxes, according to Meridian. “Such a decision would likely impact developed country appetite to provide financial support to assist South Africa with its just energy transition, putting concessional or conditional funding at risk,” it said.

Eskom’s CEO André de Ruyter has said between 3GW and 6GW of new generation capacity would be needed to stabilise the grid. Energy minister Gwede Mantashe has voiced support for both the increased use of gas and exploration to secure domestic sources of the fuel.

Nationwide power cuts headed for a record this year may rise 10-fold by 2026 unless South Africa rapidly deploys a massive build of renewables, Meridian said in another study released last week. — (c) 2022 Bloomberg LP