Accelerating South Africa's energy transition - with gas power and renewables www.ge.comgas-power/future-of-energy
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Accelerating South Africa’s energy transition with gas power and renewables www.ge.com/gas-power/future-of-energy
In April 2021, the
country announced
it aims to reduce its
annual greenhouse
gas (GHG) emissions
Executive Although Africa contributes ~5 percent
to global carbon dioxide (CO2) emissions, to 398–440mn tonnes
Summary the African Development Bank (AfDB)
expects the costs of climate change on
per year (tpy) by 2030,
South Africa’s the continent could rise to $50bn each
year by 2040, with a further 3 percent
28 percent less than
its 2015-set targets
leaders must decline each year in GDP by 2050.1
with the launch of an
work urgently South Africa, which generated 86 percent
of its electricity from coal in 2020, sees updated draft of the
with international addressing climate change as an urgent
priority. Addressing this priority requires Nationally Determined
counterparts strong commitments and, consistent
policy and regulatory frameworks.
Contribution (NDC).
to reduce the The country has made progress. The 2019
impact of Integrated Resource Plan, the Green
Transport Strategy which enhanced
climate change. the recently implemented carbon tax Renewables are the fastest growing source
are examples of the government’s of new power generation capacity and
commitment to emissions reduction. electricity. Research shows South Africa’s
The Nationally Determined Contribution energy mix will evolve to include greater
is South Africa’s commitment in terms of amounts of renewables, even as coal
the United Nations Framework Convention remains the dominant fuel beyond 2040.
on Climate Change (UNFCCC) and its
Paris Agreement (PA) to contribute to
2
Accelerating South Africa’s energy transition with gas power and renewables 2
solutions to funding shortfalls,
Executive Summary Figure 1), gas power can serve as an enabler
for greater renewables penetration and,
(Continued) accelerate the retirement of coal assets, both
of projects from beginning to end.5
South Africa’s energy needs are urgent.
on overall emissions. The near-term impact
Through proper coordination between all
sustainable energy is needed to transform of coal-to-gas switching could represent
participants, South Africa’s Gas Programme
the country’s economic development. could be the inclusive approach which brings
As the country increases access to—and reduction in South Africa. The government
along workers and communities historically
demand for electricity—renewables and and key stakeholders continue to deliberate
reliant on the country’s vast coal sector.
gas provide a powerful combination to on the social impact of a transition from
address the CO2 emissions challenge. its current high emission economy to a
low-carbon climate resilient economy.
The complementary nature of renewables
GE believes that the accelerated
With the country’s unemployment deployment of renewables
solution to change the near-term rate sitting at a record high of over 30
percent, large infrastructure projects
together with gas power
trajectory on emissions reduction.
could play a role in spurring economic can change the trajectory
growth and creating opportunities for for climate change, enabling
GE believes gas will not just jobs, new skills and industrialization.
be a backup fuel but also the substantive reductions in
new baseload capacity for the While there is no universal blueprint for emissions quickly, while in
Coal Repurposing Programme implementing a coal-to-gas transition, many parallel continuing to advance
case studies exist from countries like Poland,
for many reasons. The focus of China and India that provide applicable
the technologies for low or near
this whitepaper is to elevate references on the socioeconomic impact zero-carbon power generation.
the emphasis on renewables of transitioning to a greener economy.4
and gas power as the urgently
needed solution to reduce carbon Beyond recognition of the It’s not an either/or proposition between
emissions in the near term.3 importance of infrastructure roll renewables and gas, but rather a
out for economic growth, other multi-pronged approach to reducing
carbon emissions with renewables
crucial considerations for South
and gas power at its core.6
Africa as it embarks on its Gas
renewables into the energy system. Programme include, building GE is uniquely positioned to play a
partnerships between private and leading role helping customers navigate
With large gas reserves in Mozambique, the energy transition through its scale,
Angola, and other parts of the region (see breadth, and technological depth.
Key SSA Countries with Largest Gas Reserves (2020)
Total 334
Cameroon 5
Equatorial Guinea 5
Congo 10
Angola 14
Mozambique 100
Nigeria 200
0 50 100 150 200 250 300 350 400
Reserves in Trillion Cubic Feet
FIGURE 1 Source: Statista 2021
Accelerating South Africa’s energy transition with gas power and renewables 3
Introduction
THE SOUTH AFRICA
CONTEXT
In October 2020, South African President
Cyril Ramaphosa launched the Economic
Reconstruction and Recovery Plan to
drive investment in infrastructure, local
production of goods, employment stimulus
implementation and development of
the power sector.7
and sustainable electricity is South
Africa’s most urgent need. The country
seeks 4–6 GW of power in the near-
term to ease current constraints.8
Industrial Research (CSIR), South Africa
lost between R60 billion and R120 billion
in 2019 due to load shedding. Thus, to
transform the South African economy,
spur re-industrialization and contribute
to increased regional trade, a stable and
reliable power supply is required.9
With ongoing technical and commercial
reforms at the state utility, Eskom,
a looming supply gap. The announcement Reliable power supply
coincided with the release of a request
the government expects new variable for proposals (RfP) for the procurement of is a prerequisite for
capacity, including 2.6 GW of solar and 2,600 MW under the Renewable Energy
wind to be added in accordance with the IPP Procurement Programme’s (REIPPP) economic development
Procurement Programme (REIPPP).
bid window 5, comprising 1,600 MW of and many industries
onshore wind and 1,000 MW of solar PV.
The South African government understands The Risk Mitigation IPP Procurement
the over-reliance on coal poses a risk to by power sector
climate change and its Climate Change technology agnostic approach could mean
Commission is working to ensure thermal, renewable and storage solutions will
COP21 commitments are met. Africa’s energy sector
the procurement for gas an even more
Currently, coal accounts for 86 percent of attractive option for the future of energy. problems need urgent
the country’s energy mix and its ageing
solutions.
But South Africa’s energy needs
10
The country’s Just go beyond the short-term.
Transition plan will ensure the move to a
low-carbon energy future creates more The unbundling of Eskom’s generation,
opportunities for the communities that transmission and distribution entities will
are likely to be impacted the most. enable a competitive energy system that
promotes increased investor participation.
The Department of Mineral Resources and
Energy (DMRE) on 18 March 2021, announced
eight preferred bidders for the Risk Mitigation
IPP Procurement Programme (RMIPP), which
aims to procure 2 GW of power to bridge
Accelerating South Africa’s energy transition with gas power and renewables 4
The changing years with the launch of the
Renewable Energy Independent
drive industrialization and economic
growth, nor combat climate change.
energy landscape Power Producer Procurement Figure 2 below shows how South Africa’s
(REIPPP) Programme. energy mix will evolve to include greater
The continent’s energy needs are critical. amounts of renewables, even as coal remains
Renewables are the fastest growing source the dominant fuel beyond 2040 according
According to the World Economic Forum,
of new power generation capacity and to the International Energy Agency (IEA).
electricity demand will triple by 2040
electricity. This is driven by public awareness An alternative to consider in the energy
as incomes rise, populations grow, and
and greater concern for the environment, future narrative is a pairing of gas and
governments push their industrialization
lower associated costs for renewable power renewables. Government will need to design
generation, and policies that incentivize the transparent policies that support the large
fossil projects is necessary to support
adoption of renewable technologies. The replacement of coal with gas and renewables.
International Energy Agency reports more
energy costs for the poorest in society.
than half of the global renewable capacity
added in 2019 achieved lower power costs
South Africa’s revised Integrated Resource
than the cheapest newer coal plants. lower CO2 emissions (
High growth countries like China have Bay Area of China. Guangdong- Hong Kong- NOx, SOx and particulate matter. In addition,
been very deliberate about putting in place Macao Greater Bay Area (GBA) is a group of
policy reforms focused on the coal-to-gas cities put forward by China to strengthen gas turbine, can also provide a pathway to
energy transition to accelerate international cooperation and promote net-zero-carbon emissions through the use
low-carbon, inclusive, coordinated and of low and zero-carbon fuels—including
industrialization targets. They perhaps set sustainable development projects. The plant hydrogen—and carbon capture utilization
an example that South Africa and other and sequestration (CCUS) technologies.
African nations may emulate. Today, China’s gas power to the Guangdong province in
energy policy reforms expect to reduce alignment with national goals to transition
coal’s share of electricity generation to less from coal-to-gas and further decarbonization.
than 58 percent from 68 percent. In 2020,
the Chinese state-owned power utility
Guangdong Energy Group Co., Ltd ordered emissions of all fossil power generation
2
The complementary
three 9HA.02 gas turbines—GE’s largest nature of renewables
less than 50 percent of the CO2 emissions of a
Dongguan Ningzhou combined cycle power similarly sized coal plant, and lower emissions and gas power is needed
plant in Guandong province, in the Greater levels for other pollutants such as mercury,
to change the near-term
trajectory on emissions
reduction.
Accelerating South Africa’s energy transition with gas power and renewables 6
Outlook for Gas of CO2 emissions. The introduction of • High capital cost for the construction
of approximately 2,600 km gas
pipeline connecting the gas reserves
GAS SUPPLY DYNAMICS to supply market in Gauteng,
IN SOUTH AFRICA on the decline and have raised questions Mpumalanga and Kwa-Zulu Natal
about the Gas Programme focused on • Operational and political risks to be
Natural gas is seen as a power plants as the main consumer. mitigated for the cross country pipeline
destination fuel to aid South
Africa’s ambitious renewable (Brulpadda gas condensate and Luipend-1X Area 1 and 4 development focused
generation goals. well) coupled with shale gas reserves and on LNG liquefaction and sale
GE believes natural gas will not just be
alternatives to gas supply. See Figure 3 below. These challenges limit gas supply to
a backup fuel but also the new baseload
South Africa as short or medium-term
capacity for the Coal Repurposing
are far from reality with a lot of development opportunities coupled with reticulation of
milestones and regulatory barriers yet to be gas infrastructure to be developed. LNG
power plants have the lowest emissions
crossed. The alternative source of gas from is seen as the quickest way of bringing
impact compared to other fossil fuels power
the Mozambique Rovuma Basin presents gas to South Africa and being used as the
plants. Their deployment, accompanied by
major challenges that need to be resolved basis in developing the Gas Master Plan.
CCUS and/or hydrogen, would represent
a meaningful and long lasting reduction before molecules can reach South Africa:
MOZAMBIQUE
MALAWI Mozambique
ANGOLA Rovuma
ZAMBIA
Basin
ZIMBABWE INDIAN
OCEAN
SOUTH NAMIBIA BOTSWANA
ATLANTIC Pande-Temane
OCEAN
Gauteng, Mpumalanga
and Kwa-Zulu Natal
SWA.
Discovered Fields
Producing Fields
Shale Gas Gas to Liquid Plant
Condensate, LES.
Brulpadda Gas Free State Gas Pipeline
Condensate and
Luipend-1X, SOUTH AFRICA
Northern Cape
Mossel Bay-PetroSA
F I G U R E 3 : Gas reserves and pipeline infrastructure in South Africa and Mozambique
Source: Africa Energy Atlas 2020-2021 edition
Accelerating South Africa’s energy transition with gas power and renewables 7
LNG has become a fuel of
choice for decarbonization in
countries without adequate
commercial gas reserves due
and the country’s economic struggles
to its competitiveness and
2020 reached 70.4 Mtpa with the United have raised a few potential issues on:
bankability either as a bridge States, Russia and Mozambique being the
• Government’s implementation approach;
integrated Gas-to-Power Programme
or destination fuel. operations of liquefaction facilities
or decoupling the gas supply solution
saw an increase of nearly 10 percent of
from the Power generation Programme
global capacity (38.8 Mtpa) in 2019.12
• The role of Transnet and the Central
Energy Fund (CEF) in the construction
LNG MARKET Global LNG Trading is projected to double and operation of an LNG infrastructure
terminal and distribution pipelines
The LNG market in recent years has capacity under construction adding
shifted from a typical long-term seller about 15 percent to global capacity when • The risk mitigation strategies for
market to a buyer market, where spot operational.13 GE projects that the timing LNG Sales and Purchase Agreement
and interruptible contracts are traded. is right for South Africa to implement (LNGSPA) for both the anchor consumer
The advancement in technology and its Gas-to-Power Programme and take (IPP) and other industrial customers
increase in liquefaction projects will be advantage of the current LNG market • The Forex risk associated with
the key drivers to achieve competitive dynamics. However, regulatory clarity on switching from coal (SA Rand
and favorable LNG supply dynamics in the Transnet’s role, Eskom’s liquidity issues traded) to LNG (US Dollar traded)
next two decades. Liquefaction projects
Accelerating South Africa’s energy transition with gas power and renewables 8These undoubtedly have created inertia ROLE OF TRANSNET AND TRANSFORMING SOUTH
in the gas market and have stymied THE CEF IN REGULATION AFRICA’S INDUSTRIES
the progress of consultation awaiting
Government directives on its strategy. The market is concerned about the delay
of the Gas-to-Power Programme coupled
The Energy market currently views the Gas- with three updates of the Integrated South Africa’s economy
to-Power Programme as either an integrated Resource Plan (IRP) draft since 2015. The
approach or as decoupling Gas Supply role of key state-owned enterprises like is driven mostly by its
Transnet and CEF in the Gas Programme
Infrastructure from the Power Generation industries. The decline
Programme. Either of the two presents its
licensing regime for commodity import, in economic activities
to make a call on its preferred approach. infrastructure and pipeline operations still
in the country is partly
THE GOVERNMENT'S of the port infrastructure and pipelines
IMPLEMENTATION APPROACH (time lag item) and strategy on the Coegha
attributed to power supply
and Richards Bay deployment are still insecurities and continued
Import infrastructure lingering in the market. The IPPs, OEMs, gas
suppliers and lenders await government’s
development will be quicker
preferred implementation approach.
to implement in an integrated
approach model than LNG SOURCING RISK MITIGATION STRATEGY
decoupling gas supply.
Whilst the integrated approach to sustain operations
The current structure of Transnet presents
a “hub and spoke model” with a Tolling opens opportunities for long- and attract investors.
arrangement. However, this creates: term LNGSPA linked with
1. market residual risk from PPA, the decoupled approach
aggregating demand gives the option of spot buy
2. project-on-project risk and interruptible LNGSPA.
in the oil and gas industry.
3. operational risk of Transnet’s ability Lenders and gas suppliers prefer long-term
to meet the project timelines, and supply contracts on a take-or-pay basis. It is imperative that extensive gas policies
Although a state entity like Transnet’s role and developmental goals are established
4. operational requirements and
in the gas structure may reduce the take-or-
volumetric risk of satisfying the
pay obligation for the LNG supply, it creates it comes with. Besides Gas-to-Power,
counterparty risk in the Gas-to-Power developing the gas infrastructure will
Programme which will prejudice the integrity
Lenders will request the risk mitigation
of the gas supply stream whilst adding a layer petrochemical industries. For instance,
strategy for the gas supply to the IPP, and
of cost to the gas supplied at the delivery logistics companies switching from
the role of Government is also linked with
point to the power plant. An integrated diesel to LNG for their long-haul trucks
whether it can accept liabilities and if yes,
approach with Government taking an equity will see an estimated cost saving of
whether it will meet its default obligations.
stake will deliver competitive LNG molecules. between 15 percent and 25 percent.14
However, a bundled approach allows the
Gas-to-Power project consortium to manage FOREX RISK MITIGATION STRATEGY
project-on-project risk (LNG Terminal and
Power Plant Infrastructure). The consortium Whilst the Consumer Price Index (CPI) of
also bears the liabilities for failure to coal is linked to the South African Rand,
dispatch power either because of Gas supply that of LNG import is linked to the US
operations or power plant operations, hence dollar. Gas suppliers prefer payment of LNG
ensuring all requirements of Lenders are delivered in US dollars whilst Government
met to facilitate project implementation. communication has been in SA Rand.
The Risk Mitigation IPP Procurement
Programme (RMIPP) provided some
mitigation strategies and same is expected
of the Integrated Resource Plan (IRP).
Accelerating South Africa’s energy transition with gas power and renewables 9Policy frameworks Change in RE and Gas Target by 2030
will guide 18
17.74
investment 16
DOES THE EXISTING 14
Installed Capacity in GW
POLICY AND REGULATORY 11.93 11.44
12
FRAMEWORK SUPPORT
REPLACING LARGE 10
COAL WITH GAS AND 7.96 8.28
RENEWABLES? 8
6.38
6
South Africa’s Integrated Resource Plan
(IRP) sets out a power generation road map 4
for the country and this has gone through a 2
series of revisions mostly driven by change in
assumptions and the need for cleaner energy. 0
The 2018 IRP laid out a plan that will increase Gas/Diesel PV Wind
the energy mix of gas to 15.7 percent (11.9 2018 IRP 2019 IRP
GW) and wind and PV to 25.6 percent (19.4
GW) by 2030. However, in the latest IRP F I G U R E 4 : Wind and PV expected to contribute 33 percent of installed capacity
released in October 2019, the share of gas according to the 2019 Integrated Resource Plan (IRP)
has reduced to 8 percent and that for solar
and wind increased to 33 percent. See Figure
4. This clearly shows the shift from more gas
to more decentralized renewable energy to Per Capita CO2 Emissions in South Africa, UK, India and China
replace coal.
14
CO2 Emissions (Metric Tons Per Capita)
GE cautions against policies which aim to 12
predict the future, setting narrow pathways
for technologies and energy sources. 10
Energy policy framework needs to balance
8
send the right signals to markets for a cost 6
4
With South Africa’s unemployment
rate sitting at a record high of over 30 2
percent, large infrastructure projects 0
could play a role in spurring economic
1960 1970 1980 1990 2000 2010 2016
growth and creating opportunities for
jobs, new skills, and industrialization. South Africa United Kingdom India China
FIGURE 5
IMPACT OF CHANGING
Source: The World Bank Data
FUEL MIX ON CO2
EMISSIONS
The country’s heavy reliance on coal than a diesel plant.16 Hydrogen and carbon
South Africa is the 14th largest emitter is the major contributor, with coal- capture, storage and utilization (CCUS) are
of greenhouse gases in the world, both viable pathways toward low to near-
emitting 467.5 million tons of CO2 percent of total CO2 emissions.15 zero emissions from power. According to
in 2018 and accounting for only McCoy Power Reports, GE has over 35 years
1.28 percent of global emissions.
However, the country has will see a drastic reduction in the carbon in terms of MW and unit count with H2 and
higher per capita emissions footprint of the country. Gas produces 50 to
60 percent less CO2 when combusted than a gas turbine is capable of burning a 50/50
than China, India and the
typical coal plant and 30 to 40 percent less H2/natural gas fuel blend by volume.
UK as shown in Figure 5.
Accelerating South Africa’s energy transition with gas power and renewables 10GOVERNMENT’S COMMITMENT TO EMISSIONS REDUCTION
South Africa signed the Paris agreement The government understands that
gas is crucial to enable the transition
1 November 2016. In response to the Paris from coal to renewable energy.
agreement’s call for countries to set out long South Africa’s favorable
term climate strategies, the country’s cabinet
conditions for wind power and its
approved the goal to become a net zero
economy by 2050.17 solar potential will also be utilized
to help meet the 2050 target.
F I G U R E 6 : Deepsea Stavanger
The 2019 Integrated Resource Plan (IRP)
Drill rig, arrived in Cape Town on
outlines how the power sector will be A carbon tax was also introduced in February
13 August 2020
reformed to help meet their target. 2019 covering fossil fuel combustion
The government is committing to emissions, industrial processes, product use
emissions and fugitive emissions such as
decommission and repurpose coal
those from coal mining. The proposed carbon According to the Climate Action Tracker,
plants, reducing the percentage tax rate is R–120/tCO2e (USD 8/tCO2e). South Africa’s 2019 Integrated Resource Plan
of coal in the energy mix from (IRP) will only enable the country to meet its
~90 percent to 45 percent by 2030 2030 Nationally Determined Contributions
exemptions, resulting in an expected tax rate (NDC’s) target. However, more measures
and 5 GW of coal still forecasted
between R6–48/tCO2e (USD 0.4–3/tCO2e).19, 20 need to be implemented beyond the IRP
to be operating post 2050. to meet the Paris Agreement target of well
Achieving their emissions target and below 2° C.
still having 5 GW coal plant operating companies and 75 percent of national
means the country plans to invest emissions. A leading Steel Company has
in carbon capture and storage.18 estimated that, they could pay up to 600
million Rand ($54.5 million) as carbon taxes a
year at the current tax rate.21
Accelerating South Africa’s energy transition with gas power and renewables 11Partnering and FUNDING AVAILABLE
FOR GAS PROJECTS
POWER MARKET ATTRACTIVENESS
Financing There are several factors that make South
Africa’s gas power market attractive. These
renewable energy as the push for clean include:
While there is no universal blueprint for energy advances. However, the World
implementing a coal-to-gas transition, many • Available demand for gas either as
Bank and its private sector arm, the
case studies exist from countries like Poland, baseload or backup to Government’s
International Financial Corporations are
China, and India that provide applicable aggressive renewables goal;
still committed to ensuring that Africa
references on the socioeconomic impact gets the needed support to industrialize • Progressive policy as evidenced in
of transitioning to a greener economy.22 and grow its economy. Thus, it continues Government’s commitments to the Paris
24 Agreement, coal repurposing Programme
Beyond recognition of the importance
of infrastructure roll out for economic energy;
growth, other crucial considerations for POLICIES
• Gas availability in the region, international
South Africa as it embarks on its Gas
LNG availability and market innovation
Programme include, building partnerships TARIFF MODELS
in pricing and infrastructure technology
between private and public sectors,
coupled with South Africa’s gas
South Africa, considering the changes that discoveries;
of projects from beginning to end. 23 have taken place in the energy sector. • A track record of rolling out large
The National Energy Regulator infrastructure Programmes, i.e., the
Through proper co-ordination between all Renewable Energy IPP Procurement
of South Africa (NERSA) in
participants, South Africa’s Gas Programme Programme (REIPPP) with 6000 MW
can be the inclusive approach which brings procured from 2010 to date;
along workers and communities historically regime has initiated steps to
• Sound institutions, particularly the deep
reliant on the country’s vast coal sector. reform the methodology used local lending capability.
recent energy dynamics.25
Accelerating South Africa’s energy transition with gas power and renewables 12GE’s Blueprint with the help of GE’s Digital Power Plant
The LNG infrastructure consists of:
• A dedicated new built Floating Storage and
for the Energy capabilities, which help to unlock power
that had previously been inaccessible.
Nanook, with a storage capacity of 170,000
Transition Capabilities, including the digital control
m3
cubic meters per day of gas
system, use real-time data to deliver better
• A 6.5 km gas pipeline connecting the FSRU
system reliability and energy security is operations, while providing valuable to the power facility
through a mix of generation sources. No predictive insights for higher reliability • Ocean LNG, a joint venture of Qatar
single form of power generation is optimal and optimization. Petroleum (70 percent) and ExxonMobil
in every situation or economy. For example:
(30 percent), signed a long-term LNG
wind and solar are variable but consume no GE’s 9HA units deliver exceptionally Sales & Purchase Agreement with the
fuel and emit no CO2; gas-fueled generation low life cycle costs per megawatt-hour. CELSE (Project Company) to supply
emits CO2 but is dispatchable (i.e., has output The economies of scale created by this 1.3 Mtpa of LNG for the project.
that can be readily controlled between high-power density gas turbine are
maximum rated capacity or decreased to unprecedented. Moreover, the turbine The power plant infrastructure was built on
zero) to help balance supply and demand;
511,622 m2 (51.16 ha) site consisting of:
hydro power often requires dedicating customers to maintain stable power
• Three 7HA Gas turbines
production and to reliably accommodate grid
carbon, renewable and dispatchable, and can variations through quick start up, rapid load • A steam turbine
provide long-term, low-cost energy storage. changes and other features. It can reach from • Three heat recovery steam generators (HRSG)
start to full load in less than 30 minutes. This
GE believes in and promotes additional • 33 km transmission line and a sub station
renewables capacity, augmented where operations not just for large power plants
needed with gas generation to provide and utilities but also for captive power plants
or small grids. It also enables the greater
GE, the major equipment OEM
use of renewable energy by enabling quick
decarbonize the energy sector. Given the time was also awarded the engineering,
it takes to deploy new renewables and to weather changes.
procurement, and construction
coal-to-gas switching represents a potential GE’s 9HA also accommodates both gas (EPC) contract. GE also entered
quick win for emissions reductions. and liquid fuels with wide gas variability
into a Contractual Service
and has the capability to transition from
As a technology and service provider gas to hydrogen, paving the way to a more Agreement (CSA) and a long-term
for the full length of the energy value
chain, GE has a unique perspective on operations and maintenance
the energy transition and has a suite (O&M) agreement for the project.
of complementary technology.
AN INTEGRATED LNG TO
For South Africa however, POWER MODEL IN PORTO DO
SERGIPE (1.5 GW), BRAZIL Under the terms of the PPAs, the project has
GE's 9HA gas turbine is the best
guaranteed an annual capacity payment of
solution. GE’s HA gas turbine portfolio The 1.5 GW Sergipe project26 approximately BRL 1.6 bn (USD 311.1 million),
Integrated LNG-to-Power project in Brazil and
more than 100 units ordered by more than with pass-through fuel and operating costs
40 customers across 20 countries. Our station in Latin America. The project was according to dispatch. The project provides
cleaner, more reliable large-scale power for
technology, expects to achieve 1 million 925 million) bond backed by the Swiss Export growing communities and helping facilitate
operating hours of commercial experience Credit Agency. Inter-American Investment Brazil’s transition to lower-carbon energy.
in the coming months. Weighing nearly Corporation (ICC) and The International
400 tons, as much as two big blue whales, Finance Corporation (IFC) provided the debt
GE believes the Sergipe LNG-to-
GE’s 9HA is the result of a US $2 billion facility, which comprises USD 288 million and
USD 200 million respectively. Power Integrated approach can
be replicated in South Africa
under the Integrated Resource
conversion of fuel to electricity to help meet
Plan (IRP) implementation.
increasingly dynamic power demands.
Accelerating South Africa’s energy transition with gas power and renewables 13The Path Forward: Recommendations
basic human right and it’s what’s needed to transform
South Africa and the rest of the continent’s industries.
Renewables and gas provide a powerful combination
to addressing the CO2 emissions challenge.
GE believes that accelerated and strategic implementation of the Gas Master Plan is have successfully implemented
deployment of renewables and gas power a Gas Generation plant.27 The Integrated
their Gas Programme through
can change the trajectory for climate change, approach reduces risk exposure and
enabling substantive reductions in emissions facilitates the LNG Supply infrastructure. The
the bundled approach of
quickly, while in parallel continuing to government’s strong position of Transnet’s Gas-to-Power (example is
advance technologies for low or near zero- role in import infrastructure is formidable. the 1.5 GW Sergipe LNG to
carbon power generation. This can be achieved via equity participation Power Project in Brazil).
in an import Terminal by Transnet whilst
GE’s 9HA gas turbine is at the heart of the linking the LNG commodity Sales and Addressing climate change will require
Purchase Agreement with the Power government and consumer action. GE is
Purchase Agreement (PPA). uniquely positioned to play a key role through
reliable, and sustainable power. Replacing its scale, breadth, and technology depth.
To successfully implement the
is a major way to decarbonize. The 9HA
Integrated Resource Plan (IRP) We have been a key player in the power
industry since its inception more than
following capabilities to support the heavy Programme, GE believes the
a century ago and have a suite of
renewables planned for the South African grid. Government will need to adopt complementary technology including gas-
the bundle approach whilst
International Developers & IPPs, gas
acquiring an equity stake to hydro, small modular reactors, battery
suppliers and lenders understand and are storage, hybrids, and grid solutions needed
experienced in the Gas-to-Power Programme. ensure skills transfer over the
for the energy transformation.
Issues raised by market players need to be course of the programme. New
addressed to facilitate the implementation entry LNG market countries
of the Integrated Resource Plan (IRP). This
the market will implement international
practices and precedent in developing the
contractual and legal framework especially
when the LNG to Power Programme is We believe it is our responsibility to support this transition
at its infancy in sub-Saharan Africa.
through our relationships with customers, policy makers,
Concerns raised by the Industrial Gas
User Association (IGUA-SA) that the
and consumers, collaborating to build an energy system
Gas Programme is dependent on new that works for everyone.
power project whilst neglecting industrial
consumers are legitimate, however, the only
anchor demand available to accelerate the
Accelerating South Africa’s energy transition with gas power and renewables 14AUTHORS
Sarah Michelle Mills
Joyce Apanga Wells
Richard Gyasie-Hayford
CONTRIBUTORS
Vuyelwa Mahanyele
Noz Dlengezelemotsitsi
Michael Konadu
Anne Ezeh
Jim Donohue
Gina Alteri
REFERENCES
1–2
Africa Power Monitor. Issue 295. April 8, 2021.
3,6
GE analysis – Accelerated Growth of Renewables and Gas Power
Can Rapidly Change the Trajectory on Climate Change (2020)
4
https://hsf.org.za/publications/focus/focus-60-january-2011-
making-south-africa-work-rules-of-the-game/PPerkins.pdf
5
7
Africa Energy Newsletter. Feb 28. 2021
8
South Africa 2019 Integrated Resource Plan (IRP)
9
https://businesstech.co.za/news/energy/367714/south-
africas-load-shedding-horror-show-in-3-graphs/
10-11
International Energy Agency Africa Energy Outlook 2019
12
IHS Markit, Global LNG: 2019 was a record-breaking year, January 21, 2020
13
International Gas Union 2019 World LNG Report
14
https://www.engineeringnews.co.za/article/regional-developments-
expected-to-ignite-south-africas-gas-economy-2020-08-28/rep_id:4136
15
https://ourworldindata.org/co2/country/south-africa?country=~ZAF
16
https://www.eia.gov/tools/faqs/faq.php?id=73&t=11
17
https://unfccc.int/node/61201
18
South Africa 2019 Integrated Resource Plan (IRP)
19-20
https://www.climatechangenews.com/2019/02/20/south-
africa-set-introduce-long-awaited-carbon-tax-june/
21
https://climateactiontracker.org/countries/south-africa/current-policy-projections/
22
23
https://hsf.org.za/publications/focus/focus-60-january-2011-
making-south-africa-work-rules-of-the-game/PPerkins.pdf
24
https://projects.worldbank.org/en/projects-operations/project-detail/P149521
25
https://www.esi-africa.com/industry-sectors/transmission-and-distribution/
26
https://www.nsenergybusiness.com/projects/porto-de-
sergipe-power-plant-barra-dos-coqueiros/
27
IHS Markit, LNG Strategic Report: LNG Import Outlook South Africa, 9 October 2020
ge.com/gas-power
© GE, 2021
GEA34992 (06/21)You can also read
