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Karpowership SA licensing process ‘fatally flawed’ – lobby group

The Green Connection says South Africans may end up paying even higher electricity prices.
Image: Supplied

Environmental lobby group The Green Connection is on record for objecting to floating power plants as a power-generating solution, and it has now told the National Energy Regulator of South Africa (Nersa) that the electricity generation licence process is “fatally flawed”, during its oral presentation at public hearings on Thursday.

The Green Connection made these comments regarding the Karpowership SA electricity generation application, adding that the floating power plant has a potentially devastating impact on the marine environment as well as the livelihoods of local coastal communities.

In March, Minister of Mineral Resources and Energy Gwede Mantashe announced that eight preferred bidders were selected for the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) to reduce the country’s reliance on expensive peaking plants and fill the short-term electricity supply gap. These proposals included three gas-to-power “powership” projects to be located in Saldanha Bay Western Cape, Ngqura Eastern Cape, and Richard’s Bay in KwaZulu-Natal.

The environmental justice organisation’s strategic lead Liziwe McDaid said: “Our submission highlights that information was redacted in the application process and is therefore incomplete. This is disturbing. Why the secrecy? Where is the transparency? What are these redactions hiding?”

According to The Green Connection, the implications of Eskom having to sign a long-term (20-year) power purchase agreement (PPA), coupled with the implications of Nersa granting a long-term generation licence are two of the major sticking points with the Karpowership SA proposal.

“Our concern is that South Africans may be in for a massive shock and end up paying even higher electricity prices.

“The contract proposed with Karpowership SA is particularly alarming, since it could supposedly last for two decades. Twenty years can hardly be seen as an ‘emergency’ energy solution.”

Read:
Public hearings into Karpowership’s generation licence applications start this week
Environmental department rejects authorisation of Karpowership plan

Section 10 of the National Energy Regulatory Act (Nersa) stipulates that every decision of the energy regulator must be taken within a procedurally fair process in which affected persons have the opportunity to submit their views and present relevant facts and evidence to Nersa. The Green Connection quoted this in its statement.

McDaid argues that the redactions in information presented in the application process unlawfully restrict and disrupt the ability of interested and affected parties (I&APs) to analyse aspects of the application and obtain expert input.

She says this becomes an obstacle for concerned citizens who want to submit their views to Nersa, based on facts and information relevant to the generation licence application.

The Green Connection says its submission includes an extensive list of critical issues that have been redacted, demonstrating procedural unfairness.

This includes a summary of the PPA and any version of the PPA. Details of the contractual arrangements with Karpowership SA and its financial information, including projections regarding the proposed undertaking were also redacted.

Read: Karpowership remains ‘fully committed’ to SA projects

McDaid also warns that given the risk of longer contracts for Eskom, especially when electricity is generated by burning fossil fuel, the tariff for electricity will be almost three times higher (1.69 R/kWh) with Karpowership SA.

This is in comparison with the most recent solar and wind projects contracted during the last renewable energy bid window (0.62 R/kWh) by the power utility. She says that this low rate per kilowatt represents the benchmark for least-cost new electricity generation capacity.

“While renewables offer largely predictable tariffs, on the other-hand fuel-based projects shift the risk to Eskom. This is because fuel is treated as a ‘pass through’ cost, meaning that Eskom is potentially exposed to both fluctuating fuel prices and the rand-dollar exchange rate,” McDaid said.

“This means if the price of fuel goes up, Eskom and the consumer pays more. The electricity generation landscape is likely to change significantly over the next 20 years, and a two-decade lock-in represents a significant risk to Eskom and the country’s economy.”

Palesa Mofokeng is a Moneyweb intern.

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“This is in comparison with the most recent solar and wind projects contracted during the last renewable energy bid window (0.62 R/kWh) by the power utility.”

And then the wind stopped blowing and the sun set, just when people got home and switched on their ovens and appliances.

You use the power from renewables to manufacture hydrogen (process which requires platinum group metals) and then burn the hydrogen when it is calm and dark. We could be a world leader if we gave our home grown industry a chance instead of wasting our money on other countries yesterdays solutions.

Incactus:

At an energy cost of 60c, adding the cost of battery storage is cheaper than Eskom and battery power does not loadshed…. Priceless

Incitatus, Chris Stoffel, The Hun, Richard the Great, RSA- Liberty are all utterly stubborn, ultra conservatives that will never read up on the latest developments, the enormous price drops in renewable clean energy generation.
I gave them many times lengthy replies, with many direct links to articles, but they simply do NOT read, and keep uttering their completely unsubstantiated nonsense.
Once more latest prices for large PV solar projects in sunny areas like SA :20-50 Randela cts/kWh, PV +BESS Battery energy storage systems 50-80 cts, wind 50-85. CSP+TS 70-120
Coal fired power, acc to Eskom 96 cts, but already 2,3 years back energy expert Chris Yelland calculated R 1.20-1.40 for the older stations, and R 1.60-1.80/kWh for Medupi and Kusile. These prices are definitely higher now, and does not in general include the most basic, legally required environmental mitigation measures like FGD, flue gas desulphurisation, and particulate filtering.
Energy expert Clyde Mallinson recently researched and wrote that we can have 5Gw of PV, wind combined with battery storage for 60 cts/kWh. For the extremely rare situation that battery, thermal storage, pumped hydro would not be able to supply enough after many DAYS of little wind and sun, natural gas fired OCGTs and CCGTs could act as last backup.
Coal fired power generation must be put to eternal rest ASAP.

Have to disagree with that – the cost of battery storage is approx 2.5 times the cost of your Pv installation. So if your PV installation costs R10 million your batteries installation for that will cost R 25 million. And on top of that your Pv will last 20 years your batteries maybe 10 years? So the cost per hour would take your 60c to approx R3,60 if it includes batteries

Indeed the main problem with the contract is that is is 20 years. This is utterly crazy and should never be allowed. It has nothing to do with the environmental credentials of the project though.
The cold hard reality is that you need significant peaker generation if you start introducing a lot of renewables into the grid. And yes this peaker power will be significantly more expensive than renewables and yes – with current levels of technology – burning fossil fuels is the only option.
So bring on the peakers- but not with 20 year contracts

One simply cannot compare a home PV solar setup with batteries, one source of renewables, one kind of storage, one location, with a national grid consisting of various kinds of renewables, if possible on widespread, strategic locations, with all kinds of storage in a national, if possible regional grid.
There is the SAPP, the Southern African Power Pool, where SADC countries help out each other. Eskom purchases regularly from Moz Cahora Bassa, and sells to LS, Nam, and Zim.
There is more than enough potential for solar (PV, CSP+TS) and wind in the SADC región. There is already considerable hydro, from Kariba, Cahora Bassa and to a lesser degree Muela in LS. But as a whole we could do with a lot more hydro, direct or pumped storage.
Batteries can kick in in milliseconds, hydro in seconds, diesel or natural gas driven OCGTs, open cycle gas turbines in 10-15 mins. CCGTs, combined cycle gas turbines are far more complicated and more expensive pieces of kit, that work on higher temps and pressure, and are 30-40% more efficient,cost effective in producing kWhrs. But cannot be easily, quickly be switched on/off.
The present Eskom and IPP, privately owned OCGTs we use at the moment in SA use diesel and produce at around R 3.50/kWh. Completely unaffordable.
The Grand Inga project in the DRC remains rather controversial, and possibly not economically sustainable. Although there seems some progress there.
So the call to bring on the peakers is extremely poorly thought through, unnecessary, and hardly any better than the totally outdated concept of “baseload power”.
We need a strategically,well planned, smart grid, with smart meters at the end users, combined with TOU time of use tariffs.

Why sign up for 20 years if we could find a solution ( excluding Eskom ) to some of the generation and distribution to closer vicinity in about 4 to 8 years ? Basically if you wish to use electricity you are on your own. We need to find solutions not polluted by the sticky fingers and one way thinking ( ama loot loot) of the ANC parasites.

Indeed besides the transformation to more cleaner, sustainable sources of electricity production, the whole energy sector has to be privatised, liberalised and deregulated as much as possible. Eskom, and the munis,metros in distribution as a monopoly have to be scrapped completely.
And that only will happen when we can vote these cluelessly too left leaning statists out of power.

This is yet another ANC scam. I wonder what the quantum of bribes were and which ministers/ government officials received them?

The days of all for one and one for all are history. Businesses that can will scale up the extent of solar they generate and use every year. It is easy to stage projects:
1. Start with a large solar project whose main aim is the optimal self-consumption with a little bit of exports.
2. Add generators that can run in parallel to solar during loadshed (generators are a building block in your smart minigrid).
3. Study data closely and figure how much kWh and inverters you could have used to either shave costs on prime rates or peak demand charges. Add double that in kWh and the right kW inverters. It doesn’t mind if you are using some surplus solar and some normal grid stored in batteries, you are saving money, typical enough tompay formthe inverters and batteries in 4 to 5 years.
4. Then add more solar and more batteries and start juggling realtime whether you use solar direct, grid, stored solar, stored grid or generators.

If you can keep it to below 50h a month, and are paying 350/kVA charges, it is worth it running diesel for those 50h than paying the demand charges. That is how sick tariffs have become : save money by generating your own diesel power!!

End of comments.

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