Karpowership’s record SA deal estimated at R218bn

The program is aimed at closing a supply gap in South Africa that’s resulting in periodic blackouts.
Image: Shutterstock

Karpowership, a unit of the Turkish Karadeniz Energy Group, is on track for its longest contract to date to supply power from vessels to South Africa in a deal worth as much as R218 billion ($15 billion).

The company that advertises a “fast, flexible, reliable” solution of floating electricity generation was named last week as a preferred bidder for three projects fueled by liquefied natural gas to provide 1 220 megawatts of electricity. The program is aimed at closing a supply gap in South Africa that’s resulting in periodic blackouts.

The 20-year deal will cost as much as R10.9 billion annually, according to a presentation by the Council for Scientific and Industrial Research, a state institution. The estimate is based on the Department of Mineral Resources and Energy’s evaluation price of the bids. It didn’t immediately reply to requests for comment.

The award adds a significant amount of generation capacity from fossil fuels for two more decades as South Africa plans a move away from coal that dominates its current power supply and has made it the world’s 12th biggest source of greenhouse gases. Other, smaller, projects chosen use a mix of solar and wind with batteries and LNG.

“Power ships have proven effective at providing fast-response, emergency electricity — hence the maximum 10-year tenor for past contracts,” said Antoine Vagneur-Jones, an analyst at BNEF’s energy transition policy team for Europe, Middle East and Africa. “That the South African government would procure one for 20 years speaks to the depths of the country’s power crisis, and questionable long-term planning in light of dropping renewables costs.”

The agreement also allows for variable charges, including fuel. “Costs are kept low by Karpowership’s reach into the LNG market and an exclusive, long-term deal with Shell,” the company said in reply to questions.

The company started pitching power from vessels to be moored off South Africa’s coast at least six years . More recently it has been looking to expand on the continent, including in two West African countries that it declined to identify in a January interview.

South Africa’s Department of Environment, Forestry and Fisheries last year revoked an environmental exemption granted to Karpowership because it failed to fully disclose its reasons for the application.

Prices have varied among Karpowership contracts and may not always include fuel supply. Lebanon paid 5 cents per kilowatt hour on a 3-year contract, according to data compiled by Bloomberg New Energy Finance, while South Africa’s evaluation price posted for Karpowership’s Saldanha project is about 11 cents per kilowatt hour for 20 years.

The final cost for the electricity could change due to the makeup of the tariff. “Karpowership South Africa charges a single price covering the fixed costs for the Powerships and variable charges for fuel and operations,” the company said.

© 2021 Bloomberg

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Yaaa!

All this money wasted because this country is run by retired corrupt “freedom fighters”.

Whahahaaaa. Hey what a joke!!!

Only one question. Who are their “empowerment” partners (aka connected ANC cadres)??

So we SA just can not do it on its own, this is a sad state of affairs really and speaks volumes to the state Eskom is in.
I reckon all that Eskom debt will be transferred onto the States book and we’ll end up importing power, or going with private suppliers. Then of course EWC will happen; rinse repeat. The private suppliers will be nationalised

These ships do not sound like the right way forward – I would like to know what the experts think about it.

Their brown envelope must have been very thick !!!

Something’s definitely amiss with these ‘powerships’. It’s purely imported electricity, with the ability to pull the plug the moment the agreement sours.
Apart from providing SA with a minuscule amount of additional energy, it doesn’t benefit the country through job creation, investment/assets or economically.

A few simple changes in policy could achieve all the above on a far greater scale.

You mean open electricity to the free market, that is just not socialism…
But at least we will be a higher price while not developing any further.

Will be interesting to know if this deal was secured in Rand; Dollar or the Turkish Lira.

Locking the country into a 20-year contract is far too long in a field where the technical development of potentially far-better alternatives is rapid and far-reaching.

IMHO it would be far better – in every single important factor affecting the RAPID supply of huge amounts of supplemental emergency electrical on a national scale (engineering implementation, safety, financial, environmental, Technology future-proofing) – to place an order with Russia for nuclear-energy ships, that could be easily, quickly, safely, and conveniently located at several coastal ports. For example at Saldanha, Coega, Richards Bay etc.

Could even build a purpose-built dock at the Melkbos nuclear site to feed directly into the existing grid – and at pretty much nominal cost.

This would be my preferred starting point for this experiment, because of the existing nuclear-experienced skilled staff and safety oversight already existing right at that point.

The whole point of using ship-based nuclear electricity is that it provides enormous flexibility iro all sorts of problems that are PERMANENTLY embedded in a fixed nuclear land-site.

Don’t need this source anymore? Stop the contract, and sail it back home!

Needs extensive maintenance or a nuclear-refuel? Send it back home! Let the Russians take their nuclear-waste back onto their homeland soil.

Nuclear energy is NOW (it wasn’t always) a viable, safe alternative.

Much of the argument against nuclear-energy is now more an irrational emotional overreaction based on the past, rather than a sober understanding of the ACTUAL safety record of the present, and in particular, the less-than-snow-white Whole-life ramifications of the alternatives.

One has only to look at the record of nuclear-powered electricity generation in France. It is a stellar example of wise risk management, and sticking to WISE, long-term decision-making, while simultaneously keeping an open-mind on the field of developing alternatives.

The future of nuclear power is small, intrinsically-safe modular units. Bill Gates is backing a really exciting commercially-viable development in this field, which promises to see commercial use relatively soon.

I’m definitely not against competitive and environmentally sound alternatives to nuclear-power. I like the solar-powered CSP generation with molten-salt backup into the night.

But gas-plants spewing huge volumes of noxious fumes into the air we breathe for the next TWENTY years? Not so much!

End of comments.

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