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Power ships the answer

The quick-floating power station solution.

The reality of several years of load shedding is dawning on South Africans as the completion dates of Eskom’s Medupi, Kusile and Ingula power stations are inexorably moved outwards.

Even the development of coal-fired power stations by independent power producers will take three to four years, once the Department of Energy (DoE) completes its current procurement process. It is planning to procure 600MW of generation capacity in this way.

In the interim the country’s exposure to regular load shedding could be mitigated by floating power stations moored in cities like Cape Town, Durban, Port Elizabeth and Durban.

Moneyweb reader Simon Norton, a Cape Town corrosion consultant, brought this possibility to Moneyweb’s attention. The energy specialists we subsequently tested it with confirm that it is a real possibility.

Turkish Karadeniz Energy Group is one of several companies globally that rent powerships to countries experiencing temporary power constraints.

According to the company’s website, Karadeniz powerships “are high technology floating power plants designed and constructed to fulfill the urgent electricity needs of the countries through rental contracts of power purchase agreements (PPA)”.

A PPA is an agreement of guaranteed electricty off-take at an agreed upon tariff. The development of renewable energy projects under the DoE’s bid program is also subject to PPAs.

Karadeniz says on its website the powerships are delivered to client countries as a complete power plant ready to operate immediately. The capacity of individual ships range from 45MW to 500MW.

They operate on either liquid fuel or natural gas or a combination of the two and can provide uninterrupted electricity at various high voltage levels.

Eskom spokesperson Andrew Etzinger says the utility rented a barge-mounted turbine in 2006 when power generation at the Koeberg nuclear power plant in the Western Cape was reduced due to the incident with an errant bolt. The barge was rented for a few months to supplement power supply to the Western Cape.

Etzinger says a powership with a generation capacity of 310MW, like that of Karadeniz, should be capable of powering a town like East London. The idea is however not to make a town self-sufficient, but rather to feed the electricty into the national grid.

He says while floating generation can alleviate the supply problem, the cost may be comparable to the cost of running Eskom’s diesel plants, which means it only solves one part of the problem.

Power expert and director of the South African National Energy Association (Sanea) Brian Day says powerships are an appropriate solution for South Africa’s current power crisis.

He says a powership with a generation capacity of 310MW is equal to one unit of a typical two unit 600MW power station, such as that which the department of energy is currently procuring from independent power producers.

Two such ships could generate the same electricity as the planned coal IPP, but would be operational sooner.

Karadinez operates and maintains its own plant and typically enters into agreements for two to five years.

Another power expert who did not want to be named because of his association with an independent power producer, says his company investigated the use of powerships about 18 months ago. At that stage Eskom was in better shape, but the crisis has deepened and this is definitely a solution that should be seriously considered, he says.

While Karadinez promises its powerships can be ready within 60-180 days, this expert estimates a lead time of a year to 18 months.

He says one needs an on-shore substation to feed the power into. If that substation has to be constructed it will require time consuming environmental approvals. These and any similar requirements for the powership will have to be expedited.

He believes powerships can deliver power at R2.00 to R2.50/kWh which is considerably less costly than Eskom’s open-cycle gas turbines that run at a cost of up to R3.00 to R4.50, depending on the diesel price.

The expert told Moneyweb that his company will submit a proposal to the DoE to procure floating power stations. If the principle is accepted, the department will issue a request for proposals and proceed with the procurement process.

The department has issued a request for information about possible near-term solutions to reduce or shift electricty demand or improve supply and submission.

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