Projects and Energy Weekly Snippets

NERSA moves to finalise rules for connecting small-scale solar to the grid

The National Energy Regulator of South Africa (NERSA) will hold public hearings in April as part of a consultation process designed to finalise new rules for small-scale solar photovoltaic (PV) generators wanting to supply electricity from their homes or businesses to the grid. The regulator has released a consultation paper with 25 March set as the closing date for written submissions. A public hearing is set down for 10 April and NERSA plans to publish the new regulatory framework by the end of May.

The consultation paper proposes a two-phase approach for the introduction of standardised tariff schemes, with the immediate focus being on the rules for a modified "net metering scheme" with different tariffs for exporting and importing energy for small-scale embedded generation up to 1 MVA of installed capacity. During the second phase, more complex structures for handling fees, subsidies, levies and taxes will be considered.

The paper suggests that replacing the current licensing regime with a registration process could reduce the regulatory burden on households and businesses keen to install grid-tied rooftop solar. Should the proposal be accepted, small-scale embedded PV generators would simply need to submit an application to a licensed distributor, which will be submitted monthly for registration with NERSA.

Engineering News, 6 March 2015  

ESKOM opts for “crazy” coal deal

In yet another unusual and pricey move by Eskom to secure coal supplies, the utility is trying to snap up five million tons of export-quality coal from Glencore Optimum Coal. Details of the potential deal come amid a multibillion-rand government bailout for the struggling utility.

However, South Africa's power stations cannot burn such high grades of coal, which means it would have to be blended down, a costly process. The five million tons of expensive, export-quality coal from Glencore will cost the utility ZAR3.76 billion a year. Energy expert Chris Yelland confirmed that it appears the utility is becoming desperate to secure coal at any price. He said it was surprising that Eskom would enter into such a deal, and that Eskom could be struggling to get enough coal from its current contracts with coal mines in the area.

Eskom said it would need about 22 million tons of coal a year, although mining bosses believe it could be as much as 40 million tons a year, and the utility wants the majority of this to be supplied by black-owned companies. Big companies such as Anglo American and BHP Billiton are trying to exit the domestic coal market and as a result, Eskom may have to enter into very expensive agreements for export-quality coal.

For Glencore's Ivan Glasenberg it is a perfect deal. If the deal goes ahead, Glencore will be able to offload its seaborne coal, most likely at a higher price. Further, if the options being explored are viable and sustainable, then job losses at Glencore's Optimum Coal Mine in Mpumalanga, where the company intended to retrench workers, could be avoided.

Business Day, 8 March 2015  

Sasol working with SA's power “war room” on gas-importation plan

Energy and chemicals group Sasol is working with Eskom War Room on a possible public-private partnership (PPP) to build a floating liquefied natural gas (LNS) facility along the South African coast, which would facilitate the importation of gas to be used by both Eskom and independent power producers (IPPs).

CEO David Constable reports that Sasol stands willing to support efforts to initially build a floating LNG terminal, which would facilitate the conversion of the expensive diesel open-cycle gas turbines to gas. He envisages Sasol, which intends on playing a leadership role in a technical, project management and deal-making perspective, working with domestic state-owned companies on the LNG-terminal project, which he admits to being at an early stage of development. 

It is understood that the terminal is now being proposed for Saldanha Bay on the West Coast in order to facilitate the introduction of gas-to-power projects, including the conversion of Eskom's Ankerlig and Gourikwa plants from diesel to gas.

The initiative is aligned to a Cabinet-endorsed plan to facilitate an injection of gas into SA's coal-dominated electricity mix, as well as to a plan by the government's IPP Office to launch a procurement programme for gas-based IPPs during 2015. IPP Office head Karen Breytenbach has indicated that a request for information will be issued in March as a possible precursor to a 3000 MW tender for gas-to-power projects. 

Engineering News, 9 March 2015

TNPA optimistic of oil and gas hub in Saldanha

Most of Transnet National Ports Authority's (TNPA) ports projects would be launched within the next two to five years, in what TNPA general manager for strategy, Nico Walters, described as "exciting times" for the authority.

Speaking at a Southern Africa Shippers Transport and Logistics Council-hosted event in Johannesburg, Walters said TNPA was particularly optimistic of a ZAR13 billion project to transform Saldanha Bay into the oil and gas hub of South Africa within four years. The authority was currently preparing for tenders for the build, own, operate and transfer concessions of three major flagship projects at the Western Cape port, announced last month as part of government's Operation Phakisa programme to tap into the benefits of the ocean economy.

Saldanha Bay is well located for both the rigs operating off West and East Africa, as well as for passing trade, or the so-called tow-rig market. Walters said Saldanha Bay would become a one-stop rig repair and oil-services hub, with the first project the creation of an offshore supply and service base for oil rigs, supplying offshore vessels with services including food and waste-collection. The second project would be a dedicated rig-repair facility or Berth 205 and the third project was the Mossgas facility to service, maintain and repair a range of smaller vessels.

Engineering News, 10 March 2015

New study forecasts doubling of renewables capacity by 2025

The global installed capacity of renewable energy could more than double to 3203 GW in 2025 from 1566 GW in 2012, new analysis by Frost & Sullivan shows. The study anticipates an average yearly growth rate of 5.7% and for solar photovoltaic (PV) technology to account for 33.4% of total renewable-energy capacity additions over the period. Wind is expected to follow with 32.7% of new capacity additions, ahead of hydropower at 25.3%.

Industry director Harald Thaler also expects emerging economies to play a larger role, as the weak economic climate in Western Europe affects support schemes. More than 130 countries currently have supportive policies in place for renewables, which has translated into a dramatic rise in renewables investment in recent years. In addition, a decline in the cost of renewable energy, as a result of technological innovation and economies of scale, has also enabled developing countries to adopt these technologies.

"Renewable-energy installations in 2013 saw the continued, gradual shift in market power to emerging economies, where economic growth and revised energy priorities will drive a sustained increase in the adoption of renewable energy," Thaler says.

Engineering News, 11 March 2015

Transport, energy projects contribute to 46% rise in Africa construction investment

Investment in African megaprojects increased by 46% to $326 billion in 2014, mainly as a result of higher investment in transport, energy and power infrastructure, advisory firm Deloitte's third yearly African Construction Trends report has revealed.

According to the report, the public sector was responsible for the development of most of the listed projects – 143 – followed by the private sector with 88 projects and public-private partnerships with 26 projects. Energy and power made up 37% of the number of megaprojects in Africa last year, followed by transport at 34%, mining at 9%, real estate at 6%, water at 5% and oil and gas at 4%.

Meanwhile, Southern Africa had led construction activity on the continent, with projects valued at $144.89 billion, or about 44.5% of the total value of megaprojects on the continent last year. The report highlighted that Africa's infrastructural transformation was being driven by increased output in the natural resources sector, which supported rising fiscal expenditure on infrastructure projects to facilitate rising international trade with the continent. Additionally, rapidly growing urbanisation and rising domestic demand in Africa had created a significant amount of foreign direct investment in the continent's biggest and most dynamic economies.

Engineering News, 11 March 2015  

Solar PV: ENEL breaks ground on 231 MW plants across South Africa

On 10 March, renewable development and management company Enel Green Power (EGP) announced that it had commenced construction of three solar photovoltaic (PV) plants in South Africa. The Aurora, Paleisheuwel and Tom Burke PV plants will be located in different areas across the country with a combined generation capacity of 231 MW.

The Northern Cape Aurora plant is currently on 82.5 MW generation output and is estimated to generate an additional 168 GWh per year once in full operation. According to EGP, the output corresponds to the annual energy needs of around 53 000 South African homes and will save an estimated 153 000 tons of CO2 emissions annually.

The Paleisheuwel PV plant will be developed in the Western Cape with a generation output of 82.5 MW. Once the plant reaches optimal operation it will be able to generate a further 153 GWh per year meeting the energy needs of 48 000 households and curbing around 140 000 tons of CO2 a year, EGP claimed.

Located in the Limpopo Province, the Tom Burke solar PV plant has an installed capacity of 66 MW and will have the ability to add 122 GWh a year once fully up and running. This will meet the energy needs of 38 000 homes in and save 111 000 tons of CO2 from being emitted each year.

EGP has a power purchase agreement in place with state-utility Eskom, which states that the generated power from the solar PV plants will be bought by Eskom. The agreement was granted in the third phase of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) tender driven by the South African government in October 2013, EGP said.

ESI-AFRICA.COM, 12 March 2015

ESKOM suspends CEO, other top execs amid three-month inquiry

Eskom chairperson Zola Tsotsi announced the shock suspension on 12 March of four senior executives, including CEO Tshediso Matona and FD Tsholofelo Molefe, following a board decision to institute a three-month inquiry into the state of the troubled business.

Tsotsi said the inquiry, which had the blessing of the shareholder, would be led by independent advisors who would look into the current state of the business and offer an independent view on the poor performance of the generation fleet, delays to capital projects, the high costs of primary energy and the utility's cash-flow challenges. "We have asked these executives – in the interest of achieving a result that we believe can only be achieved through a very unfettered and transparent process – to step aside so that they can allow this process…to proceed. And even though we have invoked the word suspension, there is no suspension of wrongdoing – so there are no charges," Tsotsi outlined.

Public Enterprises Minister Lynne Brown immediately welcomed the board's decision to launch "a comprehensive and holistic audit" but argued that it should be "deeper than a mere fact-finding exercise and it should be a deep-dive into the company to tell us what is wrong and how it should be fixed".

There was a mixed reaction to the news from the various trade unions. Trade union Solidarity welcomed the move while the National Union of Mineworkers (NUM) expressed their shock. "It meant that there is a collapse of governance… [and] we think that there is a bigger picture rather than to gun for these four executives," NUM general-secretary Frans Baledi said in a statement.   

The suspension decision was made during a board meeting on Wednesday, 11 March, which was attended by the full complement of the new board.

Engineering News, 12 March 2015 

The above reflects a summary of certain news articles published during the preceding week. It is not an expression of opinion in respect of each matter, nor may it be considered as a disclosure of advice by any employee of Hogan Lovells.

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