Projects and Energy Weekly Snippets
21 August 2015
South African nuclear power plan stirs fears of secrecy and graft
Fears are growing in South Africa that agreements to build nuclear power plants that could be the most expensive procurement in the country's history will be made behind closed doors, without the necessary public scrutiny. Construction on the first plant is due to start next year, breakneck speed compared with the years of regulatory and environmental checks for nuclear projects in countries such as Britain and the US. The Democratic Alliance, the main opposition party, believes the pace of the deal will prevent proper analysis before contracts are signed and huge sums of money change hands.
South Africa's President Jacob Zuma said this week the nuclear plan was at an "advanced stage" and the procurement process should be completed by March. Following meetings between Zuma and Russian President Vladimir Putin last year, the Russian atomic agency Rosatom said it had agreed a $10 billion contract to build power stations. However, the DoE denied an agreement had been reached, raising public suspicion in South Africa of backroom dealmaking.
A 2013 study by the University of Cape Town's Energy Research Centre found more nuclear power was not needed and would not be cost-effective, based on an estimated installed cost of $7 000/kW. Experts question whether the nuclear build is necessary at all, given that two large coal power plants are due to be completed in the next three years, gas-fired capacity is increasing, and renewable projects are mushrooming.
Engineering News, 14 August 2015
Lobby groups call for moratorium on mineral licences
Lobby groups AfriForum and Treasure Karoo Action Group said on Tuesday they have demanded that Mineral Resources Minister Ngoako Ramatlhodi place a moratorium on all mineral prospecting licences for companies that have direct or indirect links to political parties. The groups said in a joint statement on Tuesday that they had written a letter demanding the suspension of current regulations governing hydraulic fracturing - or fracking - pending the finalisation of the strategic environmental assessment and Academy of Science of SA reports on the mining process.
Science and Technology Minister Naledi Pandor announced the government’s intention to proceed with a strategic impact assessment and exploration of shale-gas fracking in May - with regulations on the safe exploration and production of petroleum published in June.
Treasure Karoo Action Group and AfriForum said on Tuesday that they were of the opinion that the high number of unrehabilitated mines and small number of prosecutions of companies for environmental transgressions nationally were sufficient reason not to proceed.
Business Day, 18 August 2015
Gas from coal could relieve power woes
Billions of tonnes of SA’s unmineable coal could be turned into gas or used to generate electricity through new technologies that promise cheaper and more environmentally friendly processes than conventional mining. There are no unconventional gas projects in commercial operation in SA yet, but the Department of Energy’s plan to invite independent gas-fired power projects could be a catalyst for development.
Pilot studies have shown that underground coal gasification would be technically feasible on South African coal deposits. It is in commercial operation in Australia and North America. Experts believe there could be potential for coal bed methane in the younger Waterberg coal deposits. The Karoo shale deposits might be exploited by fracking, but those studies are at a far earlier stage.
Underground coal gasification and coal bed methane operations are cheaper than coal mining, avoid the negative consequences of storing and transporting coal and have carbon capture possibilities. In 2007 an underground coal gasification pilot plant at Majuba was fired, proving the technology worked in principle. It produced 2 MW of power that was flared and not used to generate electricity. Eskom says underground coal gasification would qualify under the Department of Energy’s integrated resource plan as a coal baseload generating option or as a gas mid-merit option. The government’s call for interest in independent gas generation included provision for unconventional gas such as underground coal gasification, coal bed methane and shale gas.
Business Day, 18 August 2015
CSIR study estimates net renewables benefit of ZAR4 billion in H1 2015
A new Council for Scientific and Industrial Research (CSIR) study calculates that South Africa’s wind and solar photovoltaic (PV) projects generated nearly ZAR4 billion more in financial benefits during the first half of 2015 than they cost the country. Conducted by the CSIR Energy Centre the study estimated cumulative savings of ZAR8.2 billion, which were partially offset by the tariff payments to renewables independent power producers (IPPs) of ZAR4.3 billion between January and June 2015.
CSIR Energy Centre head Dr Tobias Bischof-Niemz said a total of ZAR3.6 billion of the savings were derived from the replacement of diesel and coal fuel costs. A further ZAR4.6 billion in benefits arose as a result of the wind and solar power plants ensuring the avoidance of 203 hours of "unserved energy".
The study found that during 15 days from January to June 2015 the contribution from solar and wind either prevented or delayed load-shedding, or reduced its severity.
“Therefore, renewables contributed a total net benefit of ZAR4 billion (or ZAR2/ kWh of renewable energy) to the economy. Our study shows that in the first six months of 2015, the trend that started in 2014 continued and speeded up, and that renewable energy provided a huge net financial benefit to the country. What is more, the cost per kWh of renewable energy for new projects is now close to 80c for solar PV and between 60c to 70c for wind projects. That will keep the net financial benefits of new renewables positive, even in a future with a less constrained power system,” Dr Bischof-Niemz said.
Engineering News, 19 August 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.