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Projects and Energy Weekly Snippets

4 September 2015

Gas emerges as key focus area for DoE in immediate future

There are indications that South Africa’s much neglected gas industry may start seeing renewed activity, as Energy Minister Tina Joemat-Pettersson on Monday pushed forward her ambitions for immediate focus to shift to the development of gas-sourced power, alongside the successful renewable-energy procurement programme.

Speaking at a media briefing in Pretoria on Monday, she said the Department of Energy (DoE) was finalising the Integrated Energy Master Plan and the Gas Utilisation Master Plan (Gump), which would build the backbone of the gas industry.

In May, the Minister said the Gump, which would take a 30-year view of the gas industry from regulatory, economic and social perspectives, was in the final stage of internal approval and was expected to be released for public comment during the second quarter of the 2015 financial year.

The request for proposals for gas-fired generation through a gas-to-power procurement programme for a combined 3126 MW allocation was expected to be released to the market in September, with a bid submission phase planned for the first quarter of 2016.

Engineering News, 31 August 2015

Joemat-Pettersson says nuclear procurement process will include study

Energy Minister Tina Joemat-Pettersson has promised Parliament that a thoroughgoing affordability study will be undertaken as part of the procurement process for nuclear energy, but said that this will not be shared with the public as it is likely to be "classified" information.

The undertaking that information on the affordability will be shared with Parliament, albeit behind closed doors, marks a departure from the approach of the Department of Energy, which has to date insisted that this be kept secret until the procurement process has been completed.

In preliminary remarks to the committee, Ms Joemat-Pettersson said: "We are committed to a thorough cost benefit analysis of nuclear energy. It is part of the procurement process. We are not going to compromise our country in any way. Once we have completed the funding model we will bring it to the committee."

Business Day, 1 September 2015

Specs and costs stall enacting of clean fuel standards

The two main issues holding up an agreement between the government and refiners on introducing Cleaner Fuels II (CF2), to bring SA’s fuel emissions standards in line with Europe’s, were the specifications and the costs, SA Petroleum Industry Association (Sapia) chairman Maurice Radebe said on Tuesday.

SA’s fuel emissions standards are about 20 years behind Europe’s and because SA’s oil pipeline infrastructure is integrated, European-standard fuels cannot be imported and kept separate. As a result, the latest models of cars cannot be imported into SA.

Mr Radebe said it had been decided that SA could not simply copy Europe’s Euro V standard because SA has both crude oil and synfuels refineries, so local adaptations would have to be made.

The issue of financing was still under discussion. It would require a huge investment - according to 2011 figures, about ZAR40 billion - to modernise refineries that were built in the 1940s and 1950s. Because the price of petrol is regulated, this cost cannot be automatically passed on to consumers, so some allowance has to be made by the regulators.

Business Day, 2 September 2015

Renewable power plan is SA’s hot ticket

In SA, the fifth-biggest producer of coal - the resource that is burnt to generate most of the country’s electricity - solar and renewable power are gaining fast. The alternatives have attracted ZAR193 billion of investment since 2011, helping the government ease blackouts.

Trouble with bringing the coal plants online is emblematic of the industry’s difficulties worldwide. Coal prices have tumbled 50% since the start of 2011, tipping more than three dozen mining companies into bankruptcy. Envoys from more than 190 nations, including SA, will try to reach a historic deal in Paris in December limiting fossil-fuel emissions everywhere, suggesting more regulations against coal.

Renewable installations, meanwhile, are surging in SA and elsewhere in the developing world. In April Energy Minister Tina Joemat-Pettersson accelerated the programme, which follows the National Development Plan. Auctions first started in 2011 under a framework the government designed with developers and banks

The government will procure more than 6000 MW of wind, solar and hydro plants, as part of the biggest surge in power capacity since the 1980s. SA saved ZAR4 billion in fuel costs and avoided some blackouts in the first half of this year, according to a study by the Council for Scientific and Industrial Research (CSIR) that found renewables may be the cheapest way to prevent shortages.

Business Day, 3 September 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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