Eskom plans to build 3,000MW gas power station without its own money

The National Energy Regulator of South Africa (Nersa) has approved Eskom’s plan to build a 3,000MW gas power station in Richards Bay.

Sunday newspaper Rapport reports that Nersa recently backtracked on its previous decision to block the project.

Eskom first proposed the plant to mineral resource and energy minister Gwede Mantashe in January 2022.

The minister subsequently approved the proposal and sent an application for the plant to Nersa for regulatory clearance.

Following public consultation, Nersa rejected the application in December 2022, based on Eskom ostensibly not following the correct technical procedure for approval.

Rapport has learnt that Nersa then reconsidered the application behind closed doors in February 2023 and concluded that it had erred in its rejection.

However, because Nersa does not have the legal powers to rescind its own decisions, it had to approach a court to declare its previous decision invalid.

The court did so, paving the way for Eskom to proceed with acquiring funding.

Nersa head office in the Pretoria CBD. Credit: Google Streetview

As part of the National Treasury’s terms for the government taking over R254 billion of Eskom’s debt, the utility cannot borrow more money to build new power stations.

Eskom is currently negotiating with the National Treasury to fund the plant through other means.

Models under consideration include a public-private partnership or power-purchase agreement with an independent power producer.

The utility hopes to have the plant start delivering power from 2028, so it won’t be able to help reduce load-shedding soon.

Gas better than coal — still not ideal

Gas power plants burn natural gas sourced from onshore and offshore natural gas and oil wells, and coalbeds.

According to the US Energy Information Administration (EIA), burning natural gas is considered a “relatively clean” way of generating electricity.

“Burning natural gas for energy results in fewer emissions of nearly all types of air pollutants and carbon dioxide (CO2) than burning coal or petroleum products to produce an equal amount of energy,” the EIA explains on its website.

“About 117 pounds of CO2 are produced per million British thermal units (MMBtu) equivalent of natural gas compared with more than 200 pounds of CO2 per MMBtu of coal.”

Nevertheless, it is still far more damaging to the environment than solar, wind, and nuclear power (assuming nuclear waste is properly processed and stored).

Several civil rights and community organizations have challenged the project’s environmental approval.

Mantashe recently said the government was prepared to battle any legal challenges from environmentalists blocking South Africa from leveraging gas to help solve its energy crisis.

“Environmentalists veto every development they don’t like,” Mantashe told Sunday Times.

“People can take us to court as many times as they can, we will continue with gas and petroleum exploration.”

Those comments came in light of the Department of Transport granting mooring permits to Karpowership for three powerships at the Coega, Richards Bay, and Saldanha Bay harbours, with the aim of providing emergency power to South Africa.

The government’s tender for a 20-year power purchase agreement with Karpowership has been heavily criticized, with energy experts, opposition parties, and civil organizations warning it could result in unpredictable electricity prices.

Among them, the Organisation Undoing Tax Abuse (Outa) has estimated that the project could cost half a trillion rand over two decades.

Reuters recently reported the government also plans to auction ten onshore blocks for shale gas exploration in the Karoo in 2024 or 2025, once legislation providing for bidding has passed.

The Petroleum Agency of South Africa (Pasa) has estimated the Karoo Basin has around 209 trillion cubic feet (tcf) of technically recoverable shale gas resources.

A 2017 study by University of Johannesburg geologists said it was probably closer to 13 tcf.

According to the Academy of Sciences of South Africa, around 5 tcf would be enough for a 1,000–2,000MW gas-fired power plant that can supply electricity for up to 30 years.

Previous plans by Shell to explore for gas in the environmentally-sensitive area were thwarted due to significant resistance by environmental activists and farmers concerned about the impact of fracking.

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Eskom plans to build 3,000MW gas power station without its own money