Category Archives: DoE

PetroSA to spend big on Mossel Bay refinery (R3bn)

Engineering News, 12 October, 2016.

(Disclaimer – this article isn’t about electricity, but about wasting taxpayer’s money on sunk costs in a stranded asset.)

STATE-owned gas-to-liquid producer PetroSA plans to spend more than R3bn over the next five years to improve the refining capacity of its Mossel Bay plant and to ensure the security of its energy supply.

It will also be seeking strategic partnerships to assist in the implementation of its plans.

(EG-SA contributor note: Here we go again! How can we even consider spending this much on “the feasibility/ front-end loading stages as part of the long-term planning for ensuring the sustainability of the gas-to-liquid refinery” R3bn on planning!!! And only last year PetroSA declared a loss of R14.7bn, see here.)

Read the full article here.


Energy Minister says Eskom to fund nuclear as new procurement framework is unveiled

Engineering News, 11 October, 2016.

Eskom’s balance sheet will be used to leverage funding for government’s anticipated multibillion-rand nuclear build programme, Energy Minister Tina Joemat-Pettersson announced on Tuesday.

(EG-SA contributor note: And this is the same Eskom pleading for government guarantees and MYPD tariff increases to keep them afloat? If the government is the guarantor then the tax payers are effectively at risk if Eskom defaults.

She told Parliament’s Portfolio Committee on Energy that the National Treasury would not be funding the programme, but that Eskom would raise the money in the international markets and would be the owner-operator of the nuclear build programme…

(EG-SA contributor note: And the IRP has been postponed again, and the IEP not mentioned – the IRP is supposed to be based on the broader IEP, which includes gas strategy)

…Joemat-Pettersson said the IRP had to be approved by Cabinet before being published for broader consultation. The plan had been due to go to Cabinet this week, but was postponed…

(EG-SA contributor note: Note also the renewed attack on Pravin Gordhan this week – getting ready for a Cabinet re-shuffle to get him out of the way of the nuclear deal? See this article

And click here for the full Engineering News story

Tina Joemat-Pettersson to present IRP to the Cabinet next week

BDLive 10 October, 2016.

ENERGY Minister Tina Joemat-Pettersson said on Monday that she would present the Integrated Resource Plan (IRP) and an integrated energy plan to a Cabinet subcommittee on Wednesday and to the Cabinet next week.

Wide consultations, including with Eskom, had been taken on both plans, she said.

(EG-SA contributor note: Wide consultations? When were these held and with whom? At least there will be public consultations after the Cabinet has seen the IRP and IEP)

The plans will reflect the government’s commitment to an energy mix that included nuclear energy, and will lay the foundation for the government’s future energy procurement.

They would not necessarily be approved by the Cabinet but would be released for public comment, Joemat-Pettersson said.

The minister reaffirmed the government’s unequivocal commitment to the renewable energy programme, but said some deadlines would be changed due to a change in circumstances.

All determinations issued in the past would go ahead, Joemat-Pettersson said at a media briefing to announce the preferred bidders for the first stage of the government’s coal-based independent power producer procurement programme (IPPPP)

Circumstances that had changed, the minister said, included the economic situation, the exchange rate and Eskom’s financial stabilisation.

Certain matters had been clarified with Eskom regarding its requirement for baseload power, and the government’s commitment to renewable energy and the IPPPP.

Tina Joemat-Pettersson announces first coal independent power firms

BDLive, 10 October, 2016.

HE preferred bidders of the first bid window for the coal baseload programme are Thabemetsi and Khanyisa, Energy Minister Tina Joemat-Pettersson announced on Monday.

She said at a media briefing that both bidders were selected on the basis of stringent requirements, with all bids reviewed and evaluated by the independent power producers office.

Both projects will require R40bn of debt and equity funding, and will create thousands of jobs in Limpopo, where Thabametsi’s project will be based, and in Mpumalanga, where Khanyisa will operate.

The two companies collectively will add 863.3MW to the country’s grid in the next five years, with Khanyisa set to begin commercial operation in December 2020, followed by Thabametsi in March 2021…

She said both companies had submitted prices well below the stipulated qualification price of 82c/kWh, which would escalate with the consumer price index.

Khanyisa came in at 80c and Thabametsi at 79c but the head of the Department of Energy’s independent power producer office, Maduna Ngobeni, said these prices excluded the costs of connecting the plants to the grid. Including this cost took the price to about R1.01c.

Click here for the full article

Smart money chooses clean energy over dead-end fuels

BDLive, 7 October, 2016.

FINANCIAL markets across the world are waking up to the threat of a new financial bubble, one premised on the possibility that trillions of dollars worth of fossil fuel assets will be lost as the world takes action on climate change.

Yet, as other economies prepare to avoid this carbon bubble, SA seems to be digging itself in deeper and deeper.

At the UN climate negotiations in Paris last year, the world agreed to keep global warming to well below 2°C above pre-industrial levels.

This is great news for averting the worst impacts of climate change, but bad-to-terrible news for the fossil fuel industry as three-quarters of their proven coal, oil and gas reserves have to remain in the ground if we are to adhere to that target.

To put a financial number on the amount of reserves that would be unburnable, Kepler Cheuvreux estimates that adhering to the 2°C target would result in $28-trillion in lost revenue in the next two decades, with the oil industry accounting for $19.3-trillion, gas $4-trillion and coal $4.9-trillion. In the longer term, Citibank estimates more than $100-trillion in lost revenue by 2050.

Those losses and stranded assets could be triggered by a perfect storm of factors challenging the viability of the fossil fuel industry business model.

A rapid increase of climate regulation coupled with major advances in energy efficiency and clean technology are undercutting the profitability of fossil fuels.

Simultaneously, broader social pressure from the likes of the rapidly growing fossil fuel divestment movement has shone the spotlight on the necessity of keeping carbon underground.

In doing so, they draw attention to the risks the fossil fuel industry faces, pushing investments out of the industry and constraining its ability to attract funders and shareholders.

These mutually reinforcing factors create a cumulative effect that makes the chances of the carbon bubble bursting quite significant. And those risks are playing out faster than most expect — so fast they have already put at risk trillions of dollars’ worth of fossil fuel assets.

Looking forward, the financial specialists at Carbon Tracker, who pioneered the concept of the carbon bubble, recently demonstrated that renewable energy is already undercutting gas and coal. And that’s even more the case in sun-drenched and wind-rich SA, where a new study from the Centre for Scientific and Industrial Research demonstrated that the lowest cost option for providing energy to the country is to pursue a high renewable energy future.

As this new reality plays out, the sector that is likely to be hit hardest is the heavy polluting coal sector.

This is perhaps best evidenced by a recent analysis from the Institute for Energy Economics and Financial Analysis, which shows that in Texas — historically one of the largest power markets in the world — none of their coal-power units is financially viable as “all but one of the plants is expected to produce pre-tax losses for their owners in coming years”.

This rapidly shifting reality leaves the South African economy in a terribly vulnerable position as we are deeply wedded to the coal industry and, if anything, are digging ourselves deeper into coal reliance.

Our Public Investment Corporation holds more coal investment than any pension fund on Earth by a long way, putting it and its pensioners at huge financial risk.

Click here for the full article