/ 4 September 2021

Karpowerships plead their case, but environmentalist argue SA doesn’t need powerships

Powergroup SA has approached the Johannesburg high court to seek an urgent interdict against Turkish group Karadeniz Energy, accusing it of attempting to remove it from a natural gas deal worth over R200 billion. (Karpowership)

The department of forestry, fisheries and the environment failed to consider that the powership fleet is “vital” for alleviating South Africa’s energy crisis and is “therefore a national priority”, said Karpowership SA in its internal appeal to the department.

In June, the department refused to grant environmental authorisation for the powerships for, among other reasons, failing to meet the minimum public participation requirements under the country’s environmental legislation.

In its response to Karpowership’s appeal, groundWork, an environmental justice nonprofit, said the success of the firm’s application cannot solely rely on energy risk mitigation. “It is still a relevant factor that there are alternative cheaper, cleaner and less harmful ways to generate the electricity, which could also develop and grow the country’s economy.”

Karpowership, part of Turkey’s Karadeniz Energy Group, is an electricity exporter that runs a floating power plant fleet. It proposed to use liquified natural gas to produce 1 220 megawatts under South Africa’s 1  845MW emergency power programme. The price tag is an estimated R10.9-billion annually. Its fleet of powerships are to be moored at Richards Bay, Ngqura and Saldanha Bay. The contract, if approved, will lock South Africa into a 20-year deal.

The department found that the company’s environmental consultants, Triplo4 Sustainable Solutions, did not conduct adequate studies on the effect of underwater noise created by its floating gas-fired plants, which could harm marine life, including African penguins, endangered dolphins, whales and turtles, and imperil small-scale fishers.

In its appeal, Karpowership SA said its public participation process met the minimum requirements for public participation, while its environmental assessments were “comprehensive”, encompassing a terrestrial and marine component. “Where no national studies could be conducted, because such technology simply does not currently exist in South Africa, international studies were conducted.”

The site assessment of marine noise is an “impossibility”… “since there is no established precedent in South Africa and no powership is yet permitted to moor”. 

In March, Karpowership was chosen as a preferred bidder under the department of mineral resources and energy’s emergency procurement programme to provide 1 220MW of electricity. It missed financial close at the end of July and the deadline has now been extended to 30 September for preferred bidders. 

groundWork said the project is not needed or desired from an energy security and socioeconomic perspective. “Its anticipated harms — for climate, biodiversity and socioeconomic considerations — far outweigh any alleged benefits, particularly in light of the feasibility of less harmful alternatives to meet the country’s electricity needs. Due to the unknown noise impacts on fish and local fishermen, the department should take the precautionary and risk averse approach and uphold the decision to refuse the environmental authorisation.” 

The nonprofit said experts have said that sound modelling is possible “and should have been conducted in this instance, to ensure a better understanding of the potential sound impacts”. 

Socioeconomic and procurement considerations under the Risk Mitigation Independent Power Producer Procurement Programme “do not, and cannot override the considerations on need and desirability as prescribed under the environmental impact assessment [EIA] regulations”, said groundWork. “Despite these constitutional, Nema [National Environmental Management Act] and EIA regulation obligations, Karpowership takes the position that because there was a procurement process through which it was appointed a successful bidder, and because there may be positive implications for energy security, this should serve as incontrovertible evidence of a need for this project, which overrides other considerations on need and desirability, and on this basis it justifies the project going ahead.”

groundWork cited studies by the Council for Scientific and Industrial Research (CSIR) and Meridian Economics, showing that a least-cost scenario for the energy sector involves rapidly building wind and solar generation in the near term. 

Further analysis by the Rocky Mountain Institute in July, filed with groundWorks’ submission, had evaluated the scope and credibility of the CSIR and Meridian reports, similarly concluding that the Karpowership projects are neither timely nor economically optimal in the next decade. 

According to the institute’s report, if commissioned by 2022, the Karpowerships would come online a decade prior to the planned need for any type of new high use energy capacity and will thus “represent an unneeded and uneconomic addition to [South Africa’s] electricity system for over half of their operational life”.

The report found that the country would be better served by focusing on investment in infrastructure to “enable a 21st century electricity system”, which Meridian’s findings and global trends show to be “largely renewable”. 

The institute’s report indicates that as renewable energy prices continue to decrease, gas capacity will become increasingly costly in comparison. The report found that Karpowerships do not best serve South Africa’s needs because of the financial risk presented by the high costs of gas plants designed for short-term emergency use being locked in for a 20-year period under the power purchase agreement, where excessive costs may be passed on to ratepayers and become a financial burden for Eskom. 

The report emphasises that investing in the proposed Karpowerships will be more expensive for electricity customers than investing in new wind and solar, and is not required for reliable electricity generation.

In response to the report, the company said: “Karpowership SA entered this process on the same terms as all other bidders and look forward to providing long-term, reliable and cost-effective electricity that supports the South African economy and eases the current load shedding crisis. 

“The process was highly regulated, transparent, equitable and Karpowership SA’s bid complied fully with all requirements. The company committed to using local suppliers and supply chains to support its projects that will kickstart new marine and energy industries in South Africa.”