/ 17 August 2023

Will Karpowership get the nod – and do we want that?

Karpowership2 (1)
A permanent stay?: The Karmol LNGT Powership Asia floating storage and regasification unit, operated by Karpowership, docked at Cape Town on 19 April 2022. Karpowership says it can be operational within 90 days – but wants a 20-year contract. Photo: Dwayne Senior/Getty Images

Karpowership SA is toiling to get environmental authorisation to moor a ship-mounted power station at Saldanha Bay in the Western Cape. The Turkish-based company has had more than one appeal rejected before by Minister of Forestry and Fisheries and Environmental Affairs Barbara Creecy. 

Creecy acknowledges how desperate South Africa’s power situation is but believes that this need should not be put before those of the environment or citizens. 

The authorisations were rejected because of inadequate information on the environmental impact of the powership. There were issues relating to the underwater noise and heat around it. Another problem was that the views of small-scale fisheries were not properly represented. 

But Karpowership has been given chance after chance to appeal. 

Is this something we want? Is it something the country desperately needs?  

Karpowership SA was named one of the preferred bidders in the government’s Risk Mitigation Independent Power Producer Procurement Programme. The company is looking to supply 1 220 megawatts of electricity to South Africa.

This should effectively stave off one stage of load-shedding. 

By all accounts, it seems like important ministers are keen on this deal going through. Minister of Public Enterprises Pravin Gordhan, Minister of Mineral Resources and Energy Gwede Mantashe and Electricity Minister Kgosientsho Ramokgopa have all been vocal in their support of powerships.

Creecy is pretty much the only one holding the process back, though environmental lobby groups, such as the Organisation Undoing Tax Abuse, are intent on fighting it. 

One of the key points Karpowership likes to make is that the power can come online swiftly — within the next 12 months, it’s been quoted as saying in the media. 

On the surface, if the company can give assurances that there will be very little environmental impact, it seems to make sense. That is until you look at the price and the length of the deal Karpowership is proposing.

The first thing that made me say “Whoa!” was the duration of the contract. A 20-year deal? That seems oddly long. Why would we need it for such a long time? 

Surely, our power crisis can be resolved quicker than 20 years from now? It should be a temporary solution. 

But then something that left me flabbergasted: the amount they are asking for. There are estimates by the Council for Scientific and Industrial Research that put the deal at R218 billion. What? That is an astonishing amount of money. 

That set alarm bells ringing. According to the electricity minister, the grid can be fixed for R210 billion. If the grid can be fixed, that means the mass renewable potential the country has can come online and load-shedding can end faster. 

So, if we have that type of money, why would we spend it on a mere 1 200MW of energy, when we can pour resources into fixing the grid and getting renewables online? 

For instance, according to Mantashe, the next bid window could procure 10 000MW of power. In addition, one expert said we would need about 10 years to get the grid properly fixed. 

It seems a no-brainer to dedicate those resources, if they are available, to fixing the grid so renewable projects can come online. 

I’m glad that it wasn’t just me who was startled by the 20-year length of the contract. Ramokgopa said it made no sense and he would try to negotiate for a shorter time.

Well, it seems the Turkish team might be keen on a shorter time — but, naturally, the cost would then be higher. 

Speaking to eNCA’s Annika Larsen this week, Karpowership chief commercial officer Zeynep Harezi said it would be keen on a five-year deal and that it could come online within 90 days. 

So, what would that price look like? In the interview, Harezi said that it would cost less than R15 billion every year to provide 1 220MW 

Patrick Bond, a distinguished professor of sociology at the University of Johannesburg, political economist, ecologist and scholar of social mobilisation, explored some of the numbers in an email: “Now the price will be far higher per unit: R2.50/kWh [kilowatt hour] compared to R1/kWh for renewables. Moreover, instead of R10.2 billion/year for a two-decade commitment, the Karpowerships must charge more to break even: R75 billion over five years, or R15 billion/year.”

It still seems crazy to me that we’d be willing to invest so much money in getting such a small amount of power. I get that it is immediate but wouldn’t we be better served fixing the grid and trying to get the ample renewable potential we have to come online? 

Interestingly, there are Karpowership projects in several countries already, such as Ghana, Brazil and Iraq. 

There are, of course, a few compelling arguments to be made for Karpowerships. One is that it’s fairly swift (recall Harezi saying that it could come online within 90 days?). That’s very fast — who wouldn’t welcome a lower stage of load-shedding in that time period? 

It’s reliable — the energy availability factor on these ships is around 95%. 

Karpowership SA makes a case for its power source being a transitional one. In essence, that means while the shift is made to renewable energy, these powerships could be a secure way to have power when renewables are unreliable. When there is no wind, or the sun is not solaring enough to power up, Karpowerships would come in handy. 

Either way, I’m not convinced they’re the way we need to go. I’m kind of hopeful the environmental authorisation will continue to fail. If they were more affordable, I might be persuaded to change my mind.