/ 20 April 2021

Gas to power: Who can halt the hot air?

The department of forestry, fisheries and the environment has refused to grant environmental authorisation to Karpowership SA for its three gas-to-power projects.

Over the past few weeks, the South African public has seen the department of minerals and energy (DMRE) in, what appears to be, a desperate rush of nostalgia for the fossil past. We have seen the publication of the Gas Amendment Bill, the gas strategy and a version of the gas master plan.  What we have not seen is the solar master plan, or the wind roadmap or the hydrogen strategy, or even the storage master plan. 

In a country supposedly treading the path of energy transition, a stark indicator of the non-progress was the announcement that 1220 MW – about two thirds of the 2000MW – of emergency power procurement or Risk Mitigation Independent Power Producer Procurement (RMIPPP) is for gas to power generation. 

In our view, this idea of each power plant being seen as an entity on its own, rather than part of a system, could be likened to a factory that needs to run for 24 hours, where each and every worker is expected to work for 24 hours to keep the factory operating. In the real world, however, in factories that run 24 hours, the workers work in shifts. This enables the system to run smoothly and efficiently.  

According to DMRE, despite initially stating that the successful bidders must be able to offer dispatchable power – where each worker must work 24 hours – they now say that different components of the power station can be located in different parts of the country, for example, having battery storage in one place and solar panels in another. The question is then, why was there a need to combine them in one power plant in the first place, since it makes the procurement more expensive? Why could the DMRE not have procured a whole batch of power stations, separately, some storage and some renewables?

While the 2000MW was initially identified as emergency procurement, the DMRE now appears to be saying that it is a fast track of some parts of the Integrated Resource Plan (IRP), and that the procurement appears to be in line with the Renewable Energy Independent Power Producer Procurement (REIPPP) programme with regard to government guarantees.

DMRE has admitted that if the international liquefied natural gas price was to rise, the costs would be passed through to the customer, that is, the South African electricity user. DMRE also admitted that as the price of the fuel is dollar-linked, if the rand-to-dollar price increases, this would also mean an increase for the consumer. So, by accepting the Karpowerships into our energy mix, we are locking ourselves into a 20-year contract where the costs of electricity could spiral out of control and there will be nothing we can do about it. 

Looked at cynically, it appears as if the entire RMIPPP process was concocted to force gas to power generation plants into the system, but only a thorough investigation will tell.

According to their website, parliament commits to its “constitutionally predicated responsibilities of law-making, oversight and public participation”.  Section 217 of the constitution states that procurement must be fair, equitable, transparent, competitive and cost-effective. On top of this, Section 24 includes the right to have the environment protected, for the benefit of present and future generations. MPs sign an oath of office to uphold the constitution.

The Karpowerships have been in the news since their announcement.  Various organisations and energy experts have lambasted the DMRE for its decision to award two thirds of its risk mitigation power plant capacity to a Turkish company, in the face of competitive renewable-based bids. Finally, more than a month after the announcement, parliament is now holding a meeting on the Karpowerships. If it was intent on holding the executive to account, surely it would do its homework and ask all of those who have expressed concerns for their views? Surely parliament would hold a public hearing and then, armed with this knowledge, it would be better informed to engage the DMRE?  Instead, parliament proposes to spend four hours listening to the DMRE’s attempts to justify what has appeared, over time, to emerge as an increasingly irrational procurement.

Unfortunately for Sahlulele Luzipo, the chair of DMRE portfolio committee, the minister who should be held to account is Gwede Mantashe. This same minister appeared before the Zondo commission last week, apparently stating that if you are in parliament on a party list, then you are expected to uphold the constitution but you are not a free agent. The implication, that where there is a conflict, political party policy position should trump the interests of the republic.

All eyes will be on parliament, and this is a test to see if MPs will use their parliamentary powers, and conduct a proper investigation into whether the RMIPPP is fit for purpose. For increasingly cynical South Africans, the question is, will parliament live up to its promises and use its teeth or will it roll over and continue to play dead as it did in the Zuma years?