🔒 Powerships could supply cheaper electricity to SA in two months – Patrick O’Driscoll

___STEADY_PAYWALL___
The Department of Mineral Resources and Energy published a Request for Information (RFI) at the end of last year to procure immediate solutions that could generate between 2,000 and 3,000 megawatts from independent producers. One of the solutions that have been presented to the government under the RFI aim has been put forward by Karpowership South Africa. The company said it could supply electricity to the grid within two months by parking five of their self-contained floating power stations in various ports in South Africa. A spokesperson for the firm, Patrick Driscoll, told BizNews that its power ships can ramp up to 2,000 megawatts within five months and supply energy at about half the cost of Eskom.

We are a global company with projects ranging from across the Indonesian archipelago, through Africa, from East Coast Africa and places like Sudan, Mozambique, up through into West Africa, Ghana, Sierra Leone, Gambia, Guinea-Bissau, Senegal and across into the Caribbean and Cuba, where we operate approximately 4000 megawatts of contracts today.  They run power into the grids, and we invest ahead of any contracts.

So, we are a bit like, I suppose you could put it, like a car rental company. We’ve always got something available. It might not be a group A that you want, but we can give you a group C or vice versa. So, there’s always something available. We are the only one in the world to do our own in-house design and engineering and we have our own shipyard in Istanbul, in Turkey.

So, we take a ship, an old cargo carrier, second-hand cargo carrier that we buy in the market, and then we convert it into a floating power ship.  That’s done by ourselves at our shipyard and then we sail them around the world to deliver electricity to customers who are predominantly country state utilities of size, Eskom, being one of the hot ones at the moment with the load shedding. They came out with the RFI, everyone’s looking forward to the Request for Proposal (RFP).

Everyone says the government is taking its time. The government is not, the government is working through a process and that process is there for a reason. It’s there to manage expectations, to manage the laws of the country and the legislation. And yes, it will take time but if you look at where this comes from. They’ve had an RFI, they are now indicating that the RFP will be out by the end of this month to mid-August. So, you know, they are aggressively working through it.

You don’t go out and procure 2,000 – 3,000 megawatts overnight. You have to follow due diligence and process and they’re doing that. So, unfortunately, the power problems will go on for the foreseeable future and as long as they have done and followed the process as per the laws of South Africa, then the contracts themselves will be in a good place. And so, the people of South Africa will have contracts that are supported by parliament, by governments all the way through the process.

So, the company is called Karpowership, but is that the local subsidiary of your international company?

The holding company is called Karadeniz Holding and then we have Karpowership South Africa; we have Karpowership Indonesia; we have local BEE partners, we have registered offices, a registered company and that company responded to the RFI.

Is the government open to this idea of placing powerships in the waters off the coast of South Africa? Is that a short-term solution for Eskom?

The government went out with an RFI. The governments took all of those requests for information on board and they’ve obviously put them into tiers and boxes and the indication is that they are coming out with a formal RFP as the next stage to go and procure 3,000 megawatts of power generation.  That power generation could be power ships, it could be mobile generators, it could be solar, or it could be wind. It could be whatever.

They’re going out to procure 3,000 megawatts. So, there’s no underlying reason why a power ship would not be something that would be attractive to the government of South Africa.

If you look at Eskom’s cost of power generation, it seems to be around R3.80 per KW/h and some of the wind and solar companies have indicated that they could generate power between 55 and 60 cents per kilowatt hour. What would power from your ships cost?

I could do an online power supply for R1.70 per kilowatt hour.

Is that about half what Eskom costs? 

That includes all fuel, etc. I think the number you’re using, I believe, is the Eskom number for their open cycle gas turbines that they’re running. That’s not all of their power generation at that cost.

So how does it compare with Eskom?

Well if they run the cycle gas turbines (CCGTs), I would be more than 50% of the price and they’re using the CCGTs 60-70%, sometimes 90% of the time when they’ve got load shedding, they’ve got X, Y and Z problems in the system and if you do those numbers backwards, then there’s a significant saving.

How soon can this be rolled out in South Africa?

Initially, I could deliver somewhere in the region of about 700 to 800 megawatts immediately and when I see immediately, you’re talking a sailing time to South Africa, probably somewhere in the region of about two months. I would then have the capability to incrementally increase that up to 2,000 plus megawatts over the following six months. And if you’re going to build a wind or solar power plant, that’s going to take you time. It’s not going be done in eight weeks.

Just give us an idea of what it looks like. So, it is a ship in the water with power lines running from the ship to a mast. How does it work?

The power comes in from the ship, has a grid substation and the grid substation evacuates the power at the allocated voltage and the power line is then taken from the ship to a transmission tower and the transmission towers is integrated, either there or there’s a new one put up. If there are transmission lines at the shore, most of South Africa’s large power plants are on the waterfront anyway. So, you know, they’ve got power lines running up and down the country. We just connect to them. It could be in numerous locations. South African coastline is very large. It could be in Richards Bay, it could be a Coega, it could be in Saldanha or it could be in Durban.

Is this only a short term solution or is this a long-term solution as well?

I’ve got contracts that range from three years, five years, ten years to fifteen plus years. So, it can be used in various durations.

The independent producers say the process of allowing them to provide renewable energy solutions to the country is taking too long. They have started a process of consulting with Minister Gwede Mantashe to discuss how this can be speeded up. The chair of the South African Independent Power Producers Association, Thomas Garner, told BizNews that the announcement of the government to start a process of procuring nuclear weapons was surprising. And, he says there does not appear to be any urgency to speed up the use of renewable energy in South Africa.

At this stage, there’s like a three-month delay in that due to Covid-19 because guys can’t really do their dedication and things like that. So, it isn’t actually short term or emergency because it takes much longer than needed.

So, what does it mean because it looked like the door was opening for the independent producers and for cleaner energy in South Africa and other options? What does it all mean for this process?

It’s not clear. I mean, we’ve got a procurement process that was approved by Cabinet, I think, last year. Then we have some of the ministerial determinations, the emergency power determination that was published, I think, in February and NERSA (The National Energy Regulator of South Africa) did concur with Eskom as the buyer and that is for an emergency programme. So, there is now a basis for going out on RFP, (Request for Proposal) but I think the RFI has not been worked through and detailed yet because of the impact of Covid. So, it seems that the RFP will only come out, I would say November at the earliest and it’s not clear what the RFP will look like.

The proposal is very clear, that huge amounts of renewable energy is to be procured over the next 10 years. There is a lot of coal-based, Eskom base load power stations to be decommissioned. There is the refurbishment of Koeberg, which is not a new-built nuclear, it is a refurbishment. Then, there’s also quite a lot of gas to power to be procured.

In the meantime, the Department of Mineral Resources and Energy has come with documentation around a Request for Information for nuclear and it is unclear why that is done, because it’s not part of the proposal and all the noises are anti-renewables. Of course, there is a lot of politics in that, but again, it is one of those things where the government is dragging its feet. No decisions are being made and we are sitting with load shedding under a hugely constrained economy at the moment, which is not good news.

So, powerships are definitely not the immediate solution or the urgent solution that they said they were looking for?

No, definitely not, but we said it right from the start that it can’t be.  You can’t go out on an RFI and think, it’s going to be quick.

The renewable sector has arranged a renewable sector discussion with Minister Gwede Mantashe because he’s obviously anti-renewables. My suspicion is that he thinks we’re not creating manufacturing jobs and jobs in South Africa, which is not completely true. So, we want to open the discussion and see if we can get some common ground.  If we can get to some common ground, I think we can move on. So, it’s positive.

We are meeting as all the renewable and independent power producers’ associations and some relevant players in the industry to see if we can get around it. We really want to state our case, make sure that we come over as humble and assertive. We don’t want to create renewables for the sake of renewables or for the sake of the private sector, but for the sake of South Africa at large and its people. It is part of the lowest cost solution and we need to, in the process, localise a lot of it, so that we can get local jobs out of it, not only from construction and operation maintenance, but also from the supply chain. So, it’s really about creating common ground and then building on that.

This is Linda for Tilburg for BizNews.