South Africa could pay up to 18 billion R2 for motor ships

Karpowership, one unit of the Turkish Karadeniz Energy Group is on the way to its longest ever contract for the supply of electricity by ships to South Africa worth up to 18 billion R2.

The company, which promotes a “fast, flexible and reliable” solution for floating electricity generation, was named last week as the preferred bidder for three projects using liquefied natural gas to provide 1.2 GW of electricity. The program aims to fill a supply gap in South Africa that is causing regular power outages.

According to a presentation by the CSIR, the 20-year contract will cost up to R 10.9 billion annually. The estimate is based on the valuation price of the offers from the Department of Natural Resources and Energy. Requests for comments were not immediately responded to.

The fact that the South African government would procure one for 20 years speaks to the depths of the country’s power crisis and to questionable long-term planning

The award will significantly increase fossil fuel generating capacity for two more decades as South Africa plans to move away from coal, which dominates the current electricity supply, and has made it the twelfth largest source of greenhouse gases in the world. Other smaller projects use a mix of sun and wind with batteries and LNG.

“Motor ships have proven to be effective in providing fast-reacting emergency power – hence the maximum term of 10 years for previous contracts,” said Antoine Vagneur-Jones, an analyst on the BNEF team for energy transition for Europe, the Middle East and Africa. “The fact that the South African government would procure one for 20 years speaks to the depths of the country’s electricity crisis and to questionable long-term planning in the face of falling costs for renewable energies.”

Do yourself with Shell

The agreement also provides for variable fees including fuel. “Karpowership’s reach in the LNG market and an exclusive, long-term contract with Shell keep costs down,” the company responded to questions.

The company began supplying power to ships that were to be moored off the South African coast at least six years ago. More recently, attempts have been made to expand on the continent, including in two West African countries that could not be identified in a January interview.

The South African Ministry of the Environment, Forestry and Fisheries revoked an environmental exemption granted to the Karpowership last year because it did not fully disclose its reasons for the application.

Prices vary between karpowership contracts and may not always include fuel delivery

Prices vary between karpowership contracts and may not always include fuel delivery. Lebanon paid $ 0.05 / kWh for a three-year contract, according to Bloomberg New Energy Finance, while the valuation price for Karpowership’s Saldanha project in South Africa is $ 0.11 / kWh for 20 years.

The final cost of the electricity could change due to the composition of the tariff. “Karpowership South Africa charges a single price that covers the fixed costs for the Powerships and variable fuel and operation fees,” the company said. – Reported by Paul Burkhardt, (c) 2021 Bloomberg LP

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