Energy minister Gwede Mantashe announced the preferred bidders for the government’s emergency risk mitigation IPP programme in March, which include three liquid natural gas powerships.

The Risk Mitigation IPP Procurement Programme (RMIPPPP) aims to alleviate South Africa’s electricity supply constraints and reduce the use of diesel-based generators.

Two-thirds of the new RMIPPP programme – 1,220MW of the 1,845MW – went to a single company, Karpowership SA.

The CSIR estimated that Karpowership SA, a unit of the Turkish Karadeniz Energy Group, can get as much as R218 billion from the 20-year deal.

This decision faced severe criticism from many energy experts because of its environmental impact, the lack of local gas resources, and the cost.

Many people argued that solar and wind power, in combination with battery storage, provide a better and more sustainable solution.

South Africa is blessed with a lot of sunshine and wind which make these renewable energy options an obvious choice.

While the programme includes solar PV, wind, and battery solutions, Karpowership SA is by far the biggest beneficiary.

Karpowership SA has responded to the local procurement criticism, saying at least 65% of its workforce will be South African and employed from local communities.

The company added that it will maintain all local and international environmental codes and protect South Africa’s oceans, ports, and sensitive environmental areas.

Chris Yelland
Chris Yelland

Energy expert Chris Yelland delved into the powership procurement decision in an interview with Department of Mineral Resources and Energy DDG, Jacob Mbele, and IPP Office Acting COO, Maduna Ngobeni.

He also explores some of the issues relating to the selection of gas-to-power over wind, solar PV, and battery energy storage for two thirds of the generation capacity awarded.

Q) Chris Yelland: Why are preferred bidders using solar PV technologies required to buy locally made solar PV panels, which may not available from local manufacturers in the quantities required by the market, and may come at a substantial price premium, while for the Karpowership projects, the ships, gas engines, floating fuel storage and regasification units (FSRUs) and the liquified natural gas (LNG) fuel (which in itself accounts for about 60% to 70% of the total cost) is allowed to be fully imported?

A) Maduna Ngobeni: Chris, remember that there are designated components, and there are components that are not designated. The DTIC looks at what is available from the local market and what South Africa is capable of manufacturing locally, and then designates certain products and components for local manufacture. Both solar PV panels and ships are designated for local manufacture.

However, the powerships and FSRUs have subsequently been granted exemption from such designation for local manufacture by the DTIC, who have since concluded that these ships cannot be manufactured here. However, when it comes to solar PV panels, the DTIC has looked at the South African industry and decided that it is possible to manufacture these locally.

Now, you are suggesting that the local solar PV panel manufacturing industry may not have sufficient capacity to deliver the required volumes. However, based on the bids received, we do not believe this to be the case. Everybody that submitted a bid confirmed that they would be able to source solar PV panels locally, and remember, not everyone that submitted a bid, was selected as a preferred bidder.

Obviously, if successful bidders are not able to source certain designated products or components locally, they can, of course, approach the DTIC and the IPP Office, and we can then deal this together. But, at the moment, we believe there is sufficient local manufacturing capacity for solar PV panels.

Q) Chris Yelland: The imported LNG fuel cost for the powerships is estimated at about R1,00 per kWh, which much higher than the full levelised cost of electricity (LCOE) of between R0,40 and R0,60 per kWh for new, standalone wind or solar PV. Why are the powerships not used in combination with wind and/or solar PV as fuel savers? Will the powerships be allowed to contract wind and/or solar PV as fuel savers in the future, and if so, will the savings be passed on to customers through tariff rate reductions?

A) Maduna Ngobeni: Firstly, when we designed the programme, we encouraged projects combining different technologies, such as solar PV, wind, gas and batteries. So, there was that opportunity to do this. We also said that it doesn’t matter where the gas plant is located. For example, the solar PV plant could be in the Northern Cape and the gas plant in Richards Bay or Coega.

However, Karpowership opted not to combine their gas-to-power offering with solar PV or wind. They still came in at a reasonable price, and hence were selected as preferred bidder for three projects. On whether they could combine with wind or solar PV projects in the future, I think that’s a discussion for another day.

We should also not lose sight of the fact that although the powership projects are not contractually combined with wind or solar PV, from a system operation point of view the various technologies are indeed used in combination. Power from gas engines is flexible and despatchable, and can complement variable power from wind and solar PV sources.

So, the system operator has the flexibility to balance the system using this gas-to-power in wind and solar PV projects that we’re still going to procure in future bid windows of IRP 2019. There is a benefit for the country as a whole if we look at this at a national level rather than trying to balance the system at the plant level.

Q) Chris Yelland: Does the tariff bid by Karpowership include all pass-through costs such as carbon taxes, environmental levies and future LNG fuel prices risks? So, if the carbon tax and/or the US dollar price of LNG goes up, will the tariff go up? Is the tariff bid linked or indexed in any way to rate-of-exchange, price of LNG fuel, interest rates, CPI, etc., such that electricity customers and the public are exposed to these future risks? Are the tariffs of the non-gas bidders indexed or exposed to similar market risks? Which projects present more risks to customers and the public?

A) Maduna Ngobeni: Yes, to start off with, the tariffs bid for the three Karpowership projects incorporate all costs, including the fuel costs, the powership and FSRU lease costs, the operation and maintenance costs, and the environmental levies and carbon taxes.

These costs making up the tariff are not fixed in Rands per kWh over the 20-year contract period, but are indexed to the US Dollar commodity price of the LNG fuel, the US Dollar / Rand exchange rate, the carbon price or carbon tax rate, and other indices.

The carbon tax component of the tariffs bid is based on the level of emissions stated by the bidder at the time of tender. As with changes in the commodity price of the LNG fuel and the US Dollar / Rand exchange rate, any variations in the applicable carbon price, carbon tax rate or environmental levies associated with these nominated emissions are passed through to the customer via adjustments in the tariff bid.

However, any carbon price, carbon tax or environmental levies resulting from emissions above that nominated by the bidder, may not be passed through to customers in the tariff, but must be borne by the IPP bidder itself. So that is how we manage these risks.

And now, moving on to renewables and battery storage, i.e. wind and/or solar PV with battery energy storage, here there were two bid options. The first option is that the bid price in Rands per kWh is a fully indexed to the South African CPI over the 20-year contract period, and the other option is that the bid price is partially indexed. So, at financial close, government can decide as to which option it will choose.

Now, if we are to compare gas with renewables plus energy storage, and guess which gives us best value for money – obviously it depends on where the prices of gas, renewables and battery energy storage are at a particular point in time.

So, from a tariff point of view, if we were to compare a gas-to-power plant with another renewable energy plus battery energy storage plant now, I think gas generally comes in cheaper, as we speak. Obviously, in future, things might differ, depending on where the Rand price of LNG goes.

Q) Chris Yelland: I am still struggling to understand how the adjudication of a supposedly open and transparent bid process could award two thirds of the generation capacity to a vendor offering high CO2 emissions, low local content, and bid prices that are significantly indexed to the US Dollar commodity price of LNG and the US Dollar / Rand exchange rate for 20 years, over qualifying vendors offering low CO2 emissions, relatively high local content and bid prices with essentially fixed tariffs in real terms over 20 years.

A) Maduna Ngobeni: Chris, remember that the RMIPPP programme followed an analysis of available options identified in the request for information of December 2019 to help close the supply and demand gap in the shortest possible time. The analysis showed that this would require short- or long-term commercial arrangements.

Unfortunately, there is limited power from existing generation plant under short-term power purchase agreements (PPAs), and this was also confirmed through the Eskom procurement initiative. The option of short-term PPAs based on green-fields projects was not feasible due to high electricity unit cost as investors would look to amortise their investment over a short period of time.

Through the RMIPPP request for proposals, the DMRE therefore opted for the long-term commitment, to ensure reasonable electricity unit cost taking into account system requirements. The RFP was technology agnostic, and proposals by the bidders had to be tailored to the requirements of the system operator.

The notion that gas will be expensive for the country in the long term might be misleading and is based on incomplete analysis. It is possible that CPI escalation on the renewable projects might be much higher than the US Dollar / Rand exchange rate and gas price escalation applicable to the powership projects. It is critical for the country to balance its exposure whilst providing the much-needed flexibility on the system to accommodate additional renewables as per the IRP.

Pricing On Cloud Readings
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Pricing on Tank Level Management
Pricing On Geyser Management

PRICING

Utility Management

Always know what you’ll pay for accurate water meter readings

12 Months

R1100

PER METERING UNIT

Annual Meter Management

Unit Price

R900

What Is Included

1x Utility Metering Device
Daily Meter Readings
Live Access to property data
Integrated With all Councils
24h Utility support

Monthly

R100

PER METERING UNIT

Monthly Meter Management

Unit Price

R900

What Is Included

1x Utility Metering Device
Daily Meter Readings
Live Access to property data
Integrated With all Councils
24h Utility support

24 Months

R2100

PER METERING UNIT

Bi-annual Meter Management

Unit Price

R900

What Is Included

1x Utility Metering Device
Daily Meter Readings
Live Access to property data
Integrated With all Councils
24h Utility support

Learn more about our Cloud Metering

FAQs

Frequently asked questions

HOW CAN I JOIN URBAN UTILITIES?

You can join Urban Utilites and have your property utilities account managed by simply clicking on the Join Now button, by sellecting your option best suited.

WHAT COST ARE INVOLVED IN JOINING?

The cost structure are divided into 2 main sections:

Monthly Management Fees:
– Monthly fee per meter installed @ R100 p/m

 

Equipment Fees: (once off)
– Water Management Device @ R865 incl
– Electrical Management Device + electrical Kw/h meter @ R2315 incl

The above fees exclude installation fees

HOW WOULD MY METER READINGS BE TAKEN?

Urban Utilities would install a small device on either the (Water or Electrical) infrastructure that would allow us to capture all consumptions through our integrated cloud based network.

HOW DOES IT INTEGRATE WITH MY COUNCIL?

Urban Utilities developed a stable integrated process that integrates with each council, this allows for all the data as collected from the property on either (Water or Electricity) to be provided to the specific council. This all happens on a monthly basis and gets processed directly from the main Urban platform via a automated process.

WHAT NEEDS TO BE INSTALLED TO ALLOW FOR THE AUTOMATED READINGS?
To capture the actual consumption readings live from your property Urban Utilities would need to install a small device on either the (Water or Electrical) architecture that would allow for the actual meter data to be processed into the Urban network infrastructure.

The Urban IoT network is cloud based thus allowing for the installations to be done seamlessly and without any major changes on the property.
90% of the installation is a plug & Play and can be done by any property owner. The other 10% only comes into effect if changes on the property architecture is needed and this would need to be done by either a qualified “electrician or plumber”.

WHERE WOULD I BE ABLE TO VIEW MY PROPERTIES UTILITIES DATA?

Urban Utilities designed a state of the art “National Utilities Portal” that allows for direct interaction between the actual property data, the property owner and the the utilities provider.
This process allows for direct interaction between all parties, thus allow the flow of true and accurate information and utilities data to be processed 24/7 365 days of the year directly from the utilities portal.

Access to the “National Utilities Portal” can be obtained by registering on the national platform
Click here to register and Join Urban Utilities

Storage Tank Management

Storage tank level indication at your finger tips

12 Months

R1200

PER STORAGE TANK / ANNUALLY

Annual Storage Tank Management

Unit Price

R2 265.50 

What Is Included

1x Storage Tank Device
Real Time Storage Tank Levels
Live Access To Storage Tank Data
Integrated Stock Control Process
Full Reporting Platform
Real Time Level Wornings
24h support

Monthly

R100

PER STORAGE TANK / MONTHLY

Monthly Storage Tank Management

Unit Price

R2 265.50 

What Is Included

1x Storage Tank Device
Real Time Storage Tank Levels
Live Access To Storage Tank Data
Integrated Stock Control Process
Full Reporting Platform
Real Time Level Wornings
24h support

24 Months

R2400

PER STORAGE TANK / BI-ANNUALLY

Bi-annual Storage Tank Management

Unit Price

R2 265.50 

What Is Included

1x Storage Tank Device
Real Time Storage Tank Levels
Live Access To Storage Tank Data
Integrated Stock Control Process
Full Reporting Platform
Real Time Level Wornings
24h support

Learn more about our Storage Tank Management

FAQs

Frequently asked questions

HOW CAN I JOIN URBAN UTILITIES?

You can join Urban Utilites and have your tank level account managed by simply clicking on the Join Now button, by sellecting your option best suited.

WHAT COST ARE INVOLVED IN JOINING?

The cost structure are divided into 2 main sections:

Monthly Management Fees:
– Monthly fee per meter installed @ R100 p/m

 

Equipment Fees: (once off)
– Tank Level Management Device
@ R2265.50 incl

 

The above fees exclude installation fees

HOW WOULD MY TANK LEVELS BE MANAGED?

All tank levels are managed through our state of the art IoT “LSM” unit. The unit forms part of the smart level sensing network that transmit all the relevant data into the cloud in realtime, this allows for valuable insight into the current tank status with loads of extra functionalities available to the user.

Read more about this on our product page by clicking here

HOW DOES IT INTEGRATE ON THE NETWORK?

The “LSM” units communicate onto our secure Urban IoT network, this process takes place in realtime to provide accurate and realtime information to the client.

All “LSM” units are free of any wiring and do not need to have electricity to operate, thus they can be implemented completely independently, where ever you need them the most even if its in rural areas.

WHAT NEEDS TO BE INSTALLED TO ALLOW FOR THE AUTOMATED TANK LEVEL MANAGEMENT?

To capture the actual tank level information live from your storage tanks, Urban Utilities would need to install a small device on storage tanks that would allow for the actual data to be processed into the Urban network infrastructure.

The Urban IoT network is cloud based thus allowing for the installations to be done seamlessly and without any major changes in the infrastructure.

90% of the installation is a plug & Play and can be done by any property owner. The other 10% only comes into effect if changes on the architecture are needed and this would need to be done by either a qualified “installer”.

 

Read more about this on our product page by clicking here

WHERE WOULD I BE ABLE TO VIEW MY TANK LEVEL DATA?

Urban Utilities designed a state of the art “Tank Level Management System” that allows for direct interaction between the actual tank level data and the client, this all takes place through our Urban Tank Portal

This process allows for direct interaction between all parties, thus allowing the flow of true and accurate information and tank level data to be processed 24/7 365 days of the year directly from the interactive tank level portal

Access to the “NTank Level Portal” can be obtained by registering on the national platform
Click here to register and Join Urban Utilities

Geyser Burst Management

Detect geyser burst and prevent water damage

12 Months

R1200

PER GEYSER / ANNUALLY

Annual Geyser Management

Unit Price

R2 288.50

What Is Included

1x Geyser Device
Real Time Geyser Valve Control
Real Time Burst Wornings
(SMS, Email & Push Notifications)
Real Time Leak Detection
Full Reporting Platform
24h support

Monthly

R100

PER GEYSER / MONTHLY

Monthly Geyser Management

Unit Price

R2 288.50

What Is Included

1x Geyser Device
Real Time Geyser Valve Control
Real Time Burst Wornings
(SMS, Email & Push Notifications)
Real Time Leak Detection
Full Reporting Platform
24h support

24 Months

R2400

PER GEYSER / BI-ANNUALLY

Bi-annual Geyser Management

Unit Price

R2 288.50

What Is Included

1x Geyser Device
Real Time Geyser Valve Control
Real Time Burst Wornings
(SMS, Email & Push Notifications)
Real Time Leak Detection
Full Reporting Platform
24h support

Learn more about our Geyser Management

FAQs

Frequently asked questions

HOW CAN I JOIN URBAN UTILITIES?

You can join Urban Utilites and have your property geyser managed by simply clicking on the Join Now button, by sellecting your option best suited.

WHAT COST ARE INVOLVED IN JOINING?

The cost structure are divided into 2 main sections:

Monthly Management Fees:
– Monthly fee per meter installed @ R100 p/m

 

Equipment Fees: (once off)
– Geyser Management Device @ R2288.50 incl

The above fees exclude installation fees

HOW WOULD MY GEYSER BE MAMANGED?

The geyser management units are designed for control over the water management process that takes place on the geyser itself.

In the case of a geyser burst or leak the number one issue that comes into play would be the possibility of water damage caused by the leak or a burst geyser. The geyser units act as a water detection device that shuts off the water in the event that a burst or leak in the geyser is detected.

The Urban management system then controls that actions around the possible geyser burst and leak by processing early warning messages to the property owner of the event via (sms, email and push notifications) through the urban portal.

The Geyser unit also allows for integration to your insurance provider by allowing the data to be processed to them in the event of a geyser burst or leak that will assist with immediate repairs and claims in the process.

HOW DOES IT INTEGRATE WITH MY INSURANCE PROVIDER?

We have an integration process that takes place with the insurance providers in South Africa that allow for each geyser management device installed to be processed and linked on the policy of each client in accordance with the policy process in place.

This will allow for the data process to take place between the geyser management device and the insurance provider.

WHAT NEEDS TO BE INSTALLED TO ALLOW FOR MY GEYSER TO BE MANAGED?

To manage a geyser live from your property Urban Utilities would need to install a small device on the geyser architecture that would allow for the actual geyser to be managed and the data to be processed into the Urban network infrastructure.

The Urban IoT network is cloud based thus allowing for the installations to be done seamlessly and without any major changes in the properties geyser architecture.

90% of the installation is a plug & Play and can be done by any property owner. The other 10% only comes into effect if changes on the property architecture are needed and this would need to be done by a qualified plumber.

WHERE WOULD I BE ABLE TO VIEW MY PROPERTIES GEYSER DATA?

Urban Utilities designed a state of the art “National Utilities Portal” that allows for direct interaction between the actual property data that includes the geyser infrastructure, the property owner and the insurance providers.
This process allow the flow of true and accurate information and utilities / geayser data to be processed 24/7 365 days of the year directly from the Urban utilities portal.

Access to the “National Utilities Portal” can be obtained by registering on the national platform
Click here to register and Join Urban Utilities

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