South Africa Defers Energy Mix Announcement
The South African cabinet has agreed on the country’s future energy mix, natural gas is a key component, and details of the new strategy will be released next month, an energy conference has been told.
The country's Department of Energy has been frequently urged to give certainty to investors, with a key concern being delays in updating the future energy mix. It chose two sites for LNG import terminals and adjacent power plant developments over a year ago; however nothing seems to have been done since then to award contracts at either site.
Energy Minister David Mahlobo told a conference December 8 that the overall mix is unchanged, but as South Africa has surplus generation capacity, the rate of expansion may be scaled-back.
Business leader Jabu Mabuza, the president of lobby group Business Unity South Africa, delivered an impassioned address to the conference, the Energy Indaba, stressing the need for certainty in energy policy “We need policy certainty, minister,” he told Mahlobo: “Investors will invest when they know what is the policy environment. It is all about policy certainty.”
Mahlobo replied: “There is no policy uncertainty. We chose an energy mix. It is not going to change. The only thing we could change was the scheduling of resources. With gas, we are going to go in the biggest way.”
There were seven break-away sessions at the conference, one of which was on gas. The latter reported back to the Indaba that “demand for LNG will grow exponentially. There are a lot of emerging projects in the East of SADC - for example in Mozambique. We must develop a gas freeway for the gas industry to develop - there is a need to invest in the gas freeway, the same as in water, liquid fuels, electricity. Without a deliberate investment in transmisson lines, development of the gas industry will be limited.”
There was a call for extensive support for mid-stream infrastructure for the importation, storage, handling and regasification of LNG, and the transmission of LNG. The report added: “Government must build a network of pipelines as - without interconnection - there will be no growth in the market for gas."
“Government should lead shale gas exploration and development, but must be conscious of environmental concerns," the report added: "Gas must not be limited to gas-to power; industry and automotive are other anchor [demand] sectors. There must also be a more elaborate roll-out (of gas) in households."
Much South African attention at the conference was on the government's confirmation that the country will proceed with a controversial nuclear-build programme, which critics say will be far more costly than proceeding with a more ambitious expansion of gas and renewables.
