South Africa’s Department of Mineral Resources and Energy issued a RFI to procure power from independent producers in 2019. What motivated Karpowership to respond to this request?
Karpowership actually responded back in 2015, through the gas to power program that was run by the department and the independent power producer’s office. South Africa has been a country that has been on Karpowership’s radar for a number of years. We have followed the situation through international media and being on the ground by visiting South Africa, and more latterly with the incorporation of Karpowership South Africa Pty Ltd.
The Risk Mitigation Power Procurement Program came out on the 13th of December last year; and with the technology and equipment aligned with our commercial flexibility, we believe that our offering is something that is affordable, deployable and implementable for the South African network in the shortest space of time. Having everything floating and not in one place certainly makes it much quicker for us to deploy and have power available to the grid. We are following the official process the department has set out and we are looking forward to the forthcoming request for proposal (RFP) so that we can make a formal response in answer to it.
Is this venture a short- or long-term solution to South Africa’s power challenges?
It could be a short- medium- or long-term solution, that will depend on what South Africa requires. At Karpowership we have contracts that are short-term, we have contracts that are long-term. Some contracts have started off being short-term and have increased in capacity, with the contract extended to become a medium-term solution and the potential to become a permanent solution as well. We have given South Africa those choices on how they would want to do this and allow the network operator Eskom a greater length of time to do a lot of the maintenance programs that they have spoken about or build additional onshore power plants as part of their long-term planning.
Karpowership has been present in most African countries, could you give an overview of how power is provided from an offshore ship to onshore power stations?
We have been present in several African countries across East Africa and West Africa. The system is quite simple; the Powership will sail to a country, like South Africa, and it will be anchored at the agreed location – the anchoring will take place while the interconnection is ongoing. The Powerships are delivered with a grid substation on board to align with the power generation. From this grid substation we have to connect into the onshore network, which predominantly is a substation or a transmission line that you see running along the roadside.
How soon can power from the ships be rolled out in South Africa, and will it be in phases?
The answer to that lies in what the RFP holds in terms of deployment; if the government expects the power to be made available in stages or all at once, that is something that will be clear in the RFP. However, Karpowership already has a fleet available and it has the ability to utilize liquefied natural gas, so we will have the ability to deploy the fleet immediately to South Africa upon receiving a notice to proceed if we have been selected from the RFP and awarded a contract. In that respect, we would be looking to generate up to 2,000 MW depending on what we are awarded, and that could be done in stages. Today I could generate somewhere in the region of 700/800 MW immediately within eight weeks to South Africa, then I can build up beyond that to 2,000 MW and that could be done in phases if that is what is required. Our fleet will be tailored to be flexible enough to meet the requirements of the RFP. We have already invested our capital, we have built the ships and we have them available around the world, that is ultimately our business.
How does Karpowership see South Africa’s recent legislative changes impacting its operations in the coming 3-5 years?
They indicate a positive change for South Africa. I looked at the integrated resources plan (IRP) that the Minister of Mineral Resources and Energy, H.E. Gwede Mantashe presented, it is the new roadmap for South Africa, the ministry have determined that 3,000 MW of South Africa’s energy mix should come from gas, now that is a positive shift for the country, the ministry is looking at additional hydrogeneration and additional renewables, the IRP is certainly driving South Africa’s future. We have read it carefully and we are monitoring it for when the ministry makes any changes as when they see fit, at this moment the IRP is very clear and the ministry is also doing an RFP for risk mitigation to alleviate the ongoing issues, so it is very proactive. It is certainly impacting Karpowership because it is giving us an opportunity to respond with a solution that is internationally recognized. We have more than 4,000 MW generating today globally, and there is no reason why what we are doing elsewhere in the world cannot be replicated in South Africa to ease the burden of load shedding in the country.
How do operations in South Africa compare in terms of ease of doing business to other countries? Do you think that South Africa’s power sector needs further liberalization?
Karpowership is a company that goes into new markets it is not operated in before. In order for us to do that successfully, we spend considerable time reviewing legislation, laws, doing business plans and strategies, putting in place processes and ensuring that our business model is usable and adaptable to the country that we are going to operate in. For South Africa, we have appointed professionals to review legislation and the laws of the country so that if and when we are successful and awarded a contract we will be positioned and ready to deploy to South Africa, and be able to operate in the country, following the laws of the country and not have any difficulties nor surprises. And that is a process we do around the world, when entering countries we have not operated in before. We treat South Africa with the utmost respect and we give it the time and due diligence so that when we are called to South Africa we are ready to respond and ensure that the solution we are delivering is affordable and implementable for the country.