AN INTERNATIONAL study has suggested the government’s plans to develop an extensive gas-to-power sector could likely negatively impact the economy and climate.
A study by the International Institute for Sustainable Development (IISD), entitled Gas Pressure: Exploring the case for gas-fired power in South Africa, said that developing an extensive gas-to-power sector in South Africa from scratch would involve significant investment in both gas supply infrastructure and power plants.
The institute said that to introduce the first 3000 megawatts of gas capacity and gas supply by 2030 could cost at least R47 billion - money that could ultimately be wasted, as gas was likely to be squeezed out of the market by cheaper, low-carbon alternatives.
To artificially stimulate local demand for gas, South Africa’s Department of Mineral Resources and Energy has proposed establishing a gas-to-power sector.
IISD and co-author of the report Richard Halsey said that based on system analysis, this would be a costly mistake.
“We strongly believe a moratorium should be placed on the development of the gas-to-power sector, and further research should be done to better understand how advances in alternatives will affect the optimal energy mix,” Halsey said.
According to the report, while gas was once seen as a necessary “transition fuel” in the shift away from coal power, rapid declines in the cost of renewable energy and battery storage technology have upended this view.
The report found that renewables and storage should be the priority until at least 2030.
Halsey said that the risks associated with gas were increasing, while the alternatives to gas were rapidly improving.
“Since gas is not needed in the power sector until at least 2035, deliberations about the start of a gas-to-power sector should be shelved until at least 2030.
“When the government reassesses gas investments at the end of the decade, based on the availability and cost of alternative technologies such as green hydrogen, it is likely that there will be no logical role for gas in the mix,” Halsey said.
According to the report, what's more, the evidence suggested that gas investments would likely lead to higher energy costs for consumers, and additional just transition challenges for workers in the fossil fuel industry.
It also said that when considering methane emissions across the value chain, gas power could be as detrimental to the climate as coal.
Boosting renewables and battery storage capacity was the better alternative.
The report argued that in an efficient energy mix, the majority (or bulk supply) of power should be as cheap as possible, while peaking plants should be used to cope with daily spikes in demand.
Finally, it said that balancing (or backup) power was needed to smooth out peaks and valleys of demand and supply.
Renewable energy, particularly wind and solar, was in the modern day easily the cheapest source of bulk supply, while battery storage was increasingly considered the most affordable, and widely deployable, new-build peaking technology, the report said.
The IISD authors said they found that wind and solar farms in South Africa were 57 percent cheaper than combined-cycle gas plants for bulk electricity supply, while 3-hour battery storage was 30 percent cheaper than simple cycle gas plants for covering peak power demand.
South Africa’s existing electricity system, which mostly runs on coal power, could also provide some of the balancing function in the short to medium term.
According to the report, significantly increasing renewables and storage capacity could address power system challenges that currently lead to frequent load shedding.
“To solve load shedding as quickly as possible, and to build the foundation of an optimal, low-cost future energy mix, South Africa should significantly ramp up its investments in solar, wind, storage, and technologies that integrate renewables into the grid,” said Halsey.
“Since renewables contribute only a small part of the electricity mix, a combination of existing pumped storage, liquid fuel generators, grid integration methods, and the remaining coal fleet can provide the balancing function for at least the next 13 years,” he said.