South Africa could pay four times more for Karpowership

Energy analyst Hilton Trollip said South Africa could pay three to four times more for Karpowership to supply electricity than it currently pays for electricity from Eskom’s fleet.

Trollip’s comments follow news that Karpowership has been permitted to proceed with applications for environmental approval for plans to dock ship-based power plants at South Africa’s Richards Bay and Saldanha ports.

Environment Minister Barbara Creecy dismissed appeals from five environmental groups against the Richards Bay plan.

In a separate ruling, she allowed Karpowership to pursue environmental approval at Saldanha, overturning an earlier decision by her department to deny permission.

Should its application be successful, the power ship could supply 1,220 megawatts to South Africa’s grid. 

Trollip told eNCA that this would eliminate about 1.2 stages of load-shedding. He said one advantage of using Karpowership would be that they are dispatchable generators, meaning they can be switched on at any time.

However, two main concerns about using Karpowership have hampered its progress to date – its environmental impact and associated costs.

From an environmental perspective, Karpowership is a heavy carbon dioxide emitter.

During the Covid-19 pandemic, Karpowership attempted to use the state of emergency regulations to sidestep environmental regulations.

“They put in an application, and it slipped through at first, but then the Environment Department picked it up, and they refused it,” he said.

Following this rejection, Karpowership attempted to appeal but was not granted leave to appeal due to process and content deficiencies in the application.

“It seemed from the beginning that Karpowership thought that they could just, in a cavalier way, ride straight through South African law and then they hit the Environmental Minister, and she stopped them on a number of occasions.”

Trollip said that from a cost perspective, an agreement with Karpowership would trap South Africa into an “unaffordable” and “outrageous” contract.

Karpowership is seeking a contract with Eskom whereby the utility would be obliged to buy 50% of the power ships’ total capacity over 20 years.

“Which is quite frankly outrageous because we would be paying about three to four times what we’re paying on average for our existing power at the moment from our entire fleet.”

It has been estimated that the Karpowership agreement would cost the country north of R200 billion.

In addition, this contract takes the form of a “take or pay agreement”, whereby Eskom would be forced to pay for the power regardless of whether it is needed.

According to Trollip, South Africa has far better solutions at its disposal.

“In the time taken for these various Karpowership applications to fail, we could have built a whole lot of renewables, which we haven’t done,” he said.

Trollip said the Karpowership contract would be ten times more expensive than the country would pay for renewables.