Karpowership to be operational in Richards Bay in less than a year

Turkey-based Karpowership wants to contribute electricity to South Africa’s grid from its project in Richards Bay within 12 months after the company received environmental approval for the project last week. 

This is feedback from Karpowership South Africa director Mehmet Katmer, who told 702 that obtaining environmental approval is a significant milestone for the project plagued by delays. 

Karpowership initially won a tender to provide electricity to South Africa by docking its powerships at three of the country’s ports in 2021. 

However, the projects have been beset by legal challenges, resulting in multiple delays despite strong support from Minister Gwede Mantashe. 

Last week, Karpowership finally obtained environmental approval for its project in Richards Bay after donating a game farm to a provincial wildlife authority in a bid to ease environmental approval. 

In exchange for the game farm, Ezemvelo KZN Wildlife, which manages protected areas in KwaZulu-Natal, has undertaken not to object to its plan for a 450 MW, ship-mounted power plant at Richards Bay harbour.

Now that the company has received environmental approval, Katmer said they expect to reach financial close within the next two months, after which the ships will arrive within a year. 

“Because of our business model, all of these assets are ready and currently available, waiting for South Africa,” Katmer said. 

“Our timeline is that once we reach financial close in another one to two months, then within a maximum of 12 months, we will be delivering electrons to the grid.”

One of the major hurdles left for Karpowership to overcome is contract negotiations with the Department of Mineral Resources and Energy (DMRE), the Independent Power Producers Office, and Eskom. 

These negotiations surround the length of the contract, which was initially set at 20 years and is now in discussion to be reduced to 5 years. 

This follows a wave of criticism over the cost of electricity produced by Karpowership that Eskom would have to buy. 

However, the offer to shorten the contract of its powerships to 5 years from the original 20 will increase the cost of electricity from the floating gas power plants to an estimated R15 billion a year. 

Katmer said Karpowership is willing to do a shorter contract and is currently in discussions with the DMRE, IPP office, and Eskom about shortening the contract. 

This needs to be finalised within the next few weeks so the project can reach financial close. 

Karpowership had its grid access extended from July 31 until the end of the year, it said to Bloomberg in August.

It will have to reach financial close before then to prevent the possibility of its grid rights expiring.