Karpowership coming to South Africa next year

Turkey’s Karpowership aims to be fully operational in South Africa before the end of 2024 after receiving environmental approval for its project in Richards Bay and pending approval in Saldanha Bay and Coega. 

Karpowership’s Chief Commercial Officer (CCO), Zeynep Harezi Yilmaz, told Newzroom Afrika that the company expects the Richards Bay project to reach financial close before the end of the year. 

Karpowership initially won a tender to provide electricity to South Africa by docking its powerships at three of the country’s ports in 2021 to produce 1,200 MW of electricity. 

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

Earlier this month, Karpowership finally obtained environmental approval for its project in Richards Bay after donating a game farm to a provincial wildlife authority 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.

Yilmaz said that after being granted environmental approval, the company will reach financial close before the end of 2023 and sign its power purchase agreement with the IPP office. 

Once the project has reached financial close, “before the end of next year, we will be fully commercially operational to start with in Richards Bay”. 

Karpowership has previously explained that its business model enables the company to dispatch powerships to South Africa quickly. 

Yilmaz also said there is no more opposition to its projects in Saldanha Bay and Coega, with all legal cases being closed in Karpowership’s favour and all issues resolved. 

The total amount of electricity produced under the tender, 1,200 MW, will be “enough to alleviate at least one level of load-shedding at half the price of Eskom’s peaking power stations and at half the emissions of coal”, Yilmaz claimed.

However, there are still significant hurdles for Karpowership to overcome in South Africa. 

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.