A new Compressed Natural Gas (CNG) plant valued at between R50 and R100-million will be commissioned in the Durban South Basin by year end, Nkosinathi Solomon, the newly appointed CEO of Spring Lights Gas (SLG) said today (June 25).
SLG is one of the two largest piped gas suppliers to KwaZulu-Natal industry. It supplies methane rich gas directly from Sasol Synfuels in Secunda to blue chip companies including Toyota, Sapref, Engen and the first ever independent power producer, Newcogen in Newcastle.
It currently has a 43% share of the KZN market alongside its former parent Sasol which is now its major competitor. Created as a black empowerment entity by Sasol in July 2002, the company started trading in the South Durban Basin. By 2006, it had extended its footprint to the rest of the province. It has since been bought out by Kwande Capital and Zungu Investments, becoming one of the most successful B-BEE companies within the energy sector.
Solomon said that up until now KZN companies had converted from coal and other energy sources to gas because it was clean, reliable and more environmentally friendly. However, as the electricity crisis in South Africa has deepened and load shedding has increased, he said the company had been inundated with calls.
Calls from prospective independent power producers keen to take advantage of Eskom’s Independent Procurement Programme and generate electricity to sell back to the grid using gas had also increased. “We want to play in this space,” he said.
Solomon explained that the new facility – which will provide between 250 000 to 550 000 kJ of energy per annum once operational – would enable SLG to grow its market to include stranded gas markets in KZN. These comprise customers who are not close to South Africa’s single gas pipeline. CNG can be trucked to customers within a 150km radius of Durban.
“We are excited to help develop the market for gas. This means that customers who would not have considered gas will now become accessible,” Solomon said.
Although the new facility is targeted at the industrial sector, he said it would also be possible move into the market for natural gas vehicles.
Recently, a R4-million project has seen Toyota convert its fleet of 95 forklifts to gas. SLG saw this as an important opportunity to experiment and contributed 30% of the capital for the project. “We’ve proven the technology does work. Now, we can now expand this to other clients,” Solomon said.
At this point, SLG, which intends to be a major player in the gas market in the SADC region within the next five years, has decided to invest in transportable CNG (as opposed to piped liquid natural gas) as a stop gap whilst key challenges facing the sector in South Africa are addressed at government level.
These include a shortage of gas molecules needed to supply a growing market as well as capacity constraints due to the fact that South Africa has very limited pipeline infrastructure. He pointed out that more gas supply options were required to grow the piped-gas industry in line with government’s stated objective of increasing the use of gas as a power source in South Africa. It is still largely underutilised.
Solomon pointed out that, in his 2014 State of the Nation speech, President Jacob Zuma had said that gas was a game changer in South Africa. Yet, at just 3%, it makes up a very small portion of the energy mix in South Africa. The ultimate aim is to reach 7%.
“While South Africa has done well in executing a renewable energy strategy comprised of solar and wind power generation, very little progress has been made in executing a gas strategy. Even though coal prices are generally lower than gas prices, these would be comparable if one took into account that, for power generation, gas produces 50% of the coal greenhouse gas emissions. Therefore coal, gas, and nuclear should be given equal consideration for base load power generation with renewables being used for contingency,” he said.