25 January 2008 – Independent power producer, Ipsa, has announced an agreement with the Central Energy Fund (CEF) to install gas turbines at the Coega Industrial Development Zone (CIDZ). This will ensure continued power supply to the CIDZ and hopefully prevent delays in the construction of the Alcan smelter project.
With an installed capacity of 1 600MW, the gas turbines will have enough power for the smelter, and have an excess capacity of 250MW.
This project is the first public-private partnership for a LNG to electricity project in South Africa. The plant uses heat from the gas turbines to produce electricity and has an added environmental benefit of low carbon emissions.
The turbines will be provided by Ipsa, IGas will provide the gas and the diesel will come from PetroSA.
It was reported that for the first phase of the project, the turbines would run on diesel, but that for the project to generate at full capacity, LNG was needed.
"That in itself requires an investment commitment from the state partners and I don’t see that happening quickly," an unnamed source said. Additionally, the project would run at a ‘big loss for Eskom’ while diesel was being used.
Peter Earl, CEO of Ipsa, said the power station and the first 1 000MW were expected to be online within 18 months.
"In terms of the deal between the government and Alcan, someone will need to put up interrupted power. Our project will reinforce Eskom’s grid and we will be on site to provide power for Alcan.
"Even if we are a bit more expensive, money will be saved on transportation costs. Power from the plant will reinforce not only the grid but reinforce power to Port Elizabeth and other industries in the area," he said.
Eskom has confirmed the utility would be the sole purchaser of the power from the Ipsa power station, but would not confirm if priority would be given to Alcan’s power needs. However, Alcan’s Robert Valdmanis said Eskom had given assurances they would heed the supply agreement they had with the smelter.
The first phase of the project, estimated at US$130 million, would take between 12 and 15 months and provide 521MW, with the second phase completed three months later, at a cost of US$150 million. The second phase would deliver an additional 500MW.
Stage three would be completed post 2010, with an estimated cost of US$150 million to US$200 million. This stage involves the installation of the LNG degasification terminal, and would provide an additional 600MW.
"IPSA had been working on the project for over a year and has already bought the turbines which will speed up the implementation of the project, because there is a two year delay now for turbines," Peter Earl said.