HomeIndustry SectorsGenerationTongaa Hulett negotiating power purchase price for cogeneration project

Tongaa Hulett negotiating power purchase price for cogeneration project

26 February 2008 – Tongaat Hulett are in negotiations with Eskom to enter into a cogeneration deal during 2008. CEO, Peter Staude said the negotiations focused on a power purchase price agreement, adding that this would determine the extent of Tongaat Hulett’s cogeneration expansion.

Peter Staude

Tongaat Hulett’s
CEO, Peter Staude

In 2007 the company put some 5MW into the national grid at a buy-back price of 12c/kwh (US$0.016) – a price which Staude feels provides little incentive for the company to spend the required capital amount needed transferring power to the grid.

Speaking to reporters earlier this week, he said a more encouraging price would provide ‘big opportunities’ for the company. Expansion plans for Hulett’s Felixton branch would take 22 month to complete and cost in the region of US$30 million. The plant would have the capacity to export 20MW onto the grid during season, and 17MW out of season.

Staude commented that not using sugarcane for cogeneration was ‘criminal’ if the crop was available and not being used to its full extent. Hulett’s could generate as much as 660MW in season, utilising 67 % of its ‘green harvested’ tops and trash. This represented a saving of 4,25 million tons of CO2 per annum and two millions tons of coal.

Utilising combined cycle technology could increase power production to 1 300MW in season, Staude continued. He proposed a buy back price of 60c/kwh (US$0.08) in season. This would increase revenue gained to US$263 million, in comparison to the current US$105 million using the US$0.016/kwh pricing agreement.