Eskom is in talks with private companies about investing in underground coal gasification (UCG), Steve Lennon, an Eskom sustainability executive leading the UCG programme, told Reuters this week.
South Africa’s state utility has been developing UCG for 10 years and is investing a further ZAR1 billion ($94 million) in research over the next five years, when it hopes to give the green light for the technology to be rolled out.
Mr Lennon says Eskom is committed to funding new technology and UCG research is not under threat, although many hurdles remain.
"When we first started the biggest challenges were technological," Lennon said. "We've overcome that."
"Now the challenges we face are regulation, legislation and the next big one will be costs. Can we make sure this is a cost-competitive technology? The indications are we can."
Lennon says he hopes UCG will produce power at around US$5-US$6 per kilojoule, less than half the cost of its obvious competitor, imported liquefied natural gas (LNG), but around double that of shale gas in the United States, reports Reuters.
UCG, a process that involves drilling wells to previously unrecoverable coal reserves hundreds of metres underground and injecting steam and oxygen to ignite a combustion process that produces a synthetic gas that can be used as fuel, could also face resistance from environmentalists who are concerned about how UCG can be controlled and its potential dangers accurately assessed due to the depth of operations.
There is also concern that the process in the long term could raise the country's carbon output, not lower it, by sustaining the use of the fossil fuel.
Reasons to be optimistic
"UCG has very large potential. It will probably be the successor to conventional coal mining," said Xavier Prévost, senior coal analyst at Pretoria-based XMP Consulting.
"It fits in perfectly with South Africa's needs because it will create energy and minimise emissions."
The gas can be used to replace coal in existing power plants, fire gas turbine facilities or for heating and cooking. The approach promises to be cheaper than coal mining too because it eliminates transportation and ash disposal costs.
The technology is being developed in Australia, Canada, India and China. Read Australia’s Linc Energy signs MOU with Tanzania to develop 400MW UGC plant.