The Problem
Southern Africa is heading towards a worsening regional power shortage which started around 2007. Continued moderate economic growth in South Africa, combined with the Government’s laudable program to deliver electricity to millions of new households, is driving demand for an additional one thousand plus megawatts of electricity per year.
As power demand rises to meet maximum supply, the development of new power generation should already be underway. But the significant cost of new ‘greenfield’ power projects – approximately US1 million per megawatt of electricity – requires significant foreign investment which so far has not materialised.
The implications of this are clear:
- Eskom’s exports of cheap, surplus power to Botswana cannot continue as domestic demand rises;
- South Africa is rapidly moving towards a point where it will be unable to meet the electricity demands of its own people.
The Solution
Kalahari Energy is working rapidly to develop a CBM based power source which will not only provide the domestic Botswana market with affordable, clean fuel, but which will also enable the safe, cheap and easy export of energy throughout the region using a ‘virtual pipeline’ of LNG or DME.
100MW Power Plant Project
In 2017 Sekaname (Pty) Ltd, a subsidiary company in the KEB Group responded to an invitation to tender for the development of a maximum of 100MW of CBM-fuelled pilot power plant in Botswana as an Independent Power Producer (“IPP”).
The tender evaluation process concluded in May 2019 with Sekaname being informed by the PPADB that its bid for a 97mw CBM-fuelled power plant was approved. As a preferred bidder (together with the other party also invited to tender), Sekaname will negotiate with the MMGE and Procuring Entities in order to finalise the terms of the contract award.
See press release 28 May 2019: Kalahari Energy Botswana awarded preferred bidder status
Project Highlights
- Unique Southern Africa market opportunity;
- Quality sponsors with extensive experience in coal bed methane exploration and production;
- The Project is one of only two respondents to the closed tender that were permitted to bid. This provides a high likelihood of success;
- Substantial project development milestones already achieved including resource estimate, appointment of Project Developer, selection of key equipment and significant costing completed;
- The Project is of strategic significance for the Botswana Government; and
- The project presents attractive risk/return on equity capital invested.
Benefits
Positive environmental impact
The Project’s scoping report has been completed and the EIA is in progress. There are no fatal flaws from an environmental perspective.
The Project will have a positive effect on the country’s carbon emissions given that electricity from natural gas has a lower CO2 emission factor than electricity from coal (which makes up the bulk of Botswana’s electricity supply at present). In addition, the Project will enable the Botswana Government to move towards implementing solar PV power stations with supplementary power supplied by future CBM-fired power stations – a climate change strategy currently under consideration by the Government.
Positive socioeconomic impact
Botswana has been plagued by power outages in recent years as a result of the troubled history of Botswana’s Morupule power station and Eskom’s well-publicised supply failures. This has had a detrimental impact on the country’s economy and there is a strong desire from the Botswana government to become energy self-sufficient. The Project will significantly contribute towards energy self-sufficiency as well as security of energy supply.
Botswana also wishes to diversify its economy away from the current economic model predominantly deriving value from the diamond industry towards a more industrialised economy and it is believed that a reliable source of natural gas from the concession areas will significantly contribute towards both this strategy and domestic energy production.