Energy balance and private investments are crucial for the recovery of the KZN economy.
KZN has the potential to cover the energy needs of the province and still supply excess energy to the national grid. With the projects being planned, KZN could become the hub for renewable energy in the future.
Renewable Energy Manager, Sbu Ntshalintshali explained, “The demand for energy in the KwaZulu-Natal province is forecasted to grow steadily at about 2% annually, from 6 281 MW to 7 562 MW by 2028. Base load generating capability in Richards Bay, will eliminate the current scale of line losses and provide a completely new source of power capable of supplying the entire demand of KZN. As such, KZN would be removed from the existing national demand profile but in addition flow of electricity could be reversed from KZN back into the national transmission network providing much-need capacity and stabilization of the grid.”
Below are some of the key projects being undertaken as part of the city’s and region’s roadmap to sustainable energy supply.
Independent Power Producers Programme
The rollout of eThekwini’s Municipal Independent Power Producer Procurement Programme (MIPPPP) is expected to attract approximately R324 billion by 2035. However, the first batch of procurement will only attract R10 billion and create over 8000 jobs. This project will be delivered through a public-private partnership (PPP) as outlined in Section 120 of the Municipal Finance Management Act (MFMA) and external service delivery mechanism of Section 76 (b) in the Municipal Systems Act (MSA). The power generation plants are expected to generate a net output of 1 576 800 MWh for natural gas and 175 200 MWh for solar power. The combined net energy output is expected to reach 1 752 000 MWh annually going to 2065.
The Municipality presented intentions to procure new generation capacity to the KZN Provincial Executive Council (PEC) on the 8th of June 2022. The KZN PEC supported the procurement of electricity from IPPs and mandated Provincial Treasury (PT) to provide concurrence in line with S120 of MFMA, Provincial Corporate Governance and Traditional Affairs (COGTA) to provide concurrence in line with S76 (a) and S76 (b) of MSA and Economic Development, Tourism and Environmental Affairs (EDTEA) to fast-track the process of Environmental Impact Assessments (EIAs) as per National Environmental Management Act (NEMA) processes.
As part of R324 billion plan, the Municipality plans to further procure an additional capacity of 2 600 MW from various sources of power generation. This includes procurement on behalf of other regional municipalities within the province of KwaZulu Natal. This will fast-track regional transformation in the province and restore energy security, not only within eThekwini region but across the other 10 districts in the province. EThekwini is willing to become an ultimate buyer from IPPs on behalf of KZN Province and other municipalities.
EThekwini’s response to the gas economy and hydrogen supply chain infrastructure
The Natural Gas Strategy of the city was adopted in 2015, aiming to provide the safest, cleanest, and most efficient forms of non-renewable hydrocarbon energy. The Municipal position is to directly invest in natural gas infrastructure such as power plants and natural gas vehicles, creating the enabling environment that would support increased gas utilization through accelerating the approval processes associated with gas ventures and raising awareness of the benefits of natural gas amongst stakeholders.
The total energy consumption in eThekwini is dominated by the transport sector (69%), followed by the industry (14%), residential (8%), and commercial (7%) sectors. Local government and electricity losses account for 1% each of energy demand. The main areas where energy consumption can be reduced is within the transportation sector and as such gas can play a role as a source of fuel, then later switch to hydrogen and ammonia fuels. The Municipality is planning to operate within the gas economy in partnership with the private sector.
The Municipality’s sustainable energy master plan outlines energy consumption will increase by 70% by 2030 if business-as-usual scenarios continue. Therefore, eThekwini is considering several strategic interventions such as building gas distribution networks and gas storage infrastructure in partnership with the private sector.
The South Africa Government published its Hydrogen Society Roadmap in February 2022. In the foreword, the Minister of Higher Education, Science, and Innovation noted that South Africa is facing multiple social and economic challenges and that there is an opportunity to use and deploy hydrogen and hydrogen-related technologies as part of our economic development and greening activities. The Government thus acknowledges that hydrogen has an important role to play in its Economic Reconstruction and Recovery Plan and transitioning towards a just and inclusive net zero carbon economy,
The eThekwini’s Regional Hydrogen Strategy seeks to explore and articulate the role of eThekwini and Richards Bay districts can play in establishing a hydrogen economy in South Africa. It also uses modeling and analysis to show how hydrogen can help to facilitate increased use of sustainable energy in the region and possibly create an export market for hydrogen-derived products. EThekwini is the first city in Africa to develop a world-class hydrogen strategy that is built on circular economy principles.
Low carbon hydrogen is catalytic for the transformation of eThekwini’s energy landscape by reducing heavy dependence on domestically produced and imported fossil fuels, in exchange for reliance on domestically sourced renewable energy and a circular economy.
EThekwini has identified 3 hydrogen hubs (namely Durban Port, Richards Bay, and Cato Ridge Dry Port), and each hub serves to meet the demand and supply for conventional fuels. The supply chain infrastructure for hydrogen projects already exists in Durban and Richards Bay, however, more repurposing must happen to ensure projects reach commercial operation. The demand patterns of hydrogen developments represent 500 kilotons (kT) by 2030, 1000 kilotons by 2040, and 1500 kilotons by 2050. This will inject a total private investment of $23 billion (R410 billion) by 2050, creating 260 000 construction jobs and 11 000 permanent jobs by 2030.
Comments on the Hydrogen Strategy
- With support from UK PACT, the eThekwini Municipality has demonstrated leadership and foresight to develop a hydrogen economy as part of the regional energy mix. This is an exciting opportunity that will transform the economy, create jobs, reduce carbon, and mitigate the impacts of climate change. The region is vulnerable to disasters as a result of climate change and the initiatives that the Municipality is taking are in response to ongoing challenges. This strategy confirmed that the leadership in the public and the private sector are motivated to lead and deliver the strategy. The building blocks are already in place to make this happen and the existing infrastructure will be explored to contribute positively to the delivery of the strategy. The Municipal leadership is inviting the private sector partners to identify specific opportunities to make the strategy a reality. – Damane Hlalele, Director, Arup
- This is the first evidence-based assessment of how the hydrogen economy could emerge within a region of South Africa. It demonstrates the scale of the opportunity to attract investment in clean technologies that will drive economic activity, create quality jobs, and increase prosperity in the eThekwini region. The next steps for pilot projects are clearly articulated, providing a rallying cry for private-sector investment. – Nick Ash, Associate Director, Arup
- We have developed a practical strategy derived from circular economy approaches to outline supply chain infrastructure projects in the hydrogen economy. Hydrogen is a thermally dense molecule with exceptional thermodynamic properties that no other gas can match. The KwaZulu Natal (KZN) region is strategically located to commoditize hydrogen and lead regional commitments in support of the African Continental Free Trade Area (ACFTA). The establishment of our South Durban Energy and Chemicals Park (SDECP) will bring policy certainty and attract much-needed public-private investment. – Sbu Ntshalintshali, Energy Office, EThekwini Municipality
The establishment of South Durban Energy and Chemicals Park (SDECP)
The eThekwini Metropolitan has established SDECP in which sector coupling energy infrastructure in the form of land-based Floating System and Regasification Unit (FSRU), LNG import terminal, and refined products terminal, along with various Gas to Power (GTP) plants, Hydrogen production and storage, Biofuel production and storage will be deployed to turnaround the economic situation of South Durban. The SDECP will be delivered through the PPP model and will offer alternatives to pure-play product storage conversions, mitigates de-industrialization in Durban, and defers decommissioning provisions.