While gas has been touted as a transition fuel, a stepping stone to help South Africa move away from coal and eventually adopt cleaner alternatives, a new study shows there is no need for this.
Economics and energy advisory group Meridian Economics on Monday released its report, Hot air about gas: An Economic Analysis of the scope and role for gas-fired power generation in South Africa. The report indicates that large-scale gas projects in the power sector are not economically viable. For now, the role of gas in the power sector is to serve as a fuel for peaking generation capacity, coupled with renewables such as solar PV and wind. In certain circumstances, diesel could be more cost-competitive than liquefied natural gas (LNG) as a fuel choice for peaking plants – which provide power during peak demand hours.
Researchers suggest that before decisions are made to procure gas for power, government should update energy policy to reflect that the prices of renewables are now significantly lower than gas. Government is finalising a Gas Master Plan, due in March 2023.