Electricity and Energy Minister Dr Kgosientsho Ramokgopa has announced that the load factor for proposed gas-to-power (GtP) plants in South Africa will be increased from 25% to above 50%.

Speaking at the release of Eskom’s winter outlook, the Minister said the policy change had been made following feedback from the market on what would be required to stimulate gas demand to solve what he described as an economic rather than an electricity problem.

“We are not resolving an electricity problem, we are resolving an energy problem and an economic problem: to be able to address the suppressed demand with regards to gas,” he said.

Ramokgopa’s statement comes amid ongoing discussions on how to solve South Africa’s so-called ‘gas cliff’; a scenario that will arise later this decade when natural gas supply to industry in Gauteng and KwaZulu-Natal will fall precipitously in line with tapering supply from Sasol’s Pande and Temane gas fields, in southern Mozambique.

Discussions on possible solutions have been under way for some time, including on the level of demand required to facilitate the creation of the infrastructure that would be required to replace the natural gas from Mozambique with imported liquefied natural gas (LNG).

Proponents of LNG imports have argued that “anchor” GtP demand is required to unlock investments in import terminals and pipelines, with projects being advanced in both Maputo, in Mozambique, and Richards Bay, in KwaZulu-Natal.

Ramokgopa said the 25% load factor outlined by the system operator for electricity would not be sufficient to “spur the industry” and that the load factor should thus be “50%-plus”.

“Essentially, I’m standing here to announce a policy position of government in relation to gas to power.

“The load factor is not 25%, it’s significantly higher,” he said.

It was not immediately apparent as to whether the announcement would apply to the inaugural Gas Independent Power Producer Procurement Programme (GASIPPPP), the bid submission deadline for which has been delayed from March 25 to October 31.

The GASIPPPP tender assumes a flexible operation of the GtP plants, rather than the far higher load factor outlined by the Minister.

It is possible, therefore, that bidders that have tailored their projects to the flexible-generation requirement outlined in the tender could object legally to any retrospective change in the design.

Ramaokgopa also did not provide a breakdown of the cost implications for electricity consumers of running the GtP plants at higher load factors.

These will have to be released, however, as these costs will need to be recovered through the Eskom tariff while the prevailing tariff methodology remains in place.

Ramokgopa suggested that changes would be made to the electricity pricing policy, which could have implications for the methodology.

However, he also indicated that the new policy would place an emphasis on affordability.