Tag: LNG Hub

Why are you still with Eskom?

Liquified Natural Gas (LNG) is a viable alternative with a strong history in power generation – just ask 42 countries! 

There is no reason to persevere with load shedding while the industry “waits” for renewable energy. Like deer in the headlights, South Africa has kept its focus on Eskom-driven solutions, when, for many years alternatives have existed. Renewable supporters can start the transitional process now by using LNG for peaking and or mid-merit power generation, vehicular and furnace fuels. LNG is well supported globally and poised to be the next wonder kid in Africa after all, Africa holds 9% of the world’s natural gas reserves! 

There is no question that 100% dependency on renewables is the end game for South Africa. However, shifting from coal to renewables without using an energy mix through the transitional period is like jumping from a bicycle to a superbike. The setup costs are significant, and renewables are new fodder in a market that has been in existence for decades. While LNG has a track record, there are simply no proven statistics around reliance on supply when it comes to purely using renewables in a Southern African context. 

What are your business needs when it comes to an energy mix?

There are significant drawbacks to relying solely on one transitional energy source. Consider how weather conditions and daylight hours impact a solar energy system’s power generation ability. To combat this, transitional energy such as LNG can run as a complementary source to solar which creates a hybrid solution that can stabilise and improve energy output. Utilising LNG as an alternative to heavy carbon-based fuels can mean escaping load shedding, less taxation and reducing carbon emissions. In terms of pricing, LNG can be contracted on a mid-to-long term basis minimising exposure to major price fluctuations.

LNG is an ideal power generator to use in an energy mix. LNG has an annual production capacity of 487 million tons a year and robust global trade which includes Southern Africa. Localised supplier, LNG Hub, offers contracted LNG supply which guarantees affordable pricing. 

LNG has a long track record and is being globally utilised in energy mixes. According to the International Group of Liquefied Natural Gas Importers, 601 LNG tankers are in service worldwide. Their total transport capacity is 86 million cubic meters and growing. Qatar and Australia are leading in LNG production, while USA, Russia, Malaysia and Nigeria are significant players. LNG receiving terminals and regasification plants span 4 continents and are in 42 countries! China, India, South Korea and Japan are the biggest importers of LNG while European importers include The Netherlands, Spain and Italy. 

Mitigating supply risks 

Based on our past and present experiences, any single energy solution poses a higher risk of energy shortages. South Africa has been long dependent on coal with a minimal viable energy mix strategy. It all boils down to an energy mix that works for your business. For example, a mine producing aluminium situated in the Northern Cape has a different energy mix requirement from that of a steel smelter in Gauteng. The need is to lessen the reliance on Eskom by customising your power generation through an energy mix that mitigates risk.

Now is the time to explore LNG as an energy option with contracted supply available. LNG Hub calls on customers to secure agreements for 2024 and 2025 as production with West African supply sources will close soon. 

For further information, visit www.lnghub.co.za.

Renewables – Where do Industrial Businesses Stand?

Producing power independently in South Africa goes beyond a purely renewable energy solution. The Government’s energy policy’s primary objective – stated in the Integrated Resource Plan (IRP) – is to secure electricity while minimising costs. The high price for renewable energy calls for a hybrid approach to power generation with Liquified Natural Gas (LNG) playing a significant role in the transitional process for industry.

A globally traded commodity LNG is one of the most stable resources available with demand expected to grow steadily at 3.4% per annum to 2035.  The war in Ukraine has created a “gas rush” in which Africa has become a key investment source for Europe. New gas fields have been touted with existing supply sources across Africa shifting focus to domestic markets such as South Africa while maintaining the growing export market.  

The Cost of Renewables

According to the Daily Maverick, the cost of electricity supplied into South Africa’s grid by the 25 preferred renewable bidders bidding in window five of the REIPPP programme has plummeted to its lowest levels ever. This may bode well for billion-rand projects feeding the national grid, but for medium to large-sized industrial businesses, sourcing or producing power independently costs are very much dependent on the location, accessibility, and infrastructure requirements.

In the grand scheme of things, renewables seem to tick all the boxes, but this is really for large-scale rollout with development plans spanning 10 years and more. In the short term can businesses afford to move completely over to renewables? We don’t think so and judging by the country’s appetite for coal, neither do South African industrial clients. 

Don’t get us wrong, renewals are great, the silver bullet, with a single wind turbine generating up to 2.77 MW. On average, in an industrial setting, 300 solar panels will generate an approximate 100kWh. All clean energy. The problem sits in consistency and dependence on internal and external factors such as access to the right weather conditions, storage and localised crime versus the demand requirements for industrial businesses.

Renewable technology is young tech and although it is projected that up to 97% of global power production will come from renewables by 2030, long-term testing under South African economic and climate conditions leaves more questions than answers.

So where does this leave industrial businesses that want to move off-grid? We believe, the answer lies in using LNG in the mix. We are not alone, Cabinet’s plan (IRP) for electricity encompasses a 2030 goal to create a mix of coal (33.36 GW), renewables (26.63 GW) and Peak Power Generation (PPG). This includes LNG as a key component in PPG.

Reliability is what South African businesses need. LNG has fuelled the top 3 biggest economies for over 30 years. Using LNG, power generation during peak and off-peak times can remain consistent with little need for extensive battery storage or renewable infrastructure reducing overall investment costs and risk.

LNG is by no means a croc-wearing lobbyist. LNG is a transitional player, assisting businesses to move off-grid with mitigated risk and sustainable supply. Considered a biogas natural gas has a market value of over $30 Billion and is consumed by 113 countries. The “L” in LNG stands for liquified, a process of cooling, converting and storing natural gas. This makes it easily accessible to virtually any location worldwide. Theft is also reduced due the technology used to store and extract the liquefied gas.

Perhaps not as sexy as renewables, LNG still packs a punch when it comes to lower emissions. LNG to power solutions provide 20% lower CO2 emissions, 90% lower NOx emissions, 97% lower particle emissions and a 100% reduction in SOx emissions. 

LNG Supply Since the 1950s 

LNG is a globally traded product with a strong resale value. Australia is the largest exporter, exporting over 87.6 million metric tons in 2021. Algeria and Nigeria are within the top 8 exporters. This is important to note, as Africa sits on 7% of the world’s gas reserves. Africa has become a key exporter to Europe, creating an opportunity for further global investment in countries such as Mozambique and Senegal. European fuel giant Eni is looking at deploying a second LNG production vessel to Mozambique to help with Europe’s demand. 

All these factors give South African industrial clients access to LNG with stable pricing contracts available from 2024 onwards. Whether it’s firing furnaces or powering boilers, through a modular supply system, LNG Hub can guarantee the supply of LNG, regardless of demand. Come rain or shine, onsite storage hubs give customers the flexibility to tap into supply when power generation is required. 

Visit our clients website for more information here.

Can LNG be a Supporting Part of SA’s Future Energy Mix?

There is an intense discussion taking place around a future-proof energy strategy for South Africa. Other energy sources need to be explored and further researched to better understand how advancements in alternatives like gas will affect the optimal energy mix. Incorporating Liquified Natural Gas (LNG) into a company’s energy approach can mean a major increase in efficiency by minimising maintenance downtime as well as boosting production due to having a continuous, stable supply of energy. It has become a necessity for big industries to reduce emissions due to the carbon tax which was recently introduced. Instead of racing to register for carbon offset projects, companies using LNG as an alternative to heavy carbon-emitting fuels can enjoy less taxation and the benefits of a greener reputation in the market.  

The Real Deal

Is LNG a “fly by night” option as some have claimed? Japan is one of many countries where the answer would be no! LNG has a 50-year long history with that country, which has contributed to stable energy supply and sustainable growth. LNG helped to transform Japan’s energy system, which 5 decades ago was reliant on oil and coal before nuclear power was developed. In the United States, over 110 LNG facilities are operating to perform a variety of services. Can South Africa take a page out of their books?

Companies using LNG as an alternative to heavy carbon-emitting fuels can enjoy less taxation and the benefits of a greener reputation in the market.  

While many industries are utilising solar and wind, there are significant drawbacks to relying solely on one energy source. For instance, should the weather conditions turn out to be a period of cloud cover or rain, this would impact solar’s ability to generate power. Not to mention the daily limitation of no power generation during dark hours. LNG can run as a complementary source to solar which is a hybrid solution that can stabilise and improve the outputs of a system. When companies take advantage of an energy mix, they can not only save and reduce emissions in the long-term but quickly bounce back when one power source fails (e.g., load-shedding) as well as coping during peak demand without incurring extra costs. This can be especially beneficial for temperature-sensitive operations like processes requiring cooling and heating.

Naturally the Better Alternative

With LNG on a site, there is the flexibility of using natural gas as a direct energy source with a high-efficiency level, especially for furnaces, burners, ovens, etc. It can also be used as the alternative energy source for backup power instead of diesel and a hybrid power solution whereby an operation uses solar and gas as primary energy sources. Furthermore, an LNG Facility onsite can provide heat recovery and fuel for vehicles as an additional benefit. 

When it comes to the stability of supply in the South African market, we are contracting directly with fellow African gas-rich countries to supply LNG to end-users.”  

Stephen Rothman, CEO LNG Hub

Rather than being the antidote to solve all South Africa’s energy “ailments,” LNG instead can be the natural choice amongst a combination of hybrid energy solutions. It is becoming more popular and accessible for large-power users to implement an energy mix to support their system rather than relying on one source of power. 

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