South Africa seeks gas power expansion

South Africa has initiated a tender process to allocate 6000 MW of electricity generation capacity from natural gas by 2030. This initiative aims to support the country’s energy supply and complement renewable sources like solar and wind power.

First tender rejected due to fuel concerns

The government had initially aimed to allocate 2000 MW of gas-fired power capacity in its first tender, but it rejected four bids received on October 28. The offers came from four companies, but none provided sufficient guarantees about future fuel supplies for power plants.

Bids exceeded capacity but lacked guarantees

The four companies—Khanyazwe Flexpower, Pictor GTP Consortium, Kelvin Redevelopment, and Komatipoort Power—offered a combined 2830 MW of capacity, which is more than the 2000 MW target. However, none could confirm they would have enough natural gas to operate their plants long-term.

Gas imports from Mozambique face decline

South Africa currently imports most of its natural gas from Mozambique, which supplies gas via pipeline from the Pande and Temane fields. However, production from these fields is expected to decline starting in 2028, which could reduce gas availability for South Africa.

Fuel guarantees are essential for projects

The South African government considers fuel availability a critical factor for new power plants. Operators must prove they can secure gas for the duration of their projects, as without such guarantees, projects cannot ensure their operation and financiers face uncertainty.

Gas to support renewable energy variations

The 2025 Integrated Resource Plan outlines a goal of adding 6000 MW of gas capacity by 2030, with half allocated to independent producers and the other half to Eskom, the national electricity company. This is intended to stabilize the grid when renewable energy output fluctuates.

New infrastructure and supply challenges

Eskom has signed a framework agreement with the Zululand Energy Terminal (ZET) consortium to develop an LNG import terminal in Richards Bay. However, building this terminal does not automatically ensure that future power plants will have enough gas for their operations.

Government remains committed to gas goals

Despite the rejection of the first tender, the South African government remains committed to its gas expansion plans. It plans to announce the next steps in the process by the end of 2026 after completing necessary validations and engaging further with market participants.