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The South African Wind Energy Association (SAWEA) has expressed dismay that none of the 23 wind-project bids submitted as part of government’s latest and expanded renewables procurement round were selected as preferred bidders and expressed concern about the current system for allocating grid access.

Mineral Resources and Energy Minister Gwede Mantashe announced on December 8 that only six solar projects, with a combined capacity of 1 000 MW, had been appointed as preferred bidders following the sixth bid window (BW6) of the Renewable Energy Independent Power Producer Procurement Progamme.

This despite the round having been expanded from 2 600 MW to 4 200 MW as part of a series of initiatives, announced by President Cyril Ramaphosa in July, to tackle intensifying loadshedding, which was being implemented at Stage 6 at the time of the announcement.

A total of 56 wind and solar bids were received by the bid submission deadline and IPP Office head Bernard Magoro attributed the low conversion rate to the fact that Eskom no longer had grid capacity available, mostly in the Cape provinces, to absorb the generators bid under BW6.

Eskom transmission MD Segomoco Scheepers said the non-discriminatory access rules of the Grid Code meant that Eskom could not reserve grid access for BW6 projects where other IPPs had made financial commitments to gain access to the capacity.

However, SAWEA argued that Eskom needed to be more responsible in managing grid access with a balanced view between publicly and privately procured electricity.

“A clearly defined queueing system needs to be urgently implemented,” CEO Niveshen Govender said in a statement.

Under BW6, bidders were required to secure cost estimate letters from Eskom for grid access but were unable to pay for Budget Quotes until they were named as preferred bidders. In the interim, developers of projects with private offtakers secured Budget Quotes for the very same grid access on which the BW6 bids were reliant.

SAWEA noted that wind developers had been guided by Eskom’s recently published Generation Connection Capacity Assessment, which indicated that there was grid availability for public procurement.

“We agree with Minister Mantashe that investment into the grid infrastructure must be prioritised and accelerated to allow for more new generation capacity, however, grid-access processes are providing little confidence in articulating how grid capacity is being allocated and we view the announcement today as a missed opportunity given our dire need for electricity in South Africa,” Govender said, while calling for a balanced view between publicly and privately procured electricity.

“We strongly urge immediate intervention by key role-players to unpack the challenges with the wind sector and find viable solutions to unlock the hurdles facing the progression toward a secure energy system,” he added.

Had all 23 wind projects been built, they would have contributed 10 TWh yearly, and could have contributed significantly to combating loadshedding, which was being implemented at Stage 6 when the decision to exclude the projects was announced.

In a disappointing development, Mineral Resources and Energy Minister Gwede Mantashe has announced the appointment of only six preferred bidders, with a combined capacity of 1 000 MW, following the evaluation of bids made during South Africa’s latest renewables procurement round.

All six are solar photovoltaic (PV) projects, with none of the 23 wind projects submitted under Bid Window 6 (BW6) of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) attaining preferred-bidder status.

The low conversion rate came despite BW6’s initial allocation being raised from 2 600 MW to 4 200 MW as part of measures announced by President Cyril Ramaphosa in July to tackle what has now become extreme loadshedding.

A total of 56 wind and solar PV projects were submitted by the early-October deadline, with a combined capacity of more than 9 600 MW.

In addition, only solar projects in the North West and Free State provinces received appointment letters, with the bulk of the remaining 27 solar projects failing to secure grid access.

The projects named as preferred bids include the 150 MW Kutlwano solar power plant, the 150 MW Boitumelo solar power plant and the 120 MW Doornkop PV facility, all in the North West; as well as the 240 MW Virginia solar park and the 200 MW Good Hope solar park, in the Free State.

The IPP Office confirmed that BW6 was now formally closed except for an engagement that would take place with the one additional eligible bidder.

IPP Office head Bernard Magoro confirmed that access to the Eskom grid had emerged as a major constraint during the bidding round, with the indicative capacity available in the Western, Eastern and Northern Cape provinces at the launch of BW6 in April having subsequently been absorbed by private projects.

Magoro explained market dynamics had changed materially during the bid window, as a result of a reform allowing distributed generators below 100 MW to proceed without a licence - a cap that will be eliminated entirely in the coming months.

That reform had the “unintended consequence” of grid being reserved for private projects, which Magoro acknowledged could advance more rapidly than is possible under the REIPPPP, partly because the REIPPPP projects are backed by a government guarantee and were, thus subject to conditions relating to ownership, local content and socioeconomic development.

Eskom transmission MD Segomoco Scheepers said the Grid Code dictated that Eskom provide non-discriminatory access to the network and it could, thus, not reserve grid access for REIPPPP projects where an interest had been shown but where no financial commitment had been made.

Eskom also had no queuing system for grid access, which left the BW6 projects vulnerable, as they were unable to apply for budget quotes before being awarded preferred-bidder status, with only cost estimate letters required for bid submission.

In the event, the capacity initially indicated to be available in Eskom’s Generation Connection Capacity Assessment was no longer available by the time BW6 bidders were in a position to make such commitments.

Scheepers insisted that Eskom had both short- and long-term plans to extend and strengthen the grid, which is necessary to connect and transport much-needed new generation capacity, especially in the Cape provinces.

Eskom’s latest Transmission Development Plan points to the need for a significant acceleration in grid-related investments to facilitate the integration of 53 GW of new generation capacity, mostly renewables, over the next ten years.

Covering the period from 2023 to 2032, the latest edition of the plan, which is published yearly, points to the need for the construction of 14 218 km of new high-voltage transmission lines over the period.

It also outlines the need for the deployment of 170 transformers, with a capacity of 105 865 MVA, along with 40 capacitors and 52 reactors to support stable and reliable grid operations and the integration of new generation c...

German Vice Chancellor Robert Habeck, who is also Minister of Economic Affairs and Climate Action, argues that there can no longer be a trade-off between industrial development and climate action.

Speaking at the fourth German-African Business Summit in Sandton on Wednesday, Habeck said that the approach being pursued by the German government was premised on creating new markets and industrial opportunities that included climate action.

“My ministry is called the Ministry for Economic Affairs and Climate Action . . . and this is because we made a decision that climate action and industrial growth are not in opposition – they belong together.”

The approach, he added, had been adopted on the basis that “environmental sustainability and economic prosperity will be mutually dependent”.

Similar models were being pursued across Europe, while the Inflation Reduction Act in the US was redirecting America’s financial firepower the way of new green markets, including electric vehicles, renewable energy and hydrogen.

“So, the decision is made and now the competition has to begin to decide where the best opportunities are and where the best sites are for producing these,” Habeck added.

Germany was setting up climate and energy partnerships around the world, including in Africa, to support its decarbonisation plans, which included the large-scale importation of green hydrogen and derivatives.

Habeck warned, however, that those countries that sought to hold on to fossil fuels would place themselves at a competitive disadvantage in seeking to secure green investment, even if such countries had potent renewable resources.

“You can't do both . having two strategies means you don't have a strategy,” he argued.

Habeck insisted that Russia’s invasion of Ukraine had underlined the risks of being too dependent on both a single country for energy and on fossil fuels. It had also added impetus to Germany’s strategy to phase out oil, gas and coal, notwithstanding current emergency measures to secure those resources in the short term.

“So, when we're talking about green hydrogen, we're not talking as an addition to fossil fuels we're talking about one replacing the other.”

Addressing the conference on behalf of President Cyril Ramaphosa, Trade, Industry and Competition Minister Ebrahim Patel said that Africa was seeking to build mutually beneficial partnerships to bolster its manufacturing output and to do so in “greener and more sustainable ways”.

He noted that, while Africa was home to 17% of the world’s population, it made up only 3% of global gross domestic product and 2% of global manufacturing.

To attract investment Patel said African countries needed to promote political stability, the rule of law and intra-African trade and investment, while also developing skills and modern infrastructure, including reliable energy supply.

However, he also urged greater ambition by German investors in Africa, including to support higher levels of manufacturing and minerals value addition.

“While this is vital for Africa, it is an opportunity for Germany too.

“First, this will provide opportunities for German businesses to invest in an expanding African manufacturing sector and to strengthen your own local manufacturing capabilities, and many German companies are already doing that.

“And second, it will help in diversifying, and derisking Germany's own global supply chains and sourcing markets.

“This is particularly important given the experience of supply-chain disruptions and vulnerabilities during the pandemic and as a result of geopolitical tensions,” Patel said, adding that there were also climate benefits in ensuring that materials were transformed closer to source.

Construction tower cranes have been something of a rare sight on the Germiston skyline over the past few decades as the once-thriving industrial hub has faced severe deindustrialisation headwinds.

Several such cranes have made a reappearance at Scaw Metals’ Union Junction complex in Ekurhuleni in recent months, however, in support of a R3-billion steel investment to increase Scaw’s steelmaking capacity from about 500 000 t/y to 650 000 t/y.

This seemingly modest capacity increase somewhat belies the significance of the project, which is South Africa’s first flat-steel investment since the Saldanha Steel project was initiated by then Iscor (now ArcelorMittal South Africa, or AMSA) and the Industrial Development Corporation (IDC) in the 1990s.

Barnes Group CEO Doron Barnes – whose company acquired Scaw Metals, together with its Haggie and McKinnon Chain units, in May 2018 – tells Engineering News that the investment has been informed primarily by the current domestic manufacturing imbalance between flat and long steel.

There is sufficient long-product capacity, which is reflected in the price, while AMSA is currently the only remaining producer of flat-steel products after the closure of Highveld Steel.

Scaw has hitherto produced only long-steel products, but the investment under way will position it to produce both long and flat products, with a 50/50 mix envisaged currently.

In addition, AMSA’s mothballing of the Saldanha Steel mill, in the Western Cape, has resulted in the closure of significant local capacity to produce thin-gauge hot rolled coil (HRC), on which some domestic re-rollers previously relied.

Barnes says the intention is to position Scaw Union Junction to produce both long and flat steel, using an advanced solution that is being supplied by Danieli, of Italy, which also supplied substantial portions of Scaw’s current steelmaking and rolling plant units, installed when the company was still owned by Anglo American.

Half of the investment cost is being funded from internal Barnes Group resources, with the balance arising from a club loan that has been extended, in equal portions, by Absa, Investec and the IDC, which continues to hold a 26% equity position in Scaw Metals.

Under the contract, which was signed with Danieli in August 2021, Scaw will build a new flat-steel complex on the brownfield site in Gauteng for narrow- and medium-width HRC, at gauges of between 1.2 mm and 8.0 mm.

The Barnes Group will absorb a portion of the output itself for further downstream processing at its Barnes Tubing operation in Isando and Hall Longmore operation in Wadeville, both also in Gauteng, where steel piping is manufactured. The balance will be sold into the merchant steel market or to re-rollers, which currently have no domestic flat-steel alternative to AMSA.

The contract with Danieli includes several components, including a medium-slab continuous caster and semi-continuous hot-strip mill, a reheating furnace, and a brownfield water-treatment plant.

It also involves the revamping of Scaw’s existing meltshop, which includes a new-generation electric arc furnace.

The meltshop will be fed using a combination of scrap and direct reduced iron (DRI), produced using the mill’s existing kilns onsite.

COGENERATION POTENTIAL

Scaw has three kilns to produce DRI, not all of which have been restarted, and Barnes reports that investigations are advancing, using initial Anglo concepts, into the prospect of fitting two of the kilns with cogeneration plants to produce about 60 MW.

No final investment decision has been made, but Barnes believes the project is likely to be developed in the coming two years, given South Africa’s electricity crisis and the fact that tariffs are rising steeply, which has improved the economics of cogenerated electricity.

At 60 MW, Scaw expects to be able to meet about 60% of its needs and buffer itself from Eskom’s load-curtailment requirements.

In addition, the new facility is significantly more energy effici...

Eskom has given notice that it intends applying for leave to appeal a Gauteng High Court judgment setting aside a decision by the utility to exclude Babcock Ntuthuko Engineering from boiler maintenance contracts at 15 coal power stations, as well as an order that Eskom should conclude a fresh tender process within six months.

The contracts, which were awarded in October 2021 to Actom and Steinmuller Africa, are said to be valued at R16.3-billion.

Babcock, meanwhile, was disqualified by Eskom for failing to submit an ISO 3834 welding certificate, which the utility described as a “mandatory returnable for evaluation”.

In his November 17 judgment, Judge Anthony Millar found the disqualification of Babcock, which had been performing boiler repair and maintenance services at various Eskom power stations since 2003, to be irrational and unlawful.

Millar described the tender documentation issued in 2018 as having been poorly drafted and ambiguous in using the words certificate and certification as synonyms.

Given this ambiguity, and the fact that Babcock had made reference to its ISO 3834 certification in a tender covering letter, the judge ruled that Eskom should have afforded Babcock the opportunity to comply by submitting the certificate in question.

Eskom’s failure to do so, was “procedurally unfair” and made the disqualification of Babcock from consideration in the award “both unlawful and irrational”.

Millar ordered Eskom to conduct a fresh tender process and for an award to be made within six months.

In the meantime, the order declaring the contracts unlawful would be suspended “pending the finalisation of the fresh tender process”.

In its notice of application for leave to appeal, Eskom contends that the judge erred in describing the ISO 3834 precondition as ambiguous, arguing that the tender made it plain that the certificate should be submitted; a requirement that Eskom claims all bidders understood.

Babcock, Eskom asserts, also understood the requirement and “admitted” in a letter to Eskom that copies of the ISO 3834 certificates may have been excluded “in error” from its bid submission.

Eskom adds that, even if the precondition was ambiguous, the ambiguity was removed during a tender clarification meeting held ahead of the submission date.

Eskom argues that the court, therefore, erred in concluding that the ISO precondition was ambiguous, that the tender process was procedurally unfair, and that the award was reviewable.

Noting that the original tender process had taken three years to conclude, Eskom also argues that the court erred in ordering that the utility conclude a new tender process within six months.

Cement and Concrete South Africa (CCSA) is preparing an application for generalised tariff protection on imported cement, arguing that antidumping duties against exporters from specific countries are taking too long to secure and are failing to safeguard the industry from what it regards as unfair competition.

Despite having a yearly cement production capacity of about 20-million tons, the domestic industry is producing only 12-million tons currently, with more than one-million tons of cement being imported yearly.

CCSA CEO Bryan Perrie tells Engineering News that no decision has been made regarding the level of protection that will be requested, with investigations still under way.

He also stresses that any tariff decision, which is likely to face stiff opposition from importers, rests entirely with the International Trade Administration Commission of South Africa (Itac), which will have to weigh up the economic costs and benefits of introducing protection.

“We are busy finalising the application, which we expect to submit to Itac during the first quarter of 2023,” he reports.

CSSA, whose members include PPC, AfriSam, Lafarge and Sephaku Cement, is also facilitating, through independent lawyers, an antidumping investigation into cement arising from Vietnam.

Imports from Vietnam have risen sharply in recent years, particularly after dumping duties were imposed on cement from Pakistan in 2015.

The duties on various Pakistani exporters range from between 25% and 62% and, following a review of the tariffs in 2019, were renewed by Itac for a further five years, from June 2022.

“Obviously, our members believe they have a strong case for protection, including the fact that the industry employs about 35 000 people at plants that are typically located in rural communities.

“In addition, our members are subject to the carbon tax, have implemented transformation programmes and, where quarrying is undertaken, are obligated to comply with the Mining Charter and to implement social and labour plans,” Perrie outlines.

“Therefore, we believe protection should be considered, particularly in a context where demand remains weak and where newly published procurement regulations no longer require localisation of a product such as cement.”

Any sustainable recovery of the industry, however, hinges mostly on increasing demand, which itself increasingly hinges on a recovery in infrastructure investment, which has failed to materialise despite repeated government statements indicating that infrastructure investment is a key priority.

Perrie says the recent award of large contracts by the South African National Roads Agency Limited (Sanral) have been viewed positively by the industry, as has Sanral’s recent assurances that local material will be used in the contracts, despite the fact these have been placed mainly with Chinese contractors.

“We require other State-owned companies and government departments to make similar commitments, especially following the Constitutional Court’s ruling that individual organs of State, rather than the National Treasury, are legally responsible for the design and enforcement of preferential procurement rules.”

The ruling, which was made in February, has undercut the previous designation of cement for local procurement by the National Treasury.

“We now have to approach each organ of State to encourage them to designate local cement, which is complicated.

“Until they do, we will receive no benefit from the cement designation, which we previously viewed as a major victory for domestic producers.”

Anglo American’s big nuGen hydrogen-powered truck is currently functioning “akin in operation and cost to its diesel counterpart”, says Anglo American market development principal Fahmida Smith.

The global mining company in May unveiled its nuGen truck, with a 2 MW hybrid battery/hydrogen fuel-cell powerplant replacing the diesel engine.

The truck, a prototype of what is the world's largest hydrogen-powered mine-haul truck, was designed by Anglo American and US company First Mode.

The vehicle, which is being tested at the Mogalakwena platinum mine, in Limpopo, weighs 220 t, with a load capacity of 290 t, giving it a total weight of 510 t.

Smith says roughly 80% of Anglo American’s carbon dioxide emissions come from diesel use, with mining haul trucks, in turn, responsible for most of these emissions.

“One of these trucks use 900 000 l of diesel a year. That presented a key opportunity for us to decarbonise.”

Smith says global truck manufacturers told the mining group that there “was no way” it was possible to decarbonise a truck of that size.

This prompted Anglo American to tackle the development in-house.

Smith says the group is continuing the monitor and test the vehicle’s performance.

The fuel-cell truck is, however, only one of four hydrogen projects the company is pursuing.

Anglo American is also working with a number of partners, such as Bambili Energy, Sasol and TotalEnergies, to create the country’s first hydrogen corridor, with a focus on logistics – trucks and buses that use hydrogen.

“That is then three projects. A fourth one is to develop, with Bambili, fuel cells for stationary applications – in particular, buildings and offices.”

Bambili Energy CEO Zanele Mbatha says she believes South Africa will have fuel-cell trucks on the road “by 2024, 2025”.

From Grey to Green

Sasol is currently one of the largest producers of grey hydrogen in the world, says

Sasol hydrogen programme management head Rilet Davison.

“We’ve got that experience. We know how to handle the product. We know how to produce the product and how to convert the product.”

Davison says this gives Sasol a strategic advantage in that it can use its existing assets in Secunda and Sasolburg to produce sustainable products such as green hydrogen.

Green hydrogen is generated by renewable energy, or from low-carbon power. Green hydrogen has significantly lower carbon emissions than grey hydrogen, which is produced by steam reforming of natural gas, which currently makes up the bulk of the hydrogen market.

Green hydrogen is, however, still much more expensive to produce than grey hydrogen.

One of the projects Sasol is targeting is to convert its Sasolburg operation to green hydrogen in a number of ways.

“We recently announced our collaboration with ArcelorMittal South Africa from a [green] steel manufacturing and application point of view,” says Davison.

“A key demonstration we want to do for Sasolburg and the Vaal Triangle is to look at three different things. We already have an electrolyser – we are in the process of completing that, with the first production scheduled towards the end of 2023.

“Now the output of that electrolyser will be used in demonstration projects to incubate local demand and supply, and to supply the green hydrogen to offtakers.”

“For Secunda, where we currently produce synthetic aviation fuels, we have the opportunity to convert from grey to green hydrogen,” notes Davison.

“We have the synthetic fuels, but, in future, we’ll have sustainable aviation fuels.”

Davison says Sasol already has a demonstration project, through a consortium, working towards production of 50 000 t/y.

“If we can ramp that up in the future, OR Tambo [International Airport] can become a sustainable aviation hub.”

Smith, Mbatha and Davison spoke at the Science Diplomacy for Economic Development (Hydrogen Economy) workshop in Cape Town.

A proposed disposal by Murray & Roberts (M&R) of its Clough unit to Webuild was terminated on Monday and Clough and its subsidiaries placed into voluntary administration in Australia with immediate effect, together with the JSE-listed group’s Australian holding company, MRPL.

The announcement triggered a sharp decline in M&R’s shares, which were trading about 13% lower directly following the announcement.

In a surprise move, M&R announced a proposed sale and purchase agreement with Webuild, of Italy, on November 18, whereby the group’s entire issued share capital in Clough Limited would be transferred to Webuild.

The agreement was coupled to a proposed interim loan facility of A$30-million from Webuild to Clough, which required the urgent injection of working capital to avoid entering voluntary administration.

With the expiry of the prescribed date for implementation, and with no reasonable prospect of the interim loan materialising, the parties mutually agreed on December 5 to terminate the agreement.

In the absence of the interim loan, the Clough board then placed Clough and its subsidiaries under voluntary administration in Australia with immediate effect.

M&R confirmed that the voluntary administration of MRPL had potential implications for RUC Cementation (RUC), which a net asset value of A$85-million (about R1-billion).

RUC has not been placed into voluntary administration, with the administration of MRPL viewed as a way to mitigate the risks to RUC .

“Other than the group’s interest in RUC, as well as a guarantee provided to Clough USA in the amount of A$3-million (equivalent to approximately R35-million), the group has no residual exposure in Australia or to Clough and will not be affected by MRPL being placed into voluntary administration,” M&R said in a statement.

The administrators appointed to MRPL and Clough were identified as Sal Algeri, Jason Tracy, Glen Kanevsky and David Orr, who are all members of the Deloitte Australia corporate rescue team.

Chronux director Rowan Goeller, who tracks M&R, says there was always a risk the deal might not be concluded, which is negative as it would have allowed M&R to exit Clough with minimal financial impact.

"The liabilities associated to Clough are ring-fenced to Australia so putting MRPL into business rescue insulates M&R South Africa, although RUC (part of the mining division) falls under MRPL and may form part of a business rescue process.," Goeller adds.

he African last-mile delivery market was valued at $1.14-billion in 2021.

By 2030 this is expected to reach $2.35-billion, expanding at an annual compound growth rate of 8.45% between 2022 and 2030, says Frost & Sullivan consultant Nomvo Kasolo.

For Africa, home to 1.3-billion people and growing to 2-billion by 2050, the last-mile delivery market presents significant opportunities going into the future.

African cities are seeing extraordinary growth, with more than 60% of Africans expected to live in cities by 2030, notes Kasolo.

“With this comes higher demands for efficient supply chains into growing urban areas and the remaining rural space, in order to avoid expansion of the rural-urban divide.”

In 2021 alone, 21 transport startups were established in Africa, addressing issues as such as digitisation and last-mile delivery solutions.

Kasolo says the last-mile sector can be segmented into categories by product, industry, sales channel, delivery type, service speed and geography.

“Based on current trends, players with the fastest turnaround times across all categories will enjoy the largest growth.

“The waiting time for consumers has been cut from the previous five to six days, to one-day or same-day delivery.”

Kasolo says this shift has created many opportunities to establish efficient sales channels.

Digital communication platforms that allow for easy returns, exchanges, and increased connectedness between client and vendor are gaining ground, including the likes of Kobo360, WumDrop, Pargo and so forth.

“Aside from newer entrants, larger industry giants are also creating innovative models to reduce shipping costs and ride this opportunity wave,” she notes.

“Regional expansions of newer entrants and established players are happening in Egypt, South Africa, Nigeria, Ivory Coast, Tunisia, Ghana, Ethiopia, Zambia, Kenya, and other markets.

“With most of the regions, the growth needs to be met by additional investments in key infrastructure (physical and digital) to ensure long-term solutions.”

Overall, the high-potential areas in the next decade are expected to be through growth in business-to-customer models (by product type), e-commerce (by industry), distributor segment (by sales channel) and parcel services (by delivery type).

In South Africa alone, the revenue generated by e-commerce is expected to reach $7.07-billion for 2022, growing to $14.9-billion in 2027, says Kasolo.

The positive trend in Africa’s last-mile story could, however, be cut short if challenges in supporting infrastructure and restraints like corruption are not addressed, she adds.

Engineering News editor Terence Creamer provides insight into the announcements made at the inaugural South African Green Hydrogen Summit; Sasol's confirmation that it is pressing ahead with its green hydrogen plans; and Cabinet's approval of the Green Hydrogen Commercialisation Strategy for public comment.