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South African natural gas and helium producer Renergen has inked a helium forward sale agreement with helium trading company Argonon Helium US for 100 000 units over 19 years, with each unit representing a thousand standard cubic feet (mcf) of helium at 99.999% purity and in liquid form.

Argonon will take possession of the units once they are paid for and for which Argonon is under no obligation to purchase, Renergen said.

Argonon intends to use the units to establish a spot market for helium.

Following the forward sale of the first 100 000 units of helium, it is intended that any future sales between Renergen and Argonon will be priced according to the spot market of helium, less Argonon’s trading margin, and will be available to Argonon until the expiry of the Virginia gas project’s licence in September 2042.

As a frame of reference, one unit weighs 4.7 kg and comprises 37.5 ℓ when in liquid form.

In terms of the transaction, Renergen says up to $25-million of helium sales from the plant at Phase 2 of Renergen’s Virginia gas project, in South Africa’s Free State, could potentially be prefunded.

The arrangement is intended to facilitate the creation of a liquid spot market for helium, which will be accessible to all investors through the Argonon platform. A portion of the funds from the pre-sale will be used to accelerate Phase 2 without the need for equity.

The contract represents significantly less than 0.1% of global helium consumption over contract term, and is, according to Renergen, intended to establish a mechanism for Renergen to sell helium to Argonon in the spot market when the Phase 2 plant becomes operational.

Financial services and technology company Purple Group has been appointed to create the digital platform to track and manage the units as they are exchanged and traded.

Further, the collaboration between Renergen and Argonon is specifically designed to bring transparency of pricing into the helium market and highlight the growing global importance of helium.

Argonon CEO Richard Charrington said “While 100 000 units is less than 0.1% of the global helium market over the term of our contract, we believe this transaction is a ground-breaking step in bringing helium to the financial markets and will pave the way for its inclusion into more mainstream commodities”.

Charrington believes that, like with so many other commodities, “it will start small and is likely to be traded by those who have researched it and understand the future potential with emerging technologies such as quantum computing and in time, may become much more mainstream in a similar way that lithium did several years ago”.

Renergen CEO Stefano Marani, meanwhile, commented that “Argonon has developed an innovative product which will provide an accessible platform and market for any interested helium investor to gain direct exposure in the underlying commodity and marks its entry into a tradeable commodity”.

He explained that helium is a rare element without substitutes and that the importance and critical role it plays across several high growth sectors including medical imagery (MRIs), welding, fibreoptics and electronics is leading to a growing global shortfall of helium supply, and consequently rising prices.

Through the development of its Virginia gas project, Renergen believes it is in a strong position to supply this growing market and continue to create long-term value for all its stakeholders.

The agreement is subject to the parties having received any approval or consent, if and to the extent required under any applicable law to implement the transactions contemplated in the agreement.

Termination events of the agreement are based on standard provisions which include only force majeure, breach or failure to perform.

HELIUM MARKET

The global helium market, which is currently undersupplied, consumes about six-million units a year, according to the estimates by Edison Group and Hannam and Partners, with an anticipated consumption of over...

Volvo Trucks South Africa (SA) should start the local testing of electric trucks within the next two years, says Volvo Trucks SA product support senior manager Erica Parry.

“Sales will be determined by various factors but, most importantly, the investment and availability of charging facilities en route, or at customers’ facilities.

“Our optimistic outlook is for possible sales to start within three years.”

This move by Volvo Trucks SA follows the announcement by its Swedish parent company that it will aim for 50% of all global new-vehicle sales to be electric by 2030.

By 2040, the goal is for 100% of global sales to be fossil-fuel free, whether that will be through the sale of battery-electric of fuel-cell electric trucks, says global product management senior VP Jessica Sandström.

She says the transformation to electric mobility will be a “quick shift”. She points to New York, where the streets were filled with horses in 1900, but cars by 1915.

The truck maker will next year launch a new vehicle with a 300 km range.

Sandström says a study of European road freight transport has shown that 50% of all goods travel 300 km or less a day by road.

Swedish furniture and goods giant Ikea has also already indicated that it wants all of its home deliveries to be electric by 2025.

Already 100% of its deliveries in Amsterdam are electric, and 90% in China.

In fact, Ikea has deployed electric vehicles in 100 cities already.

One Hundred Trucks

Volvo Trucks has received an order for 100 Volvo FM Electric trucks from DFDS, Northern Europe's largest shipping and logistics company.

The deal is the largest commercial order to date for Volvo’s electric products, and one of the largest ever for heavy electric trucks worldwide.

“Together we are showing the world that electrified heavy truck transport is a viable solution already today,” says Volvo Trucks president Roger Alm.

First deliveries of the Volvo FM Electric to DFDS will start in the fourth quarter of next year, and continue throughout 2023.

The trucks will be used for both short and long transport in the DFDS logistics system in Europe.

The FM Electric can carry a weight of 44 t (gross combination weight) and has a range of up to 300 km. With a top-up charging session during lunch, this distance can be extended.

The vehicles can be charged via overnight depot charging (each truck comes with an AC charger) and via high-power charging on route (DC charging).

Volvo Trucks believes that the electrification trend in the heavy-truck market is accelerating.

In Europe, a few hundred trucks above 16 t have been registered so far this year. Of these, about 40% are Volvo electric trucks.

Volvo Trucks started serial production of electric trucks in 2019.

The product range now includes six electric truck models – the Volvo FH, Volvo FM, Volvo FMX, Volvo FE, Volvo FL and the Volvo VNR, sold in North America.

State-owned electricity utility Eskom has approached the Gauteng High Court to have the regulator’s recent decision to reject its revenue application for the period 2022/23 to 2024/25 set aside for being “patently irrational and unlawful”.

Eskom approached the court this week for a review of the National Energy Regulator of South Africa’s (Nersa’s) September 30 decision to reject its latest application on the basis that the methodology Nersa used to determine Eskom’s allowable revenue had expired and would be replaced by a new methodology, which was currently the subject of a stakeholder consultation process.

Nersa, which released a consultation paper on a possible new methodology on September 24, argues that the current methodology has not provided price stability and that a new approach is also required considering changes under way in the electricity supply industry, including the impending unbundling of Eskom.

The utility has agreed to participate in the review but has argued that it is “simply impossible” for it to make a fresh application on the basis of a yet-to-be-determined methodology in time for a decision to be tabled in Parliament by March 15, as would be required for such a decision to be lawful.

“It is wholly irrational for Nersa now to expect Eskom to make a fresh application in terms of as yet undisclosed principles that may or may not inform a new methodology that may or may not be adopted at some stage in the future,” Eskom says in a founding affidavit deposed by CFO Calib Cassim, who describes it as a “Kafkaesque state of affairs”.

Eskom is, thus, also asking the court to grant it urgent interim relief in the form of an order directing Nersa to process the revenue application it submitted on June 2 and to do so under the existing tariff methodology so that a “lawful tariff” can be determined for the 2022/23 financial year, which begins on April 1.

“This relief is necessary to provide a lawful route to determining an Eskom tariff for the 2022/23 financial year in the limited time remaining before 15 March 2022 when that tariff has to be tabled in Parliament in accordance with the requirements of section 42(5)(a) of the Local Government Municipal Finance Management Act (MFMA) 56 of 2003,” Eskom argues.

The application also names the finance and mineral resources and energy ministers, as well as the South African Local Government Association as respondents, owing to their potential interest in the matter, but with no specific relief sought from them.

Eskom argues that the interim relief sought by Eskom is of national importance because without a validly determined tariff for 2022/23, Eskom will be financially unsustainable, as it will have “zero revenue” for the 2022/23 financial year.

“The required revenue to allow Eskom to continue operating will be more than the total allowable revenue for the 2021/22 financial year of over R260-billion.

“Moreover, because more than R350-billion worth of Eskom debt is linked to over R900-million in interlinked national government guarantees, if Eskom’s finances collapse, the finances of the entire national government are at risk,” Cassim states in the affidavit.

Eskom has asked for the matter to be treated with urgency, and that a hearing date of no later than December 1 be set so that there is time, following any judgment, for Nersa to publish its application for public comment by no later than December 17.

“On the assumption that four weeks is the most that may now be left for public comment, a deadline of 14 January 2022 may be fixed for submissions to be made by interested parties.

“That will then enable public hearings to be held between 17 and 21 January 2022,” Eskom says in its affidavit.

Nersa would then have more than a month, Eskom argues, to decide the application by February 25, leaving enough time for the decision to be implemented by the 15 March 2022 deadline envisaged by the MFMA.

Eskom also accepts that its 2023/24 application, as well as subsequent appl...

South Africa’s Forestry, Fisheries and the Environment Minister Barbara Creecy says a breakthrough is needed at COP26 on the issue of climate finance, warning that the failure of developed countries to honour their $100-billion-a-year commitments has led a breakdown of trust.

Addressing a virtual stakeholder consultation session on South Africa’s position ahead of the upcoming climate talks in Glasgow, Scotland, Creecy said that COP26 would not live up to the expectation of being an “ambitious COP” unless clarity was provided on the actual mobilisation of the $100-billion already pledged.

“If developed counties want to re-establish trust, they have a road to travel.”

However, South Africa would also be pushing for a new and “more ambitious” financing goal for the period beyond 2025, particularly in light of Organisation for Economic Cooperation and Development research that shows that developing countries would require between $3-trillion and $4-trillion to implement the mitigation and adaptation programmes needed to bolster their climate resiliency.

South Africa would, thus, propose that the $100-billion figure become the “floor” for yearly commitments that should be ramped up progressively to $750-billion by 2030.

In parallel, South Africa would be seeking specific financing support for its own more ambitious mitigation plan, as contained in its updated Nationally Determined Contribution (NDC) range.

The new NDC range of 420- to 350-million tons of carbon dioxide equivalent (Mt CO2-eq) for 2030 is an improvement on its 2015 pledge of 614 Mt CO2-eq to 398 Mt CO2-eq, with an upper level that is aligned with the Paris Agreement’s pledge to cap global warming to below 2 °C above pre-industrial levels and the lower figure compatible with a 1.5 °C pathway.

South Africa will seek to tap international financiers for grants to support a just transition from coal, as well as concessional loans to support Eskom’s just energy transition strategy, which has received Cabinet approval.

Creecy reported that a committee of Ministers – drawn mainly from the economic cluster, but also including the international relations portfolio – had been established to focus on the financing implications of the NDC and the Eskom strategy, as well as the regulatory and policy implications.

She dismissed suggestions of division in Cabinet on the issue, saying that all Ministers are bound by Cabinet decisions, including the NDC, which would have policy implications, including for the Integrated Resource Plan, which is widely held to be outdated.

Creecy described as “valid” the security-of-supply concerns raised by Mineral Resources and Energy Minister Gwede Mantashe, who has warned of a possible economic collapse if South Africa were to agree to shut its coal plants prematurely.

“Planning, timing and pacing” of the transition were important to ensuring an orderly energy transition, particularly given South Africa’s current deficit of electricity supply.

Creecy also defended Eskom’s decision to include gas-to-power in its decarbonisation plans, arguing that gas was an important transition fuel.

Besides climate finance, South Africa would also be pursing greater ambition, especially in the area of adaptation, at the COP26, where it aims to secure fresh financing commitments for adaptation in Africa.

South Africa will focus, in particular, on Article 6.3 of the Paris Agreement to secure a predictable source of funding for adaptation, which would grow as carbon markets grow.

“We note with concern that, while the Green Climate Fund has, in principle, agreed to a 50:50 balance of funding for adaptation and mitigation, in practice the funding is highly skewed towards mitigation.”

South Africa will propose an adaptation target of having 50% of the global population being resilient to the adverse impact of climate change, from drought to floods, by 2030, and increasing that to 90% by 2050.

Creamer Media's Chanel de Bruyn speaks to Engineering News Editor Terence Creamer about the release of the International Energy Agency's (IEA's) latest World Energy Report and warnings of more energy market turbulence unless higher levels of investment are made to both meet demand and decarbonise energy systems.

The second phase of the Presidential Employment Stimulus Programme (PESP) will include the establishment of a new Social Employment Fund, which aims to support 50 000 work opportunities for the common good in communities, provided by organisations outside of the State.

It will also include the establishment of the national Pathway Management Network as part of the Presidential Youth Employment Intervention, Minister in the Presidency Mondli Gungubele said during a briefing on October 14.

The first phase of the PESP has, thus far, created 551 000 jobs against a target of 694 120. Some Phase 1 programmes are, however, still in implementation.

The main objective of the stimulus is to use public investment to create jobs rapidly and at scale to provide support to those who need it most.

In addition to creating jobs and supporting incomes, the stimulus aims to support local economic recovery by providing a wider stimulus for consumer spending in poor communities, he highlighted.

"Employment recovery must, ultimately, be driven by growth in the private sector. Government is implementing a range of interventions, including structural reforms through Operation Vulindlela, to revive growth and support [these] firms to create jobs.

"In the short term, however, public employment can provide meaningful work and a stable income, while keeping people connected to the labour market and giving them skills to enhance their employability later on.

"The first phase of the employment stimulus has provided valuable lessons for what we can achieve if we set our ambitions higher, if we forge strong partnerships with organisations across society, and if we work together across government," he noted.

The PESP Phase 2 projects - some a continuation of successful Phase 1 projects and some new - have been allocated R11-billion and involved an intensive bidding process by all departments to participate in the PESP, which was adjudicated by the National Treasury and led to the current portfolio of programmes, said Trade and Industrial Policy Strategies development strategist and adviser to the President Dr Kate Phillip.

"The Covid-19 pandemic created a crisis and, in this context, the need to respond at scale created an opportunity to do things differently and find new ways to deliver employment solutions that are meaningful to participants and that create real social value from work undertaken.

"A priority was to take a whole-of-society approach. We need to reach out and partner with other role-players in society to solve the unemployment challenge. Part of the criteria was to look for meaningful partnerships with non-State actors," she said.

The PESP's focus has been on meaningful work participation for participants, so that participation provides real work experience in which they learn team work, time management, collaboration, coordination, accountability and delivery.

"This prepares them to play a productive role in the wider economy as part of the pathway out of these programmes into what we hope will be a recovering wider labour market."

The other challenge was designing for scale. The scale of the unemployment problem is huge, and solutions are needed that are able to respond at meaningful scale, said Phillip.

"The urgency of delivery created a need for innovation to reach scale. This has included the use of digital platforms for recruitment and application processes that have enhanced transparency and accessibility," added Public Works and Infrastructure Minister Patricia de Lille.

"The PESP has encouraged real innovation in how we deliver public employment programmes across government, from how we recruit participants to the type of work that is supported. We are determined to incorporate these lessons going forward to improve the impact of public employment across the board," she said.

"Eleven national departments were responsible for implementing programmes in Phase 1. [Fifteen departments will be involved in the second phase.] This represe...

State-owned electricity producer Eskom has identified a pipeline of ‘just energy transition’ projects valued at about R400-billion that it will seek to fund using concessional finance raised from international financiers that have committed to supporting decarbonisation initiatives in developing countries, including South Africa.

Just Energy Transition GM Mandy Rambharos reported on Thursday that the pipeline includes wind, solar and gas and battery projects, some of which will be deployed at its decommissioning coal power stations, starting with Komati in 2022.

It also includes the building of at least 8 000 km of transmission lines, 12 new substations in four provinces, the deployment of 110 transformers by 2030 to strengthen the network, the reinforcement of critical distribution corridors and the deployment of microgrids in locations that are hard to electrify using grid electricity.

Eskom is proposing to fund the projects through a Just Energy Transition financing facility, which has been conceptualised as a multi-tranche, multi-year facility, funded by a multi-lender syndicate on a “pay-for-performance basis”.

Rambharos said the facility, which she likened to a building loan, has been canvassed with various lender counterparties, which have expressed enthusiasm for its simplicity.

There is also strong support for the fact that there is an option to opt-out from projects that might not be covered by lender mandates, such as gas-to-power projects.

The facility was also discussed with climate envoys from France, Germany, the UK, the US and the European Union who visited South Africa in late September as part of preparations for the COP26 climate talks scheduled for Glasgow, Scotland, in November.

During the visit, it was agreed that the ‘Just Transition Financing Facility’ should be supported to enable South Africa to implement, starting with Eskom, its more ambitious climate action plans, while also addressing the social impacts of the transition.

South Africa has deposited an updated Nationally Determined Contribution range of 420- to 350-million tons of carbon dioxide equivalent (Mt CO2-eq) for 2030 with the United Nations Framework Convention on Climate Change, which represents a marked improvement on its 2015 pledge of 614 Mt CO2-eq to 398 Mt CO2-eq.

THREE FIVE-YEAR TRANCHES

Speaking during a webinar hosted by the South Africa Oil & Gas Alliance, Rambharos said that Eskom currently envisages the facility being rolled out in three five-year tranches to 2035.

However, it was premature, she said, to indicate how much the utility would seek to raise in each tranche as discussions were still under way.

It was likely, though, that the first tranche would be significantly smaller than the subsequent tranches as the initial funding would be for feasibility studies to progress the projects to bankability.

It was also too early to state what impact the new loans would have on Eskom’s already unsustainable debt profile, but Rambharos stressed that the potential lenders it had canvassed had indicated an eagerness to provide Eskom with funding support for its transition, despite its current debt problem.

Eskom did not envisage using the facility to address its legacy debt, however, and was in separate discussions with the National Treasury to find a debt solution. It also did not aim to pursue any debt forgiveness in return for decarbonisation.

Rambharos could also not say what the lending-rate differential would be under the financing facility, saying only that it would be seeking “highly concessional” terms relative to what was available commercially.

Eskom had also taken a decision to include gas-to-power in its just transition strategy, despite growing opposition to the use of gas globally.

The decision was based on the need for a ready-made technology to complement the variability of renewable energy so as to accelerate the transition from coal and possible transition to green hydrogen in time.

However, Rambharos stressed t...

The Independent Communications Authority of South Africa (Icasa) has resolved to oppose Telkom’s litigation to stop the expiry of the temporary Covid-19 spectrum allocation.

In August, the authority directed the various telecommunications companies to return the temporary spectrum it had assigned to enable the operators to handle the surge in demand for connectivity during the country’s Covid-19-linked State of Disaster by November 30.

Icasa issued emergency spectrum on an initial three-month temporary basis during April 2020, extending it twice as South Africa’s intermittent lockdowns continued during 2020 and 2021.

While the last extension expired on August 31, Icasa said it is important that the industry be allowed adequate time to plan and adjust their operations after having had access to the spectrum since April 2020.

“Icasa believes that the circumstances and considerations that informed the issuing of the radio frequency spectrum at the onset of the pandemic never contemplated that the spectrum would be licensed on a long-term or semi-permanent basis,” the authority said in a statement.

Icasa previously said that it cannot allow the temporary spectrum assignment to assume a state of permanence.

“The authority will therefore be derelict in its duty if it were, by default, to perpetuate what is now becoming an anti-competitive, unfair and unjust spectrum licensing regime, under the guise of pandemic relief,” Icasa said in the October 13 statement.

Further, Icasa had set out an expedited timetable for the permanent licensing of the high-demand spectrum through an open, market-based approach by no later than the end of March 2022.

“In Icasa’s view, it would be unfortunate if the authority’s efforts to license this spectrum were continually to be frustrated by recourse to the courts to allow the temporary, ad hoc Covid-19 spectrum arrangements to remain in place in perpetuity.”

There is a looming risk of more turbulence ahead for energy markets, the International Energy Agency (IEA) warns in its latest World Energy Outlook publication.

“The world is not investing enough to meet its future energy needs, and uncertainties over policies and demand trajectories create a strong risk of a volatile period ahead for energy markets,” the 2021 edition of the flagship report warns.

Released against the backdrop of fuel shortages and surging energy prices across the world, but particularly in the UK and parts of Europe and Asia, the report states that transition‐related spending is currently inadequate to meet rising demand for energy services in a sustainable way.

Investments are also falling well short of what is required for limiting global warming to 1.5 °C above pre-industrial levels, as contained in the report’s net zero emissions (NZE) scenario.

Global average temperatures are already 1.1 °C higher than those of the pre‐industrial age, with visible impacts on weather and climate extremes.

$4-TRILLION-A-YEAR BY 2030

To achieve the NZE pathway, yearly investments in clean energy would have to rise to $4-trillion by 2030, more than triple today’s levels.

Much of this investment, the report says, would have to be directed towards four key measures to “keep a 1.5 °C path within reach”, including: a massive additional push for clean electrification; a relentless focus on energy efficiency, a broad drive to cut methane emissions from fossil fuel operations; and a big boost to clean energy innovation.

“There is a looming risk of more turbulence for global energy markets,” executive director Dr Fatih Birol warns, pointing to deficits across all sectors and regions, underpinned by inadequate clean energy investment and falling oil and gas investment.

He dismisses any suggestion that the current crisis has been precipitated by the clean energy sector, describing such arguments as a "gross mischaracterisation".

"I think the issue is not that we have too much clean energy . . . but that we have too little clean energy."

The crisis, he asserts, is the result of a strong growth recovery, fuelled by fossil fuels and higher emissions, extreme weather events that curtailed hydropower production in some regions and a surge in planned and unplanned gas plant outages.

Birol expresses particular disappointment with the way the gas industry has been managed in the run-up to the crisis.

"Natural gas has been presented as a reliable, affordable energy source, which could complement the clean energy.

"But the current volatility in the natural gas markets, I believe, is not a good news for the natural gas industry and the natural gas industry didn't get good marks from millions of consumers around the world and I think they should take note of this."

While investments in wind, solar and electric vehicles are gaining momentum, the pace, Birol argues, remains too slow to reach net zero emissions by mid-century and to compensate for lower fossil fuel spending that is currently geared towards a world of stagnant or even falling demand.

The amount being spent on oil and natural gas has also been dragged down by two price collapses in 2014/15 and in 2020.

Boosting deployments of clean energy technologies and infrastructure provides a way out of the impasse, but the IEA stresses that it needs to happen quickly, or global energy markets will face a turbulent and volatile period ahead.

“Clear signals and direction from policy makers are essential. If the road ahead is paved only with good intentions, then it will be a bumpy ride indeed.”

STUBBORN INCUMBENCY

Birol warns, too, that the world’s encouraging clean energy momentum is running up against the “stubborn incumbency” of fossil fuels in energy systems.

The world’s consumption of coal, for instance, is set to grow strongly this year, pushing carbon dioxide emissions towards their second largest annual increase in history.

However, under all scenarios presented in the report, coal use ...

As part of its Sustainable Development Goal Seven (SDG7) Programme, the United Nations Economic Commission for Africa (UNECA) announces that the Development Bank of Southern Africa (DBSA) and Pimco have reached terms on their issuance of R3-billion of debt securities, which signals the first closing.

The SDG7 Programme, which was launched in February 2020, is aimed at deploying private capital in Africa to support the development of renewable energy.

South Africa, one of the initial national sponsors of the programme and through President Cyril Ramaphosa’s office and the DBSA, persisted in efforts to finalise the deal despite slowdowns associated with the pandemic, UNECA notes.

Pimco, which attended and announced its desire to act as a key investor at the launch of the programme, has engaged in assessing and structuring several potential assets from different countries, focusing first on refinancing debt to provide liquidity for further green generation.

The SDG7 Programme is built on three fundamental pillars namely climate, finance and governance, which serve to assure that proceeds are exclusively deployed to support the development of renewable energy generation, UNECA says.

“The success belongs to South Africa and the DBSA for their single-mindedness in recognising the value of attracting foreign private debt investment into the energy sector, and to Pimco for committing to the green energy transition on the African continent.

"This first close is an important signal to the many other countries interested in the SDG7 Programme who recognise the value of attracting private capital to support economic growth and green industrialisation. We look forward to concluding further transactions as part of the programme in the very near future,” UNECA executive secretary Dr Vera Songwe says.

“We are gratified to help initiate this programme for the UNECA and the continent and appreciate the endorsement from private international financial institutions such as Pimco, which are not only engaged in the South African economy, but see the particular opportunity in supporting our clean energy transition,” says Finance Minister Enoch Godongwana, who served as chairperson of the DBSA during the initiation and early stages of this transaction.

Standard Chartered acted as placement agent and structuring adviser for this transaction, while Fieldstone is the SDG7 Programme adviser and is the transaction originating bank.