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Arandis Power responds to environmental concerns

2020-02-13  Edgar Brandt

Arandis Power responds to environmental concerns

Arandis Power has responded to environmental concerns raised regarding power plant driven by low sulphur heavy fuel oil through which it is has offered to supply South Africa’s Eskom with 120MW of electricity. Managing Director of Arandis Power, Ezio Vernetti, told New Era that a very detailed environmental impact assessment (EIA) study was conducted and environmental clearance was received from the Ministry of Environment and Tourism. 

“Detailed air emission studies were part of the EIA and it is significant to note that whilst this plant is a thermal plant, the emissions are completely in line with World Bank environmental emission standards and are significantly lower than emissions from a coal fired power plant for example,” Vernetti told New Era’s Inside Business. 

As the MD and a founding member of Arandis Power, Vernetti noted that the company responded to the South Africa’s Department of Mineral Resources and Eskom’s “Request for Information (RFI)” to supply 2000MW of dispatchable power. 

“The plant will be built within 18 months from the signing of a PPA (Power Purchase Agreement) with Eskom. Such signature is obviously subject to Eskom going through its procurement process and to an agreement being entered into with Arandis Power. Timelines to the Eskom process are unknown at the moment, however it is plausible that this could be completed in 2020,” Vernetti explained. The expected lifespan of the power plant is 35-years while the minimum PPA offered is 10-years.

Vernetti also confirmed that NamPower has not yet expressed an interest in purchasing some or all of the electricity to be generated at the plant. However, he added that the Arandis Power plant was, and still is, designed an intended for Namibia. 

Said Vernetti; “However, the South African Department of Energy and Eskom opportunity is presenting itself at an opportune time for our company that coincides with the change in regulations in the Namibian electricity supply industry brought about by the approval of the Modified Single Buyer (MSB) model.” The MSB opportunity opens the doors for Namibian power generators to export electricity to the region. 

“In responding to the Eskom RFI call, our company is being proactive and is seizing this opportunity. This however will not preclude us from engaging with NamPower as well within the context of the new MSB regulations, should our national utility company wish to consider a supply from Namibia,” Vernetti added. 
For every power plant around the world, the cost of the electricity generated is linked to the contracted dispatch profile. This capacity factor is the prerogative of the buyer, which in this case would be either Eskom or NamPower. As such, the Arandis Power cost of electricity is aligned to the cost of electricity encountered for such plants in the Southern African Power Pool (SAPP).  Vernetti noted that in every event, the Arandis Power cost per kilowatt-hour would be significantly less than the cost of the Eskom’s peaking plants. 

“The ‘overnight cost’ for building the Arandis Power plant is below N$19 500 per kilowatt of installed capacity. In comparison, the still uncompleted Kusile coal fired power plant of Eskom, is currently at an overnight cost in excess of R50 000 per kilowatt of installed capacity,” Vernetti added. 
The Arandis Power plant is a 100% privately financed initiative and the N$2.3 billion investment will be financed through a typical limited resource project finance structure that has been fully engineered and where funding commitments have been secured.

Meanwhile, Vernetti was adamant that the Arandis Power project is not only viable and bankable but is of significant value in that it is fully compatible with the drive to build more renewable energy projects in Namibia. 

“With the contribution of Arandis Power’s flexible generation capacity that assures grid support services such as load following and voltage support, the plant is essential to help mitigate the intermittent nature of renewable energy generation plants. The Arandis Power plant can significantly contribute to the drive for achieving 100% electricity self-sufficiency in Namibia at a lower overall electricity cost than the one paid today. In Namibia, the Arandis Power plant would unlock the further construction of hundreds of megawatts of renewable energy projects,” vernetti explained. 

2020-02-13  Edgar Brandt

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