Sasol upscales renewables roll-out ambition to 900 MW, starts plotting big green-hydrogen role
JSE-listed Sasol announced on Monday that it would pursue a 900 MW renewable-energy roll-out at its Secunda and Sasolburg complexes by 2030, raising its initial deployment target of 600 MW by 50%.
President and CEO Fleetwood Grobler said that the upscaled plan would be pursued in partnership with others, including Air Liquide, which recently acquired Sasol’s 16 air separation units at Secunda for R8.5-billion.
The carbon-intensive business had indicated previously that renewable energy would be core to its goal of decreasing greenhouse-gas (GHG) emissions from its South African operations by 10% by 2030, from a 2017 baseline of 63.9-million carbon dioxide equivalent (CO2e) tons yearly to 57.5-million CO2e tons.
The plan was heavily criticised as insufficient by environmental groups and shareholder activists and Sasol had since initiated work on a 2050 GHG emissions reduction roadmap, which was likely to incorporate a higher level of ambition.
More details on this plan would be published at Sasol’s 2021 Capital Markets Day in the second half of the calendar year, but Grobler stressed that it would not yet “have all the answers” by that date.
In May last year the group tested the market for renewables opportunities, triggering such a strong response that Sasol expressed confidence that if could roll out at least 600 MW of renewables by 2030.
That market-testing exercise also informed an initial request for proposals (RFPs), released in November, for two 10 MW solar photovoltaic plants at its complexes in Secunda and Sasolburg.
Grobler told Engineering News & Mining Weekly that the company received an “overwhelming response” to the RFPs from independent power producers (IPPs) and that the evaluation of the bids was currently under way.
Project implementation should begin in 2021, with Sasol intending to enter into long-term power purchase agreements with the IPPs, which would fund, build and operate the power facilities.
The same model would be used for the other tranches of the 900-MW build-out to 2030, but Sasol could consider investing directly, particularly in those instances where the renewables facilities would be used to produce green hydrogen, using electrolysers.
Grobler was also optimistic that Sasol could navigate South Africa’s restrictive policy and regulatory environment, noting that the Department of Mineral Resources and Energy had indicated that it would consider offering support for distributed-generation investments on a case-by-case basis should there be any conflict with the Integrated Resource Plan, or the regulatory rules.
However, lifting the licence-exemption cap from 1 MW to above 50 MW, as announced by President Cyril Ramaphosa in his State of the Nation Address, would also help Sasol’s roll-out, Grobler confirmed.
Speaking during the virtual release of interim results, which pointed to a stabilisation of the debt-laden company’s financial position, Grobler described sustainability as “the key strategic focus” for the group, which was also pursuing a restructuring initiative known as ‘Sasol 2.0’.
He said that Sasol intended pursuing various partnerships to improve its future sustainability, with the Air Liquide collaboration providing the basis for the initial 50% increase in the size of its renewable-energy deployment plan.
“As we diversify our energy mix by introducing renewable energy, we are committed to at least 40% local-content procurement, mainly focused on construction activities.”
GREEN HYDROGEN LEADER
The group was also working on “proof-of-concept green hydrogen initiatives”, and planned to leverage its existing Fischer-Tropsch assets and technology to support South Africa’s energy transition.
A report published by the Council for Scientific and Industrial Research a week ahead of Sasol’s results argued that South Africa’s Fischer-Tropsch plants could be repurposed to use green hydrogen to produce ‘powerfuels’, including carbon-neutral kerosene for export into Europe’s aviation sector.
Green hydrogen is produced by using renewable electricity to split water, using an electrolyser, into hydrogen and oxygen.
“We play a key role in South Africa’s energy landscape and we will leverage our position to lead the country’s hydrogen economy,” Grobler said.
He also told Engineering News & Mining Weekly that he anticipated that Sasol would begin implementing small-scale green-hydrogen production within the coming five years.
Sasol currently produces grey hydrogen from coal and any green hydrogen produced in future would be used incrementally in the existing Fischer-Tropsch assets to begin producing carbon-neutral jet fuel.
Grobler saw no funding constraint to such a demonstration project, indicating that there were many stakeholders willing to participate in such an initiative.
“Funding would be the least of the problems to think about, but we need to get a proof of concept,” he said, while stressing that the initial electrolyser plant would be small and that any green jet fuel would not initially be manufactured as a standalone product, but as a proportion of overall kerosene output.
$760M MOZ GAS INVESTMENT
In parallel, the group was also considering ways to accelerate a feedstock transition from coal to gas and, on February 19, its board approved a $760-million investment for the Mozambique Production Sharing Agreement licence area, in southern Mozambique.
“This will extend the plateau production from the existing licence areas and support continued gas supply to both Mozambican and South African markets,” he said, noting that the plan included domestic monetisation, in Mozambique, of gas through a 450 MW gas-fired power plant and a liquefied petroleum gas investment.
The current “high-case” reserve estimate reflected up to 1.2-trillion cubic feet (tcf) of gas and between 7- and 21-million barrels of oil reserves in the licence area.
“To put this in perspective 1 tcf of gas is able to power a 1 000 MW power plant for up to 20 years.”
Besides its own gas exploration and development activities, Sasol was also mulling liquified natural gas imports, as well as the prospects of sourcing gas from Rovuma, in northern Mozambique and even from the Brulpadda discovery offshore South Africa.