South Africa's energy landscape is undergoing a significant shift with the announcement of a new gas procurement plan. Electricity Minister Kgosientsho Ramokgopa revealed that the country will allocate 5,000 megawatts to gas-to-power projects, as part of a broader effort to address the immediate need for storage flexibility and dispatchable supply. This move marks a departure from the previous focus on wind energy, with Ramokgopa citing the need for dependable fuel sources to provide reliable electricity.
The new plan, announced at Windaba 2025, prioritizes gas-to-power projects and battery energy storage systems, with a combined allocation of 9,600 megawatts. This determination aims to reduce the risk of further variable generation increasing electricity curtailment. Ramokgopa emphasized that a generating plant without dependable fuel cannot provide dependable electricity, highlighting the need for a coordinated fuel infrastructure and generation program.
The gas allocation plan aligns with Gwede Mantashe's 2024 Gas Master Plan, which specified 6,000MW of gas-fired power as part of the energy mix by around 2030. However, the new procurement determination accelerates the plans for large-scale gas-to-power projects to serve as an anchor load for midstream liquefied natural gas import infrastructure. This move is expected to provide the baseline offtake necessary to de-risk terminal investments.
The Industrial Gas Users Association South Africa's Gas Roadmap and Gas Master Plan 2024 emphasize that LNG import infrastructure cannot achieve financial close without massive, bankable anchor demand. The 5,000MW gas-to-power allocation directly matches this requirement, providing the necessary offtake agreements to support the development of LNG terminals. The plan also prioritizes near-term coastal LNG import nodes, without formally linking the procurement framework to mid-term indigenous gas field development or offshore pipeline aggregation.
South Africa faces a looming gas cliff, with Sasol's natural gas supply from Mozambique expected to decline sharply or cease by 2026-2028. The 5,000MW gas-to-power determination aims to bridge this shortfall, with major new gas-to-power plants and LNG terminals expected to reach commercial operation in 2029-2030. Interim emergency LNG arrangements via Mozambique/Matola will be necessary to address the immediate needs.
A cost-benefit analysis reveals that replacing diesel with natural gas can cut fuel costs by approximately 50%. Eskom's diesel open-cycle gas turbines burned up to 3.3 billion liters of diesel annually during severe load shedding periods, with a cost of R5,935/MWh. In contrast, combined-cycle natural gas generation operates at a fraction of this variable cost, with imported LNG delivered inland/coastal costing R105-R140/GJ.
The Zululand Energy Terminal at Richards Bay, a joint venture between Vopak Terminal Durban, Reatile Group, and Transnet Pipelines, has signed a 25-year terminal operator agreement with Transnet National Ports Authority. The terminal will serve as a foundation customer for Eskom's planned 3,000MW gas-to-power project in the Richards Bay Industrial Development Zone. This development is expected to support the growth of gas-to-power projects in the region.
Key points
- The 5,000MW gas-to-power allocation aims to address the immediate need for storage flexibility and dispatchable supply in South Africa's energy sector.
- The plan aligns with Gwede Mantashe's 2024 Gas Master Plan, which specified 6,000MW of gas-fired power as part of the energy mix by around 2030.
- The gas allocation plan is expected to provide the baseline offtake necessary to de-risk terminal investments and support the development of LNG terminals.
