Karpowership, a unit of the Turkish Karadeniz Energy Group, is on track for its longest contract to date to supply power from vessels to South Africa in a deal worth as much as R218 billion ($15 billion).
The company that advertises a “fast, flexible, reliable” solution of floating electricity generation was named last week as a preferred bidder for three projects fueled by liquefied natural gas to provide 1,220 megawatts of electricity.
The program is aimed at closing a supply gap in South Africa that’s resulting in periodic blackouts.
The 20-year deal will cost as much as R10.9 billion annually, according to a presentation by the Council for Scientific and Industrial Research, a state institution.
The estimate is based on the Department of Mineral Resources and Energy’s evaluation price of the bids. It didn’t immediately reply to requests for comment.
The award adds a significant amount of generation capacity from fossil fuels for two more decades as South Africa plans a move away from coal that dominates its current power supply and has made it the world’s 12th biggest source of greenhouse gases.
Other, smaller, projects chosen use a mix of solar and wind with batteries and LNG.
“Power ships have proven effective at providing fast-response, emergency electricity — hence the maximum 10-year tenor for past contracts,” said Antoine Vagneur-Jones, an analyst at BNEF’s energy transition policy team for Europe, Middle East and Africa.
“That the South African government would procure one for 20 years speaks to the depths of the country’s power crisis, and questionable long-term planning in light of dropping renewables costs.”