26 February 2008
South African agri-processing company Tongaat Hulett is in negotiations to supply state company Eskom with electricity generated at its plants, in answer to the government’s call for co-generation projects by industrial players.
According to a statement released by the company in late January, Tongaat Hulett has the ability to co-generate electricity at its sugar and starch operations, supplying the national grid with up to nine megawatts of electricity during the crushing season.
“The company’s sugar and starch operations have pre-qualified to participate in Eskom’s co-generation pilot programme,” Tongaat Hulett CEO Peter Staude said in the statement.
“The potential electricity that we would be able to generate, assuming co-generation projects at four South African sugar mills and two starch plants, was initially indicated as 209 megawatts and, if all the biomass of cane and the emerging technologies were used, it could increase to approximately 600 megawatts.”
He added that, as the programme was currently in the bidding phase, no further specific information was being made public with this regard.
Engineering News quoted Staude this week as saying he would be “surprised” if a co-generation deal between his company and Eskom was not struck this year, with the only remaining obstacle being the power purchase price agreement, which would determine the extent of his company’s investment in co-generation.
The publication reports that the company had put electricity back into the national grid in 2007 at a price of 12 cents per kilowatt-hour, which Staude said provided “very little incentive” for co-generation, adding that he would prefer a buy-back price in the region of 60 cents per kilowatt-hour.
Powered by sugar
As the size and growth in demand for electricity in South Africa and the supply dynamic have become clearer, the importance of the potential generation of power by the sugar industry is increasing.
“In a scenario of a number of the right investments and the latest technology, the South African sugar industry could supply in excess of 2% of South Africa’s power needs,” Staude said in the company statement.
“The timely finalisation of an agreement to produce co-generated power will enhance the viability and competitiveness of the South African sugar industry, including the growers when compared to countries such as Australia and Brazil who already have sugar energy regimes in place.”