Eskom, Sasol strike deal to ensure long-term energy supply

Eskom and Sasol have signed a memorandum of understanding (MOU) to collaborate towards achieving energy sovereignty in South Africa.

The two entities will collaborate in exploring and researching potential future Liquified Natural Gas (LNG) requirements for long-term certainty of energy supply.

The signing ceremony took place at Eskom’s Megawatt Park headquarters in Sunninghill.

Electricity Minister Dr Kgosientsho Ramokgopa says the signing of the MOU is important in addressing the country’s cost of electricity, its economy as well as the demand for gas.

Ramokgopa says the focus on gas will help cushion low-income households as well as middle and high-income earners. The focus will be on diversifying energy resources.

The Minister says the high price increases in electricity are untenable. He says it is important that the ball is not dropped in the pursuit of a just energy transition.

“We think that the government to level we can negotiate better, but also if you’ve got you are able to aggregate demand that will have the volumes will have an impact on the cost of the molecule and that’s why it is important that the Sasol and Eskom enter into this mou because with our intention to repurpose the fleet of Eskom, that means that we can scale up demand over the passage of time.”

VIDEO | Energy Sector | Eskom, Sasol sign agreement:

Gas users

Eskom CEO Dan Marokane says the purpose of the memorandum of understanding will enable the country to find a solution for gas users, who require longer-term certainty of supply beyond this decade.

“The step that we are taking is really located within the three areas of focus that we have always spoken about as far as resolving the energy dilemma energy security is an important aspect. What we’re doing today adds to what moves towards that aspect. It does bring in some element of contribution towards sustainability components. The gas focus within the source portfolio is less. And also the issue of us beginning to work together in a manner that we are together with all the other gas users brings about the economies of scale that will ensure a better affordability position for the gas sourcing through this.”

Clean energy solutions

Meanwhile, Sasol CEO Simon Baloyi believes gas will play an important role in South Africa’s transition from fossil fuels to clean energy solutions.

“However, that transition needs to be at. The right pace is to make sure that we balance our nation’s needs for development, energy, security, and long-term sustainability because we don’t want to go backward as a nation. We need to go forward. And gas is going to play an important part in a just transition to a lower carbon future. And so this is the next logical step that we’re taking now. So as we move forward, we’re evolving the role of gas as we’re evolving our role as a gas aggregator to support the downstream gas industry, which will also include gas. Power.”

The country’s two major energy companies working together will help to accelerate the climate change transition in a responsible way, which sets the country up for the best economic, environmental, and social outcomes.

Eskom says it is focused on a balanced and diversified energy mix by introducing gas for baseload power amongst others.