2020 Was a Good Year for Gas-to-Power in Africa
The oil & gas industry has just turned the page on one of its toughest years in history. The Covid-19 pandemic that obliterated demand for key commodities and imposed lockdowns on most of the world put all upstream investment and exploration activity to a halt. But not all the value chain suffered equally. As the continent continues to secure energy for hundreds of millions living without electricity, gas-to-power made once again strong advancements in 2020, paving the way for even bigger developments in 2021.
West Africa is Confirming its Leadership Position
Driven by major markets such as Nigeria, Côte d'Ivoire and Ghana, gas-to-power will continue to thrive across West Africa. The sub-region already includes sub-Saharan Africa's three biggest gas-to-power markets and is seeing increasing appetite to secure electricity through gas, including in smaller economies such as Togo and Benin.
Côte d'Ivoire, the sub-continent's second biggest market by electricity production from gas, is the country that made the biggest progress last year. It is currently adding 643 MW via the 253 MW Azito 4 expansion project that broke ground in March 2020, and the 390 MW Atinkou (Ciprel V) project whose financial close was reached the same month. Once commissioned, these projects will bring Côte d'Ivoire's installed gas-to-power capacity very close to the 2 GW threshold. Further down the line, they are notably expected to be followed by the 372 MW Songon gas-to-power plant, whose concession agreement was approved by the government in September 2020.
Its eastern brothers Togo and Benin are making strong progress too, albeit often overlooked. The construction of Eranove's 65 MW Kékéli Efficient Power plant continued throughout 2020, with the SGT-800 gas turbine delivered in September in Lomé. Meanwhile, Benin reaffirmed its owned ambitions by announcing at the start of the year an expansion of its MariaGléta complex, where a 127 MW plant was already inaugurated in 2019. The call for bids for an additional dual-fuel 143 MW plant were issued in October 2020 and will ultimately result in 300 MW of installed capacity on site, which should be supplied by an LNG import terminal in the future.
Nigeria is Pouring New Foundations
While Nigeria did not break ground on any project nor achieved financial close on any major new venture, several bases were laid for a strong gas-to-power growth in this decade. Nigeria is especially addressing two major challenges that continue to affect its power industry: weak transmission and distribution networks, and lack of reliable midstream gas infrastructure.
To cope with the former, the country launched the Presidential Power Initiative in partnership with Siemens. Structured in three phases, the project will focus first on increasing the Nigerian system's operational capacity from 5 GW to 7 GW before ramping up to 11 GW and ultimately 25 GW. Major greenfield combined cycle gas-to-power projects have been identified as part of the initiative, including two plants of 1,350 MW each in Kaduna and Kano, and putting the plans for the 450 MW Agura facility back on the table.
In order to secure the gas required to run its existing and future power plants, Nigeria also officially broke ground on the 614 km Ajaokuta-Kaduna-Kano (AKK) gas pipeline in June 2020. Dating back from the country's Gas Master Plan of 2008, the pipeline will be bringing gas from Nigeria's south to its northern states and is expected to support a power generation capacity addition of 3,600 MW. Several projects are already being planned along its route, including a 1,350 MW gas-to-power plant in Abuja. The project notably received a grant from the U.S. Trade and Development Agency(USTDA) in February 2020 to support its required technical, economic and financial analyses.
As it heads into 2021, Nigeria has put all the right elements in place and there are reasons to be optimistic on the future of its gas-to-power industry.
Southern Africa is the New Emerging Gas-to-Power Hub
Driven by Mozambique and South Africa, the gas-to-power industry in Southern Africa is the one expected to see the biggest jump in investment and capacity generation. One of the continent's biggest gas-to-power facility is taking shape in Mozambique with Globeleq' Central Térmica de Temane (CTT), a 420 MW plant that will run on domestic gas from the Temane Production Sharing Agreement. It will be the largest facility under-construction in sub-Saharan Africa. More importantly, it is part of a $2bn integrated gas and power project that includes further gas production from Temane and the development of the 563 km Temane Transmission Project, considered Phase 1 of an even larger planned interconnection between Maputo in the south and the Tete Province in the north. While Mozambique is no stranger to gas and has already developed a few gas-to-power plants using royalty gas from its export pipeline to South Africa, CTT will be by far its biggest such project yet.
After talking about adopting gas within its energy mix for years, South Africa is getting serious about burning cleaner fuel at its existing thermal facilities. The country had already commissioned several power plants expected to run on gas but currently running on diesel: Ankerling (1,327 MW), Gourikwa (740 MW), Avon (670 MW), and Dedisa (335 MW). In its updated Integrated Resources Plan (IRP) of 2019, South Africa reiterated a long-standing commitment to natural gas, by reaffirming its ambition to convert the four stations to LNG or natural gas, and commission an additional 3,000 MW of greenfield gas-to-power capacity by 2030. Several such projects are already well advanced, including the conversion of the Ankerling and Gourikwa stations and plans to develop at least one LNG import and regasification terminal. These do not take into account the significant discoveries of gas made by Total in 2019 and 2020, which should be monetised locally.
New Markets are Paving the Way for Gas in their Energy Mix
Conversions will also be the way through which Senegal will become one strong African gas-to-power market within the decade. The country has a clear vision to use its newlydiscovered domestic gas reserves to convert most of its existing thermal power plants and support greenfield gas-to-power generation capacity in the future. In order to do so, Senegal is embarking on the development of a 135 to 155km gas grid able to transport 284 MMscfd and initially support over 420 MW of power generation capacity, including state-utility Senelec's 98.7 MW Bel Air (C6) and 30 MW Cap des Biches (C4) power plants, ContourGlobal's 87.5 MW Cap des Biches power plant, Azura Power's 115 MW Tobene power plant and the under-construction 120 MW Malicounda power plant.
In a second phase, four additional gas-to-power facilities are planned by 2030: a new 150 MW plant at Cap des Biches, the expansion and conversion of the Sendou power station to 300 MW, a new 300 MW power station in Kayar and a new 250 MW power station in Mboro.
2020 laid the bases for such ambitions to materialize in Senegal, with the adoption of the country's first Gas Code in February, followed by a $1.28m grant received from the U.S. Trade and Development Agency (USTDA) to further advance studies pertaining to the gas pipeline network connecting the Yakaar-Teranga offshore gas fields to its power stations.
While Senegal's northern neighbor, Mauritania, could also join the club by converting its existing 180 MW Nouakchott Nord station, its in the Democratic Republic of Congo (DRC) that positive news could come from. In August 2020, President Félix Antoine Tshisekedi requested his Minister of Hydrocarbons, Hydraulic Resources and Power and his Minister of Finance to fast-track legal processes and permits pertaining to the valorization of the natural gas produced onshore by Perenco. The move is expected to result in the monetization of natural gas through power generation, especially to address the DRC's energy deficit and provide stable supply of power to its booming mining industry.
On its eastern border, the country is also moving forward with a project to extract methane from Lake Kivu to produce power, and to be executed by Tunisian contractor Engineering Procurement & Project Management (EPPM). In doing so, the DRC intends to replicate the successes of ContourGlobal in Rwanda, where a 26 MW floating plant on Lake Kivu has already been extracting gas for power generation since 2016.
Such developments are not even taking into account the growing importance played by captive and small-scale gas-to-power initiatives that are increasingly securing energy for industries and proved especially reliable to power emergency hospitals or isolation centers during the Covid-19 pandemic. As the industry diversifies and grows, new regional and local actors are also expecting to drive innovations and investments moving forward. While the relevance of traditional actors such as Eranove, Globeleq or Endeavor Energy will not fade away, these will now be sharing the stage with strong and ambitious newcomers, for the benefits of African consumers.