Gas is set to play a pivotal role in South Africa’s energy transition, according to Prashaen Reddy, a partner at Kearney, who shared his insights following the release of a draft Gas Master Plan in late April. The draft plan, which invites public commentary, outlines a strategic framework for the integration of gas into the country’s energy mix.
Reddy emphasizes the significance of recent gas discoveries in Southern Africa, particularly in Mozambique, South Africa, and Namibia. These discoveries present an opportunity to leverage indigenous resources for industrialization, social development, and economic growth. Currently, the gas sector employs over 70,000 individuals and contributes between R300 billion and R500 billion annually to South Africa’s GDP through local gas supplies.
“To sustain and expand the industrial base, few alternatives are as economically viable as gas for energy-intensive industries. Without a viable gas solution, industrialization may further decline,” warns Reddy. He underscores the importance of gas-to-power projects in stabilizing the power sector as South Africa seeks to diversify its energy mix away from a coal-dominated system, as outlined in the draft Integrated Resource Plan 2023.
Reddy further elaborates that natural gas plays a critical role in balancing energy security with sustainability on a global scale. He states that natural gas is essential for supporting a cleaner energy mix and maintaining energy security until renewable or nuclear capacities, or other baseload technologies, are developed and deployed. “Natural gas is the cleanest fossil fuel and is suitable for peak generation shaving and baseload provision. It also complements variable renewable energy sources due to its operational flexibility and lower capital costs,” he explains.
However, Reddy acknowledges the environmental concerns associated with natural gas, noting that it still emits greenhouse gases (GHGs). He stresses the necessity of mitigating these emissions through carbon capture, utilization, and storage (CCUS) technologies. Additionally, the lack of adequate gas infrastructure poses a significant challenge, necessitating substantial international and regional financial investments.
Despite these hurdles, Reddy is optimistic about the commercial viability and market demand for hydrocarbon projects, which he believes will deter financiers from withdrawing funding in the medium term. “The global energy transition cannot abruptly eliminate hydrocarbons, which still constitute over 80% of the world’s energy mix. Gas will play a crucial role as a transitional hydrocarbon, providing energy security and reducing environmental impact until renewable and nuclear capacities are established,” he concludes.
The draft Gas Master Plan’s call for public input marks a critical step in shaping South Africa’s energy future, with natural gas poised to be a cornerstone of the transition strategy amidst the global shift towards sustainable energy sources.
