Natural Gas Generators for Peak Energy Shaving

Systematic load shedding is here to stay in 2023. In years past, it came and went; from time to time, in uncomfortable tranches of a few days before weeks of relief when the grid remained stable.  

Those days are long gone. Eskom themselves have warned South Africans that they can expect to endure planned power outages for the next two years at the very least. The traditional approach to continuing your business operations during an outage has been to turn to diesel standby generators. The current situation makes that an unsustainable endeavor for two reasons.   

Firstly, these generators are not prime rated, but are rather set up for a standby application. ‘Stand-by’ denotes a running time of 200 hours per year. As South African business owners are now painfully aware, load shedding currently totals more than 10 hours per day, meaning that less than a month will pass before your standby generator becomes a costly investment through maintenance and repairs.

Secondly, the price of diesel makes these engines painfully expensive to run. If we consider a 1 MW generator, an average fuel price of R23/litre will translate to a running cost of over R7/kWh, excluding the cost of maintaining that engine. That might have previously been manageable for two hours at a time, but at 10 hours per day (a reality during Stage 6), it will amount to R18.7 million per year in diesel spend.  

As if that wasn’t enough, 1 July 2023 also sees an average municipal electricity tariff increase of 18.69%. For many struggling commercial and industrial energy users who are on Time of Use (TOU) tariffs, that may be a bridge to far for the survival of their business. Consider that currently, some TOU users in Ekurhuleni are paying R8.44/kWh during their Winter Peak Energy Hours, and City Power users are paying almost R5/kWh, and it becomes clear that the 5 hours per weekday that this is enforced become as painful as load shedding itself.

The solution to the abovementioned challenges? Rooftop solar PV is great for savings, but it is reliant on weather conditions and thus, is intermittent. Battery storage is a fantastic substitute for diesel, but many BESS solutions are not equipped to run for multiple load shedding sessions. The answer then becomes a natural gas generator, which offers a continuous power supply at a reasonable Rand/kWh running cost.

When one thinks of gas generators, the default solution is a lean-burn engine which does well under a consistent load but struggles with significant step loads. This poses a challenge for industrial users who use heavy machinery that may dip or spike their demand. If they make use of extreme heating in their processes, they also cannot afford a slow load acceptance when load shedding kicks in. It would not only lead to a stoppage in all manufacturing, but it can also mean that their product, or machinery itself, is damaged by the delay.

Enter rich-burn natural gas generators. They are often more expensive and less efficient than their lean-burn cousins, but this is sacrificed in the name of efficiency. Consider that a lean-burn engine is typically capable of loading at 15% intervals. In contrast, a rich burn is capable of accepting up to 65% load in a single step, and 100% load in two steps.

Now that load shedding is resolved, let’s look at Peak Energy Shaving. Not only would we run these rich-burn units during power outages, but we would also run them during the three sunrise and two sunset hours when energy users pay these expensive Peak tariffs. The Rand/kWh running cost is cheaper than the Peak Energy tariff, so much so that these engines are effectively paying themselves off every time they are running.

As for what makes an attractive business case? The sweet spot was traditionally a high electricity tariff and a low gas price. Consider an Ekurhuleni TOU client who has a blended Peak Energy tariff of R3.95/kWh. If they have a Sasol pipeline gas connection, and are receiving gas from Sasol, they may be paying R120/GJ (gigajoule) for gas. A 1MW rich-burn gas generator would have a running cost of R1.51/kWh in year one, which is significantly cheaper than the client’s R3.95/kWh.

For City Power energy users in Johannesburg, their blended peak might be R2.80/kWh and they might be receiving gas from Egoli Gas at R180/GJ. This would mean a genset running cost of R2.21/kWh in year one. The gap between the two rates is smaller, but the gas generator is still outranking the City Power tariff, thus providing a saving.

A business case which was previously more difficult to make work was where a site does not have access to piped natural gas and would require Compressed Natural Gas (CNG) to be trucked to site. This additional logistical cost meant a more expensive gas price and inflated the gas generator’s running cost significantly. That was all before daily load shedding, however. In 2023, we can forecast what a 1MW diesel generator will cost to run, according to the load shedding schedule of site. In Johannesburg, Stage 4 would cost R12.2 million/year, stage 6 would cost R18.7 million and Stage 8 would cost R26 million. Our gas generator enables the site to offset this exorbitant diesel cost and in turn, the return on investment not only saves money, but it may also save the business itself.