Chemicals and energy group Sasol has signed three power purchase agreements (PPA) to supply renewable energy to its SA operation, as it looks to move away from the troubled state-owned power utility Eskom and record-high levels of load-shedding.
The company signed a long-term agreement with Msenge Emoyeni Wind Farm to supply 69MW of wind power to its operations in Sasolburg, with supply expected to start in 2024.
“This is key in achieving the first production of green hydrogen generated from renewable energy sources at Sasolburg and progressing our ambition to lead the development of a green hydrogen economy in Southern Africa,” Sasol said on Tuesday in a half-year production and sales update to end-December.
Besides reducing its reliance on Eskom, the company aims to cut its greenhouse gas emissions by 30% by 2030 of its 2017 baseline figure, and plans to procure 1,200MW of renewable energy by 2030.
Sasol and industrial gas and services provider Air Liquide also signed two PPAs with Enel Green Power, a subsidiary of the Italian Enel Group, for 220MW of wind power for Sasol’s operations in Secunda; it is expected to be operational in 2025.
Enel Green Power will generate the power at two of its wind projects in the Eastern Cape. Air Liquide has been operating an oxygen production site in Secunda since June 2021 after buying 16 oxygen productions from Sasol. The companies first started collaborating in finding alternative power sources in April 2021.
The three PPAs are still subject to regulatory and financial approval.
In terms of financials, external sales revenue declined 2% year on year because of lower volumes, and sales volumes dropped by 5%, because of lower volumes in Eurasia being offset by higher volumes in the US. The average basket price rose 3% year on year.
Operational challenges hit Sasol’s SA operations, particularly in the mining business, but its coal stockpile remains above its minimum of 1.5-million tonnes.
This led to Sasol downgrading its mining guidance from between 950 tonnes and 1,050 tonnes per continuous miner per shift to between 900 tonnes and 1,000 tonnes in line with its current performance levels.
Volatility in pricing and demand is also expected for the rest of the current financial year amid the uncertain global macroeconomic environment, including high inflation and the war in Ukraine, as well as the possible disruption from power cuts by Eskom and problems at Transnet and SA’s freight rail infrastructure.
“Uncertainty around these factors impacts our ability to provide accurate volume forecasts at this time,” Sasol said.
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