Sweet source

Turn­ing sugar into elec­tric­ity

Finweek English Edition - - Companies & markets - GUGU­LAKHE MASANGO

SUGAR GROUP Ton­gaat-Hulett is on a drive to sweet talk sugar com­pa­nies into di­ver­si­fy­ing their rev­enue streams by sell­ing their sur­plus elec­tric­ity to Eskom. Cur­rently, Ton­gaat-Hulett’s two sugar mills sell sur­plus elec­tric­ity to an uniden­ti­fied “green” elec­tric­ity trader for re­sale as cer­ti­fied re­new­able elec­tric­ity to con­sumers.

Ton­gaat-Hulett is be­lieved to be in talks with the De­part­ment of Min­er­als & En­ergy (DME) and Eskom to fa­cil­i­tate the sugar in­dus­try’s mar­ket for large-scale co­gen­er­a­tion of re­new­able elec­tric­ity. How­ever, Ton­gaatHulett de­clines to give de­tails. But Fin­week un­der­stands that talks be­tween the DME and the group are at an ad­vanced and sen­si­tive stage.

Should a mar­ket for re­new­able elec­tric­ity be es­tab­lished, sugar com­pa­nies stand to gen­er­ate a lot of cash. On the other hand, Eskom will ap­pre­ci­ate any ini­tia­tive to sup­ply elec­tric­ity to the na­tional grid be­cause it op­er­ates un­der “tight con­di­tions”.

How­ever, the growth of a re­new­able en­ergy sec­tor – such as elec­tric­ity gen­er­ated from ex­cess sugar bagasse – is likely to be re­stricted by the low price of coal-gen­er­ated elec­tric­ity.

Ton­gaat-Hulett’s mills at Felix­ton and Maid­stone pro­duce ex­cess bagasse, which is a waste prod­uct from cane sugar pro­duc­tion used to pro­duce sur­plus elec­tric­ity. Sugar mills burn bagasse to fire mill boil­ers to gen­er­ate steam and elec­tric­ity. Thus bagasse is a biore­new­able en­ergy source for sugar fac­tory boil­ers. Any ex­cess elec­tric­ity gen­er­ated in a fac­tory could be sold into the na­tional grid.

Reliance on bagasse as a fuel source cuts coal us­age at sugar fac­to­ries. Illovo Sugar, Africa’s largest sugar cane pro­ducer, also uses bagasse as boiler fuel. “This unique process also re­sults in the group hav­ing min­i­mal reliance on fos­sil fu­els, such as coal, for its en­ergy re­quire­ments,” says the group. Coal us­age within the Illovo group con­sists of less than 10% of to­tal en­ergy used.

Iron­i­cally, sugar com­pa­nies are not big cus­tomers of Eskom but are in­ter­ested in sup­ply­ing their ex­cess elec­tric­ity to SA’s power util­ity. But a move to large-scale co­gen­er­a­tion of re­new­able elec­tric­ity by sugar com­pa­nies re­quires sig­nif­i­cant cap­i­tal in­vest­ment. Ton­gaat-Hulett seems to be ready to fi­nance such a project.

With any luck, elec­tric­ity gen­er­ated from sugar could be very lu­cra­tive for sugar com­pa­nies while as­sist­ing Eskom to cope with the in­creas­ingly high de­mand for elec­tric­ity in SA.

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