Tlou Energy has been named as the preferred bidder for the development of a 100 MW coal bed methane fired power plants in Botswana. Recently, Energy ministry was given the go ahead by the country’s Public Procurement and Asset Disposal Board to open discussions with two bidders for the project. The company said it will now work with the government to finalise all the project agreements.
“Tlou Energy Limited can confirm that the company has now received written confirmation from the government of Botswana that it has been chosen as a preferred bidder for the development of a maximum of 100 MW of Coal Bed Methane Fuelled Power Plants in Botswana,” it said in a market update.
In October 2018 the Tlou submitted its comprehensive response to the Request for proposal (RFP) for the Development of a Maximum of 100 MW of Coal Bed Methane Fuelled Power Plants in Botswana.
The company’s submission outlined a staged development commencing with up to 10MW of generation as well as outlining project feasibility, proposed field development, installation of power generation facilities and supply of power into the grid in Botswana.
Tlou’s Managing Director, Tony Gilby said the approval of their tender represents great progress for the company.
“The proposal that we submitted was very competitive and we welcome this decision by the Government. We look forward to working together to deliver a successful power project. The effort put in by our team over recent years has been phenomenal and this result makes it all worthwhile,” said Gilby.
“The company will now progress with additional work on the ground to deliver a Gas-to-Power solution that can bring significant benefits to the country and to our shareholders. I look forward to updating the market as we continue to develop the project.”
Tlou noted that The RFP was assessed across three different criteria, Compliance, Technical and Financial. Of the competing bidders, Tlou’s proposal received the highest pass mark for the compliance and technical stage. The financial stage required the calculation of a Levelised Cost of Energy (LCOE) for the project, with Tlou’s proposal having the most competitive LCOE. This was possible due to Tlou’s ability to operate efficiently using very experienced personnel coupled with the geological knowledge gained over many years of operating in Botswana. Upon successful completion of the initial project, the Company would look to expand further.
An initial staged 10MW development was selected to facilitate the success of the downstream project by requiring relatively minimal up-front capex. This reduces risk and therefore limits the downside for Tlou, its shareholders and the government.
Tlou used the electricity guide price provided by the government in the Company’s tender of approximately USD $0.12 per kWh. At this price a 10MW project could generate gross revenue of approximately USD $10 million per annum.
Tlou considers the first 10MW as a pilot power generation project. Revenues from this project could facilitate rapid future expansion, which could be enormous based on the Contingent Gas Resources already in place at Tlou’s project acreage.
The transmission line component of the downstream power generation project represents the bulk of the capex required and will be designed to transmit upwards of 20MW of electricity into the grid.