More load shedding pain around the corner
Although winter load shedding has been less severe than expected, a recent escalation to stage 6 shows that South Africa is not out of the woods of its energy crisis, spelling bad news for the economy
Earlier this year, Eskom and electricity minister Kgosientsho Ramokgopa warned that winter would see heightened load shedding.
“I’ll be brutally honest. It’s going to be an exceptionally difficult winter. We know that in summer conditions, the deficit is 6,000 megawatts. When we go into winter, the peak can go up to 37,000 megawatts,” Ramokgopa said.
However, load shedding actually reduced going into the winter period, with most of June seeing stage 3 as the highest stage of load shedding.
This was due to multiple reasons, including a reduction in planned maintenance, a decline in unplanned outages, and, crucially, lower-than-expected demand.
Last week, South Africa was hit with a particularly biting cold front, resulting in a significant increase in demand.
For instance, demand on Saturday, 8 July, was 27,725 MW, but by Monday, 10 July, when the cold front hit, demand reached 33,370 MW. This, coupled with an increase in breakdowns, pushed Eskom to stage 6.
Although load shedding has since lessened to a rotation between stage 2 and 4, the Bureau for Economic Research (BER) said that higher levels of load shedding could hurt the economy as the country moves into Q3.
Although the economists said they remain constructive on Q2 2023 real GDP dynamics – with manufacturing and mining production higher in Q2 than Q1 – elevated levels of load shedding might halt Q3 growth momentum.
“Therefore, the weakness we initially expected for Q2 may simply be postponed to the third quarter,” the BER said.
Should get better
That being said, the BER previously said that there may be some positive news for load shedding in the near future.
The BER said that an update from Operation Vulindlela – a joint operation between the Presidency and National Treasury that wants to introduce reforms in the energy space – has led to optimism.
Importantly, Operation Vulindlela’s Embedded Generation Task Team has tracked an increase in private sector generation projects from approximately 4,000 MW in March 2022 to a combined capacity of 10,000 MW.
3,000 MW of this is expected to come online next year, which should help reduce load shedding by three stages.
The BER also noted that Eskom should return several major generation units from long-term outages by the end of this year or the start of 2024.
This, ultimately, means that South Africa’s energy crisis should lessen in intensity in 2024.
“Therefore, we are cautious not to extrapolate the current very poor domestic business conditions into 2024. Although slow going, there seems to be more progress being made behind the scenes to alleviate the debilitating power constraint than is generally appreciated,” the BER said.
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