Winter load shedding is going to be worse than you expect, analyst warns
Intellidex analyst Peter Attard Montalto says that load shedding in the coming winter months is going to worse than many people are expecting – but hopefully, things will only improve from there.
Commenting on a week of backlash towards electricity minister Kgosientsho Ramokgopa’s recent comments on pumping billions of rands back into coal, the analyst said that South Africa has a clear way out of the load shedding crisis, if only the “madness” could be set aside.
In the context of the power crisis, Attard Montalto said that the madness in question is trying to set aside established energy plans and promote spending money the country doesn’t have on assets the National Treasury doesn’t fund.
In a media briefing following a tour of Eskom’s coal fleet this past month, Ramokgopa floated an ‘option’ he would present to cabinet, promoting investment into the refurbishment of coal power stations, while boosting investing into private coal mines to ensure better coal quality for these stations.
While this was not presented as an official proposal, Ramokgopa questioned South Africa’s haste in decommissioning its coal power stations and trying to replace them with renewables that could not match the generation taken offline watt for watt.
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However, this has been met with confusion and backlash from energy stakeholders and has been described as incoherent, given the established policy direction in the Integrated Resource Plan of 2019.
According to Attard Montalto, questioning established plans is not a bad thing, but counterproposals need to be supported by data.
More importantly, they need to make sense.
“What really shocked… was the clear lack of understanding of how the budget process works or how investment in a tied private sector mine might work over what period. The plans are completely incoherent,” he said.
“There is no way the National Treasury would fund upgrading of private sector mines. The finance minister has confirmed that, leaving egg on (Ramokgopa’s) face.”
The analyst noted that Eskom has already done the calculations for what Ramokgopa suggested: it will cost R400 billion to extend some of the fleet for a further five years. This is money that no one has, and there is no room to raise these funds.
Making the suggestion even more nonsensical is that it would take – at best – five years to execute this plan. This is time the country does not have.
“You would still need to procure the fastest and cheapest electricity in those five years anyway: renewables, battery, a little bit of gas, rooftop solar and so on. The minister’s job is to end load-shedding, yet his plan would fail to do that even if the money was available from the magic money tree,” Attard Montalto said.
The analyst said that the country needs a sensible plan through the IRP and political will to get this plan done with haste – not sinking into “madness”.
However, even with the best plan and best execution, it’s too late for the coming winter. The hope lies in the years beyond.
“If things go to plan, then this winter should be the worst point of the load-shedding crisis, albeit a particularly bad one and worse than people generally expect,” he said.
“The end of load-shedding, supported if there is a credible and sensible IRP, may well take a few years longer. We will get there quicker — taking investment sentiment along with us, if we can keep the madnesses at bay.”
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