South Africa’s record electricity cuts last year could rise 10-fold by 2026 unless the country rapidly adds generation capacity from renewable energy sources, complemented by battery storage and even diesel-powered plants, a study by Meridian Economics has found.
The bulk of the country’s energy is generated by state-owned Eskom Holdings SOC Ltd, whose poorly maintained coal-burning plants have become increasingly unreliable, while government programs to secure more power from private producers have been dogged by delays.
Last year, 2,521 gigawatt hours of power was taken off line, Council for Scientific and Industrial Research data show.
While some steps have been taken to bolster output, such as exempting plants that generate as much as 100 megawatts of electricity from requiring a license, much more needs to be done to stabilize the system, Meridian analysts wrote in a report published Monday.
They estimate more than 15,000 megawatts of additional solar energy is needed, as well as almost 7,000 megawatts from wind farms.
“In the absence of further urgent and drastic interventions, load shedding is likely to increase substantially in the coming years,” the analysts said, referring to the local term for rolling blackouts implemented to prevent the grid from collapsing. The addition of about 1,400 megawatts of thermal capacity, which typically sees diesel fuel being burnt during periods of peak demand, could provide backup power as more clean energy generation is added to the grid, they said.
The government awarded contracts to provide 2,000 megawatts of so-called emergency electricity more than a year ago and while power-purchase agreements were signed with one bidder this month, most of the projects have been delayed by legal and procedural issues.
A number of other companies that recently secured tenders to supply renewable energy to the grid under another program may have difficulty concluding their financial arrangements due to rising supply-chain costs and other challenges, according to people familiar with the details.
The construction of more than 4,000 megawatts of private generation capacity secured by the government faces a “high probability” of failing without further intervention, Cape Town-based Meridian found.
It warned that local content obligations for plants threatened their financial viability and recommended that the requirements be eliminated or drastically reduced. It also called for power procurement to be expanded, contract prices to be increased and additional incentives to be made available.
A failure to take urgent action could see power cuts rise four-fold next year from 2021 levels and the situation will become increasingly dire from 2025 when a number of Eskom’s coal stations are set to be decommissioned, Meridian said.