South Africa still 3 years away from seeing any load shedding reprieve: economists

 ·27 Jun 2022

As South Africa faces a week of extended stage 4 load shedding, there is some good news on the electricity generation front, as Eskom has announced several winning bids for independent power producers (IPPs), say economists at the Bureau of Economic Research (BER).

“Fortunately, over the medium term, it is not all doom and gloom on the electricity generation front,” the BER in a research note on Monday (27 June).

“Eskom has identified 18 winning bids from an auction in April to offer independent power producers (IPPs) access to vacant land in Mpumalanga with direct access to the national grid. These projects, which on completion will add 1,800MW to South Africa’s power generation capacity, will be financed by the IPPs. In addition, they will sign direct offtake agreements with private sector companies.”

The BER noted that this is a positive step and adds to the sense that, after multiple delays, we could start to see a bunching of green energy investments in South Africa. Hopefully, this could start in earnest from the second half of 2023, the group said.

“Besides construction activity relating to these projects supporting private fixed investment, it also bodes well for a lifting of the electricity supply constraint, albeit with a lag. Realistically, the energy constraint may only start to ease from late 2024/25.”

While Eskom’s latest bids have been welcomed, it’s cold comfort for millions of South Africans who face extended stage 4 load shedding this week.

Besides increased electricity demand amid a cold spell across the country and unplanned generation unit outages, Eskom’s problems were compounded by unprotected labour action after wage talks with unions reached a deadlock.

Unlawful industrial action at various power stations has impacted planned maintenance and repairs, and at some stations, the full complement of workers has not reported for duty, the power utility said on Sunday (26 June).

“Eskom regrets to inform the public that stage 4 load shedding is anticipated to continue from 05h00 on Monday morning until midnight at least until Wednesday.

“This is due to unlawful and unprotected labour action at a number of power stations, which has caused delays in carrying out planned maintenance and repairs. Furthermore, at a number of power stations, the full staff complement has not reported for duty,” the power utility said.

“As a result, unplanned generation losses have not been reduced as planned, which has compelled Eskom to continue taking precautionary measures to conserve generation capacity and safeguard plant from damage. There is a possibility that the stage of load shedding may have to change at short notice, depending on the state of the plant and the availability of labour.”

Approximately 4,000MW of generation capacity is at risk due to the illegal strike action. It is, therefore, necessary to replenish emergency generation reserves to be able to react to unforeseen circumstances, Eskom said. 

“Adequate emergency reserves are crucial to assist with the generation deficit while dealing with generating units that may trip owing to unlawful action, and to compensate for the inability to return generating units timeously to service.”

Read: Load shedding has led to a spike in insurance claims for this one item

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