Stage 7 load shedding is coming: analyst

 ·12 Jan 2023

South Africans should expect load shedding to get worse in 2023, says Intellidex analysts Peter Attard Montalto, who forecasts stage 7 load shedding – or higher – by the middle of the year.

Speaking to The Money Show on 702, Attard Montalto said that load shedding remains one of the biggest risks for South Africa in the year ahead, even more so than a looming global recession and political noise around key policy issues.

“We forecast stage 7 load shedding in July, on average – the peak may be higher – with stage 6 (average) in February,” he said.

Eskom was forced to implement stage 6 load shedding this week following a high number of breakdowns at its stations. While the country was initially expected only suffer through stage 6 in the evenings – with stage 4 during the day – further breakdowns necessitated a move to all-day stage 6 load shedding.

Stage 6 load shedding is the highest level of outages introduced in South Africa so far – however, economists have argued that blackouts have been higher when factoring in load curtailment on heavy industrial users.

There were serious concerns over an official move to stage 7 in December 2022, when Eskom took unit 1 of the Koeberg Nuclear Power Station offline. The station is the most reliable in Eskom’s fleet, and each of its two units produces close to 1,000MW of power.

Unit 1 will be offline until June 2023, at the very least, with Unit 2 expected to go offline in October. Even if things go according to plan, South Africa will be short 1,000MW throughout much of the year. This is exacerbated by around 3,000MW being offline until 2024 due to critical failures at the Medupi and Kusile power stations.

Having 4,000MW offline is bad enough, but Eskom also faces issues with diesel – having spent more than double its budget in 2022 – and vital infrastructure around the country is being severely damaged by the outages or stolen by criminals while the power is off, leading to even more blackouts.

The move to stage 6 this week prompted the country’s largest cities – including Johannesburg, Cape Town and Tshwane – to issue alerts to residents, warning of damage to infrastructure and elevated levels of criminality due to the high levels of outages.

But despite the many ills and inconveniences attached to high levels of load shedding, Attard Montalto said that the economic impact on South Africa is lower than expected.

“The economic impact is less than what we would have said a year ago because there’s been so much adaptation,” he said.

“There has probably been about 1.2 gigawatts (1,200MW) of unregistered rooftop solar in South Africa in the last year, a large number of batteries, a huge amount of diesel and backup generation and batteries put in for business in the last year.

“So the economy is remarkably resilient – the problem is it’s not going anywhere particularly exciting. It’s sort of clinging on by its fingernails instead of getting anywhere positive in this environment,” he said.

Speaking on South Africa’s position in the context of the global economy, Attard Montalto said that a global recession is coming. The technical definition of the recession is not important, he said – because the world will certainly have the feel of one.

For South Africa, this won’t mean too much and will likely weather the recession “pretty well”, he said. Because of local issues with Transnet and ports and infrastructure, South Africa doesn’t take part in the global market commodity cycles – but it will benefit from a general boost in commodities.

Local political noise around things like the South African Reserve Bank’s mandate will also not have a major impact, he said, as the section 25 issue around land expropriation showed that it is not easy to change the country’s Constitution.

“This is not a short or medium-term issue,” the analyst said, adding that load shedding is a bigger worry and gauging its impact on South Africa will be the challenge this year.

Read: Cape Town and Joburg on high alert as all-day stage 6 load shedding hits

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