Despite the downbeat economic environment, South Africans can be hopeful as there are indications that load shedding will start to ease in the foreseeable future.
In its weekly review, the Bureau for Economic Research (BER) said that sentiment in South Africa is broadly negative, with respondents in Absa’s Purchasing Managers’ Index (PMI) showing levels of pessimism last seen during the strictest stages of the covid-19 lockdown.
However, the BER said that a recent update from Operation Vulindlela provided some optimism.
Operation Vulindlela is a joint operation between the Presidency and National Treasury that seeks to unlock growth-boosting reforms, including those in the energy space.
Crucially, the pipeline for new private sector energy generation projects tracked by Operation Vulindlela’s Embedded Generation Task Team has jumped from roughly 4,000 MW in March 2022 to a combined capacity of 10,000 MW.
There are 108 projects involved with a combined expected fixed investment requirement of over R200 billion.
In a positive for South Africa’s immediate energy needs, 3,000 MW is expected to be online next year, equating to roughly three stages of load shedding.
In addition, the BER added that Eskom should return several major generating units from long-term outages by late-2023 or early-2024.
This means that South Africa’s energy crisis could improve dramatically 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.
Plans on the go
Electricity Minister Kgosientsho Ramokgopa recently announced a series of initiatives to combat load shedding.
For instance, ex-Eskom employees and other experts will be deployed to underperforming power stations to boost their Energy Availability Factor (EAF), including the Matla, Kriel, Majuba, and Kendal power stations.
Support from experts will also be made available at the nation’s open-cycle gas turbines in regard to logistics and storage.
Moreover, the minister said that two more hydrogen projects, as per the Risk Mitigation Independent Power Programme, had been approved by the Eskom board and should be online by the end of June, adding another 274 MWs to the grid.
“We’re looking at the additional Bid windows in June and July of 2023, including a Big Window, number seven, for wind and solar PV,” Ramokgopa added.
“We need to make sure the prospects of these projects are located geographically in the areas with access to grid capacity” – alluding to the prior Bid Window, where roughly 3,000 MW remains unallocated due to a lack of access to grid capacity.
The minister also said that a further Bid window involved four battery storage projects of 1,200 MW and a 3,000 MW gas project.