702<\/a> this week, the analyst said that while there is a non-zero probability that the grid will collapse, there is a broad misunderstanding of what this scenario would look like and how it would play out.<\/p>\nThis has led to “raw panic” among people on both a personal and business level.<\/p>\n
“There was a massive underestimation on the probability of a blackout before Christmas, and now people are very much overestimating it,” he said.<\/p>\n
“There has been a lot of misinformation going out, a lot of conspiracy theories in financial markets, that somehow blackouts are far more likely…and the grid operator has been tacked on to do various things that are technically not possible.”<\/p>\n
The analyst said that the government and Eskom have not helped themselves on this by dismissing total grid collapse too much in the past and not focussing on planning.<\/p>\n
In the broader picture, Attard Montalto said that the likelihood of a grid collapse is “a couple of percentage points here – certainly not higher.”<\/p>\n
But whether grid collapse is likely or not, the worries and lack of communication over the scenario are already having an impact.<\/p>\n
The rand pushed past R19 to the dollar on Thursday (11 May) as investors and wider markets were gripped by the narrative. Meanwhile, Eskom and the government have sat silent.<\/p>\n
Attard Montalto said it is concerning that, despite various meetings between the government and stakeholders, South Africa has simply not implemented the kind of crisis planning a country would need to have for this kind of situation.<\/p>\n
“Some really serious wargaming is required for this. The food sector is somewhat ahead of the curve, with the banking sector at the margin – but this is the issue that keeps me up at night. There has not been enough planning for this low-probability event.”<\/p>\n
“There is raw panic in some places,” he said.<\/p>\n
“I still think people underestimate the impact this will have – the overestimating the probability. We need to be quite careful, there is an extreme tail risk. There are many things Eskom and the operator can do beyond load shedding…but there’s an extreme tail risk if things go wrong and they lose control of the grid.”<\/p>\n
Compounding the issue is that there are different kinds of blackouts that South Africa could experience – from a momentary blackout that the System Operator can manage on a short-term basis to the more “headline” blackout where the country is plunged into total darkness for a few weeks.<\/p>\n
The latter is the most improbable, while the former has a higher likelihood. In either case, there has been no communication or contingency plan put in place.<\/p>\n
“There’s an idea that there’s a standard way this would happen, and that’s not helpful in the public discourse. Again, the lack of information has not helped, hence a degree of panic has started to set in.”<\/p>\n
Attard Montalto said that while planning needs to be in place, the focus needs to shift to far more likely events coming in the next few months.<\/p>\n
Probabilities are far higher for stage 8 load shedding to be implemented during the winter months, he said, and this should really be the core focus.<\/p>\n
This also requires a lot more planning, especially in diesel supply chains, the analyst said, as well as food supply chains, which are already under strain at stage 6.<\/p>\n
The analyst said that the economy has been incredibly resilient to load shedding, and people have started to adapt – albeit at a huge cost – but nevertheless, there are high probability outcomes during the winter months that need to be focused on first before sounding the alarms on total grid collapse.<\/p>\n
\nRead: Get ready for 16 stages of load shedding<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"Some sectors are in a “raw panic” over the grid collapsing in South Africa, which pushed the rand past R19 to the dollar on Thursday.<\/p>\n","protected":false},"author":10,"featured_media":665233,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[26],"class_list":["post-687301","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-opinion","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/687301","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=687301"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/687301\/revisions"}],"predecessor-version":[{"id":687317,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/687301\/revisions\/687317"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/665233"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=687301"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=687301"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=687301"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}