South Africa\u2019s independent power producers are eating into Eskom\u2019s electricity sales, which are projected to fall 2% per year between now and 2027.<\/p>\n
This is according to one of the \u2018Big Three\u2019 credit rating agencies, Fitch Ratings, the other two being Moody\u2019s and Standard & Poor.<\/p>\n
Pressure on sales volumes is one of the factors that could lead to a deterioration in Eskom\u2019s liquidity and funding access and a downgrade in the utility\u2019s credit rating, Fitch said in a statement this week.<\/p>\n
Eskom, which provides 90% of South Africa\u2019s electricity, is struggling to meet demand with its fleet of coal-fired power stations that often break down.<\/p>\n
The utility has implemented rotational blackouts on all but one day this year. The constant outages have prompted companies to commission the building of power plants for their own needs, mainly solar and wind facilities.<\/p>\n
Data released by the statistics office on Thursday show Eskom is already losing ground. The utility produced 11.4% less power in the first four months of 2023 compared with the same period last year, and consumption of its electricity fell 10.7%.<\/p>\n
Over the same period, generation and consumption from other producers rose from a year earlier.<\/p>\n
The government expects private companies to add more than 4 gigawatts of electricity generation capacity to the grid by the end of 2024 and another 3 gigawatts by 2030.<\/p>\n
Decrees in 2021 and last year that removed caps on the size of power plants that companies can build for their own use have resulted in 108 projects with a combined capacity of more than 10 gigawatts being registered for construction, according to a report released on 30 May.<\/p>\n
Tariff increases for Eskom approved by the country\u2019s energy regulator were below what the utility had requested for this fiscal year and the next and are forecast to be less than 10% from 2025-26, Fitch said.<\/p>\n
That would be insufficient to fund adequate capital expenditure for asset maintenance and provide a fair return for Eskom, added the rating company.<\/p>\n