South Africa’s energy crisis may threaten an anticipated economic rebound in the fourth quarter of this year, just as prospects are expected to pick up on the back of the July unrest and lockdown restrictions.
Eskom last week resumed its rolling blackouts, implementing a week of stage 2 scheduled power cuts – what the utility terms load shedding – from Thursday, due to breakdowns at generation units.
The power utility’s emergency reserves were depleted faster than expected due to further breakdowns, while delays in returning certain generating units to operation also contributed to the crisis.
Eskom spokesperson Sikonathi Mantshantsha said the power system was under severe pressure as breakdowns removed 14 700MW from the grid, while planned maintenance was 5 277MW.
“This load shedding is also necessary to address other additional risks in the generation fleet,” Mantshantsha said.
“During this time, Eskom will be working hard to return a number of generating units to service and we urge the public to continue using electricity sparingly.”
The latest bout of scheduled power cuts comes at a time when the country’s economy is struggling to recover from Covid-19 pandemic shocks and supply chain disruption, expected to cause a lacklustre performance in the third quarter of 2021.
The government is currently trying to mitigate Eskom's supply shortages by allowing self-generation and procuring additional renewable energy from independent power producers on an emergency basis.
South Africa's economy is estimated to lose at least R500 million per stage of scheduled power cuts per day.
The SA Reserve Bank last week said the latest projections suggested the economy will contract by 1.2 percent in the third quarter, with growth averaging 5.3 percent in 2021.
Investment in the economy has remained weak this year as electricity supply was constrained even with low demand.
Data from Statistics SA last week showed electricity generation lost momentum in August, growing only by 2 percent from a year ago, following growth of 3.4 percent in July, and 3.2 percent in June.
On a month-on-month basis, however, electricity production contracted by 0.2 percent, after growth of 0.7 percent in the month prior, indicating slowing momentum after starting the third quarter on a strong footing.
Investec economist Lara Hodes said generation capacity remained constrained by financial and operational challenges, and Eskom's energy availability factor (EAF) – the percentage of maximum electricity that its plants are capable of supplying to the grid – is still below 70 percent, averaging just 63.02 percent year-to-date.
"While the low EAF readings are partly attributable to higher planned maintenance, electricity supply constraints continue to hinder business performance," Hodes said
"Adding to Eskom’s myriad of challenges, according to analysis by the Centre for Research on Energy and Clean Air, Eskom is ranked 'the world's most polluting power company'. Specifically, the utility emits more sulphur dioxide than the entire power sectors of the EU and US."
BUSINESS REPORT ONLINE