South Africa 06 March 2023
- This monthly report tracks power utility Eskom’s ability to supply power to the grid, the demand for electricity, and the consumption of electricity. It reviews Eskom’s Energy Availability Factor (EAF) as well as how unplanned outages are affecting power supply in SA.
- Rolling blackouts continue despite the announcement of energy reforms to eventually end these recurring outages. Supply cuts were implemented in the past year, with a record number of loadshedding days.
- The power utility’s fleet shows no sign of improved generation capacity despite the reforms announced to address electricity supply shortfalls; unplanned outages have increased. The EAF averaged around 58% in 2022, down from 62% in 2021 and 65% in 2020. It remains well below the utility’s target of 75%. The EAF has averaged 52% thus far this year and dropped to below 50% for the first time this year in the first week of January.
- The decline in the EAF can partly be attributed to an increase in unplanned outages. The unplanned outage factor (ratio of energy losses over a given time period to the maximum amount of energy which could be produced over the same time period) has increased to an average of 33.8% so far this year. This compares with an average unplanned outage factor of 30% in 2022.
- The SARB estimates that loadshedding likely shaved off 2.1-2.3 ppts from quarterly real GDP growth in Q3:22 (depending on exactly how the impact of loadshedding is modelled). The SARB lowered its GDP growth forecast to come in at 0.3% in 2023. The SARB’s forecasts consider lower commodity prices, higher inflation and interest rates. On the supply-side the forecasts incorporate increased loadshedding.
- Importantly, apart from the growth impact, loadshedding may have broader price effects on the general costs of doing business and the overall cost of living.
- President Cyril Ramaphosa declared a state of disaster in February 2023; this will enable government to accelerate its response to the ongoing electricity/energy crisis. President Ramaphosa noted that this will “provide practical measures that we need to take to support businesses in the food production, storage and retail supply chain, including for the roll-out of generators, solar panels and uninterrupted power supply”. The President also plans to appoint a minister in the presidency when he announces changes to his cabinet later this evening to focus solely on improving the electricity supply. “The minister of electricity will focus full-time and work with the Eskom board and management on ending loadshedding and ensuring that the Energy Action Plan is implemented without delay”.
- National Treasury announced debt relief for Eskom to the tune of R254bn in Budget 2023. Eskom’s debt relief, however, comes with terms and conditions; for example, the funds received is only to be used to repay debt and settle interest rate payments. An international consortium has been appointed to advise on improvements to Eskom’s coal-fired power plants; a review is expected to be concluded by mid-2023.