Eskom has warned of persistent high stages of load-shedding this winter with a high likelihood of reaching stages 7 and 8, setting off alarm bells across industries over the consequences, including the possibility of substantial output cuts at the Volkswagen car factory in Gqeberha.
At a news conference to present Eskom’s power supply and demand plan for June, July and August, chair Mpho Makwana said the power system was severely constrained.
“The system will be even more constrained during winter. Forecasters think this will be a much colder winter, which will result in high electricity demand for heating,” said Makwana, who leads a 12-person board.
An escalation to higher stages will cause the effects of load-shedding on businesses, healthcare and education to go from bad to worse, lead to high food prices, and further tarnish SA’s image as a favourable emerging market to park investor capital.
Lives would be put at risk, said Khaya Sodidi, deputy general secretary of the Democratic Nursing Organisation of SA.
“Not all healthcare institutions have been exempted from load-shedding. Longer periods without power would be devastating to healthcare facilities, especially those in rural areas. This will undoubtedly put patients’ lives at risk,” he said.
Schools are already buckling under the pressure of not having power for several hours during the day, according to Nomusa Cembi, spokesperson of the SA Democratic Teachers Union.
“That is why we are calling on the government to look at other alternative sources of energy for schools, such as solar power,” Cembi said.
Eskom interim CEO Calib Cassim said the power utility had about 47,500MW of installed capacity, but availability of only about 26,500MW.
The performance of the Eskom generation fleet has deteriorated over the last three months from an energy availability factor (a measure of generation output compared with total installed generation capacity) of 56% in March to about 52% in May.
Eskom would aim to keep unplanned generation losses at under 15,000MW but had planned for scenarios in which unplanned outages rose to about 18,000MW. “If unplanned outages reach 18,000MW, the likelihood of stage 8 is extremely high,” Cassim said.
Eskom’s base case scenario for the next three months assumed unplanned outages of about 15,000MW and demand peaking at about 32,500MW. This would require load-shedding to be implemented at stages 3 to 5 on most days, said Segomoco Scheppers, Eskom head of transmission.
With an assumption of 18,000MW of unplanned outages, stage 7 and 8 load-shedding would have to be implemented every day from June to August.
During these stages, South Africans would be left without power for 14 hours and 16 hours respectively in a 32-hour cycle, a scenario that would deal a huge blow to SA’s credentials as one of the go-to emerging markets for foreign capital.
“It is going to be quite hard for businesses to survive when we go beyond stage 6. We already see that at stage 6 load-shedding the impacts are quite dire — prolonged periods at stage 8 will be devastating,” said Business Unity SA (Busa) environment, energy and climate manager Happy Khambule.
Martina Biene, who heads the SA division of German carmaking giant Volkswagen, said the company had already cut production by 4,000 vehicle units so far this year and if stage 5 or above carries on, it would lose about 33,000 units by the end of this year. The maximum capacity at the plant was 161,000 units per year.
Ford’s SA subsidiary, another big player in SA’s biggest manufacturing industry, said at its Struandale engine plant, stage 8 would mean it losing 96 hours in production over eight days.
Other economic sectors that sounded the danger signal were miners, the food production and retailing sector, and the agricultural industry.
The economy could not withstand such elevated load-shedding levels, said Zinhle Tyikwe, CEO of the Consumer Goods Council of SA, which speaks on behalf of some of the biggest names in food production and retailing.
Load-shedding posed a food security risk as the additional cost burden large food manufacturers and retailers had to incur for backup power continued to escalate, she said.
Initial estimates showed that from September 2022 to January 2023, some of its members spent more than R1bn on diesel because of load-shedding.
“These costs have obviously escalated since then, particularly with the current load-shedding level of stage 6,” Tyikwe said. “We are concerned about the impact of load-shedding and in this regard, we are in consultations with Eskom to advocate for minimum interruptions to food security,”
Farmers’ warning
Farmers warned that more load-shedding would only further increase the cost of producing food.
“We are very concerned,” said Christo van der Rheede, CEO of Agri SA.
Farmers’ profitability was already under severe pressure from increased fertiliser, fuel, labour, packaging and shipping costs and increased load-shedding would make it harder to run a profitable business due to the “costly affair” of having to expand solar systems or use more diesel to power generators for longer periods of time.
Retailer Pick n Pay warned that deeper power cuts could result in food price increases due to higher costs.
“To date, we have sought to protect customers in a very tough environment by absorbing most of [the cost of buying diesel to keep stores running].
“However, we and others in the industry have said that escalating costs cannot be absorbed indefinitely and that severe load-shedding will impact inflation over time,” Pick n Pay said.
Load-shedding is not implemented for the mining industry. Instead, miners have load curtailment agreements with Eskom which are implemented at stage 6 load-shedding.
“At stage 6 load-shedding we are load curtailed by 20% of contracted supply for 10 hours from [2pm to midnight].
“The industry (mining and smelters) consumes about 10,000MW so we give up 2,000MW (equal to two stages of load-shedding),” said the Minerals Council SA’s Christian Teffo.
If Eskom went to stage 8, Teffo estimated miners would be load curtailed by 2,666MW over the same number of hours at the same times of day as above.
“This will result in further losses of production as some of our members stop operations to be able to drop the required load,” he said.
Support
However, there were some instruments in place to support businesses, said Khambule. These included a rebate for certain sectors on diesel, the tax incentive on new solar power installations, and the bounce-back loan guarantee scheme to help small businesses finance renewable energy projects.
Eskom’s Scheppers said that the actual demand forecast for 2023 was about 33,000MW.
“This is a forecast of peak demand and [there] is potential for variability around this number. We do try to give the most robust and realistic assumptions, but [demand] can be up or down,” he said.
“The winter outlook is tight, and any significant outage slip will have a knock-on effect that will influence the plan from that point forward. The winter plan does not cater for difficulties that could arise at power stations due to industrial action and other protests.”
The average unplanned outages for the financial year-to-date (April and May) ranged between 16,000MW and 17,000MW.
This corresponds to Eskom’s mid-range demand and supply scenario for the winter months, which assumes 16,500MW of unplanned outages. This would require the daily implementation of stage 6 load-shedding for the next three months.
Update: May 18 2023
This story has been updated with more information.
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