South Africa load shedding has entered a new stage dragging the economy down, power outages continue even as the country gears up to end coal energy dependency.
South Africa’s coal dependence is so high that the country is ranked third in carbon output globally. Because of this, South Africa has received a US$8 billion deal to shed off reliance on coal for energy.
The South African power monopoly Eskom, has announced Stage 4 of the ongoing load shedding, which means more South African power cuts will only worsen for the next foreseeable future, further threatening the country’s economy.
- Eskom South Africa has been suffering from a breakdown of equipment, among other things, and frequently cited a malfunctioned generator unit at one or more of its power stations.
- Switching from coal to renewable energy is vital for South Africa to stabilize its power output and create employment.
- Most African nations insist on power monopolies and do not allow the private sector to participate in the energy industry.
“The load shedding has been caused by a shortage of generation capacity owing to breakdowns and delays in returning some generating units to service,” the power utility admits.
Eskom South Africa has been suffering a breakdown of equipment, among other things and frequently cited a malfunctioned generator unit at one or more of its power stations, Nuclear Power Station trips during routine testing and so on. Even with US$8 bn in the pocket, South African power outages persist for whatever reason.
As load shedding worsens, the power outages are obviously having an impact on the South Africa economy as Minister in the Presidency, Mondli Gungubele admitted recently. Local media quotes the minister saying the South Africa power outage has affected the Gross Domestic Product (GDP).
The minister gave an example of quarter two returns which he said show a decrease of 0.7%, a major setback because before the power troubles, South Africa economy had enjoyed two consecutive quarters of positive growth.
“As a country, we have experienced slow growth and rising unemployment,” he said.
This fact is not about to change any time soon and as the country closes the third quarter, we can expect negative returns or at least a continued slowdown in the economy.
The minister was keen to point out that South Africa power cuts were not the only reason behind the affected economic performance.
While admitting South Africa power cuts are to blame in part, the minister also cited floods in KwaZulu-Natal and Eastern Cape and inflation, all of which he said are factors of the economic slowdown in South Africa.
“…manufacturing is the largest industry in KwaZulu-Natal and the damage caused to factories and plants, and disruptions to logistics and supply chains, decreased national manufacturing output by 5.9%,” he explained.
Not to single out South Africa’s economic performance, he went on to point out that; “South Africa, like many countries around the world, experienced increases in the prices of food, housing and fuel, which were events beyond the control of the government.”
While it is true that the global economy has somewhat stalled, the South Africa power cuts are a matter of grave concern. The government there is attempting to increase its energy capacity by inviting the private sector to set up mini-power generation plants, a lesson other African countries should take.
While Eskom South Africa works to get things in order, power cuts have led to the need for interventions such as the Economic Reconstruction and Recovery Plan (ERRP). This is a national recovery initiative that the minister remains confident will help stabilize the economy while they work on the power cuts.
“Government remains confident that through collaborative efforts and implementation of the ERRP, we can improve our economic growth,” he said.
Switching from coal to renewable energy is vital for South Africa to stabilize its power output and create employment. The switch from coal to renewable energy is costly, and many African nations are dragging their feet.
The situation is further exasperated by the fact that in recent years, many African nations have been discovering oil, and many more are conducting explorations offshore. The potential of changing their economies from the sale of crude oil is far too promising to forgo.
This is a point that will be driven home at the upcoming COP27 in Egypt later this year. Africa will be looking to push the West to provide funding for the renewable energy transition. This time around, the South Africa deal stands as a concrete example that with sufficient funding, the transition is not only doable but plausible and strung with multifaceted benefits, including employment.
South Africa, for instance, flying on the coal-driven investments, it became Africa’s second-largest economy, second only to Nigeria, which ironically overtook South Africa after oil findings. South Africa is ranked the 13th largest emitter of greenhouse gasses in the World.
This is a fact that will be brought up at COP27 in Egypt because most of this greenhouse gas is from the burning of coal, the country admits that 77% of its greenhouse (GH) gas emissions is from the production of energy for electricity through the burning of coal.
This reality has led South Africa’s President Cyril Ramaphosa to admit that; “The crisis that we are facing requires that we should take bold, courageous and decisive action to close the electricity gap.”
Ending power monopoly: South Africa welcomes private sector investment
As Africa prepares to host Cop27 in Egypt, South Africa has taken another bold move that again sets precedence for the rest of Africa. Instead of depending solely on the state utility Eskom South Africa it has launched the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).
Most African nations are insistent on power monopolies; they do not allow the private sector to participate in the energy industry. Power production is strictly an investment for the government, and energy production in Africa is a government monopoly.
With the launch of the REIPPPP, South Africa is now changing this approach, perfect timing ahead of COP27 in Egypt.
The problem with power monopoly is the fact that lack of competition allows for lax management, reduced creativity and leaves room for overpricing. South Africa is not the only African country that is suffering from power outages, in fact, most all African countries have severe power shortages and face blackouts every so often.
By putting an end to power monopoly and allowing the private sector to invest in power production, governments can create room for competition and, that way, ensure only the best, most efficient, and well-priced power companies service the demand. Granted, investment in power supply and distribution is enormous. Still, with renewable energy, mini-power plants are an affordable option, and this is expected to be a major point at COP27 in Egypt.