Private sector eating into Eskom’s sales

New data from the Reserve Bank shows that despite Eskom’s improved performance in recent months, South African households and businesses continue to reduce their reliance on the utility for electricity. 

The bank revealed this in its latest Financial Stability Review, which outlined the major risks to the local economy and its financial sector. 

One of the major risks in the recent past has been continued load-shedding and the potential for a complete grid collapse. 

The Reserve Bank had begun preparing for such an eventuality last year, coordinating with major financial institutions to ensure their systems remained online during a complete blackout. 

However, in the first Review of the year, the bank said the risk of a complete electricity grid failure has reduced significantly.

It refused to rule out the potential for a complete grid collapse and said it is still planning for such an event through the Financial Sector Contingency Forum. 

Current efforts are centred on developing, coordinating and testing contingency plans to mitigate, to the extent possible, the impact on the financial system and the economy.

The reduced likelihood of a complete grid collapse is partly due to Eskom’s improved performance but mainly due to massive investment by businesses and households in alternative energy. 

According to Eskom estimates, rooftop solar capacity of approximately 5,500 MW had been installed as of the end of May, compared to 4,000 MW a year earlier. 

This is only set to continue as over 7,000 MW worth of new renewable energy projects have been registered with Nersa. 

Furthermore, RMB estimates that companies alone will add over 6,000 MW to the grid by the end of next year and contribute nearly 20,000 MW by 2030. 

At the same time as this rapid shift has occurred, Eskom’s performance has continued a years-long decline, which has stalled in the past three months. 

The rapid uptake of alternative energy sources by the private sector and the decline of Eskom’s performance have resulted in declining demand for electricity from the utility, shown in the graph below.

Economy will continue to stagnate

Despite the improvement in electricity supply, the Reserve Bank does not think the country’s economic performance will experience a significant uptick. 

At its latest Monetary Policy Committee (MPC) meeting, the bank did not revise its economic growth forecast for the year, leaving it at 1.2% for 2024. 

This is due to the effect of load-shedding on businesses being broadly neutralised by the rapid shift to alternative energy sources. 

Last year, RMB economist Isaah Mhlanga estimated that the vast majority of corporates in South Africa could operate at close to full capacity during stage 3 load-shedding. 

Thus, the benefits of a reduction in load-shedding will most likely only be felt in the longer term when savings on diesel expenditure and procurement of solar energy can be used to invest in future growth for companies. 

While the Reserve Bank has lowered its load-shedding forecast and the impact it will have on the economy in 2024, it said it does not expect it to enhance economic activity anytime soon. 

“The recent improvement in the power supply, with no load-shedding since 26 March, is a welcome development.” 

“We have revised our load-shedding assumption down, but additional revisions may be required if this performance is sustained,” the MPC said. 

This is not only due to the effects of load-shedding being largely nullified but also because of other structural constraints on South Africa’s economy. 

In particular, logistical inefficiencies have become a severe handicap, constraining the export of minerals and the import of productive goods.

This has resulted in mining and manufacturing – two of South Africa’s most important drivers of growth and employment – coming under pressure in the past 12 months.


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