Load-shedding can come back in three years

South Africa will be plunged back into load-shedding in the next three to four years should Eskom follow its current decommissioning schedule. 

This schedule would see almost half of Eskom’s coal-fired electricity generation capacity lost as old power plants are retired from service. 

Such an eventuality is well known to experts and Eskom itself, with the utility’s Medium-Term System Adequacy Outlook for 2026 to 2030 indicating that load-shedding is likely to return. 

However, the looming crisis risks being exaggerated by South Africa’s lack of local oil-refining capacity, which has halved since 2020. 

Cresco advisory partner Dominic Goncalves warned that the decline in refining capacity will put South Africa’s last line of defence against energy security at risk. 

In a recent research paper, Goncalves explained that the shock to global oil supply from the conflict in the Middle East shows that diesel is no longer a guaranteed last line of defence. 

“Had an external shock as the Strait of Hormuz closure occurred during a time of load-shedding, there would be serious pressure on diesel availability,” Goncalves said. 

Diesel is used to power on-site generators for critical loads such as hospitals and data centres, alongside other consumers. 

Most importantly, Eskom consumes an immense amount of diesel through its Open Cycle Gas Turbines (OCGTs) during periods of load-shedding. 

These facilities consume up to 30% of South Africa’s refined diesel supply during periods of load-shedding. If this were to happen now, the local supply chain would be unable to meet the demand. 

Goncalves explained that it is vital for the sector to consider the potential for an external shock, such as the Middle East conflict, and a local shock, such as load-shedding, to occur simultaneously. 

This is because the likelihood of such a combination is relatively high, and the consequences would be devastating for the local economy. 

“It is important to note that while Eskom’s reserve margin is currently stable, in the next 3 to 4 years South Africa is forecast to return to load-shedding if Eskom’s decommissioning schedule is followed,” Goncalves said. 

“This schedule would remove almost half of Eskom’s ageing coal fleet, without adequately replacing these assets with sufficient load-following technologies such as LNG, Coal, Nuclear, BESS or grid-forming inverters.” 

Cresco’s National Energy Balance model predicts a widening system imbalance where there will be deficits in the early morning and evening hours. 

This will require Eskom to increase diesel usage to follow the load of the renewables fleet, which is currently being installed without enough batteries or grid-forming inverters to provide dispatchability. 

As a result, the grid will have an excess of renewables at certain times of the day, but a shortage during other times of the day, as well as during periods of cloud cover and low wind. 

Diesel crunch could break South Africa’s economy

Goncalves explained that if a local shock to diesel demand through load-shedding were to happen at the same time as an external shock to supply, South Africa would be in a dire situation. 

As of March 2026, only two of five local diesel refineries in South Africa are operational, and around 57% of the country’s total refined diesel supply is shipped via the Strait of Hormuz.

Since 2022, South Africa’s domestic diesel refining capacity has halved, with the shutdowns of Sapref and Engen’s refinery turning South Africa from self-sufficient into a structurally import-dependent country.

This makes the country highly exposed to global diesel markets and sensitive to shocks such as the one from the closure of the Strait. 

More than half of South Africa’s diesel is currently imported from Gulf suppliers directly exposed to Hormuz disruption, including Oman (34%), the UAE (12%), and Bahrain (11%).

A significant chunk is also indirectly exposed to Hormuz disruption through supply chains, with refined supplies from India accounting for 20% of South Africa’s demand.

The prolonged conflict has resulted in South Africa having to compete for non-Gulf barrels against stronger buyers such as Asia and Europe. India is acting as a swing supplier, reallocating barrels to the highest-paying market.

“A key outlier variable is what would happen in the face of an internal shock (Eskom return to load-shedding), in addition to the external shock currently faced (Hormuz closure)?” Goncalves asked. 

This would almost certainly lead to shortages in South Africa, crippling the local economy and Eskom. 

During stable periods, Eskom uses only 3% to 10% of the country’s diesel supply for load-following and system balancing functions for the country’s four OCGT peaker plants.

However, during load-shedding, this percentage ramps up to 20% to 30%. This is exaggerated by private consumers also increasing diesel demand to power diesel generators.

This means any deterioration in Eskom’s fleet performance amid the current global situation could result in a spike in national diesel demand of 20% to 30%.

“What the Strait of Hormuz crisis has taught us is that we can no longer rely 100% on diesel for the future,” Goncalves said.  

“Any major geopolitical risk or war could fracture supply chains and turn the ‘option of last resort’ into a difficult-to-obtain fuel source.” 

The solution is a combination of increased generation capacity to replace Eskom’s decommissioned facilities and increased investment in renewable microgrids. 

These are relatively easy to deploy and minimise diesel consumption in the event of a disruption to the normal power supply. 

At a national level, South Africa needs to deploy batteries at scale to reduce fuel needs and diesel reliance during peaking hours. 

The rapid deployment of renewable energy is not backed by sufficient batteries and grid-forming technologies to avoid future supply-demand imbalances on the grid.