Electricity crisis worse than load-shedding

South Africa is facing a looming electricity crisis that has the potential to be more severe than the past few years of load-shedding. 

This is feedback from South African National Energy Development Institute (SANEDI) Professor Sampsom Mamphweli when explaining the cost pressures Eskom faces. 

Mamphweli explained to Newzroom Afrika that electricity prices in South Africa should continue to rise in the near future as two factors drive Eskom’s higher cost of electricity production. 

These are the need to build new generation capacity to meet future demand and the rising municipal debt owed to the utility. 

With the current regime of cost-reflective tariffs, the rising cost of producing electricity directly translates into higher tariffs. 

Mamphweli said there is a desperate need to build new generation capacity to avoid a crisis, as Eskom is set to decommission 8 GW of capacity by 2035. 

The decommissioning of coal-fired power plants will be done under South Africa’s Integrated Resource Plan (IRP) and is not at the behest of foreign funders of the Just Energy Transition. 

“While we are out of the woods for now, there is a looming crisis. Eskom needs to decommission about 8 GW of coal-fired power stations between now and 2035,” Mamphweli said. 

“As things stand, there is no proper plan on how we are going to replace the 8 GW before 2035.” 

“We need to quickly address that in terms of planning and bringing in new generation capacity as quickly as possible through renewable energy with battery storage and gas-fired plants.” 

“We need to quickly concentrate on that aspect to ensure a sustainable energy supply. Otherwise, we might see something worse than what we have gone through in the past few years in terms of load-shedding.” 

The decommissioning of 8 GW of coal-fired power plants is not the only threat to Eskom’s continued suspension of load-shedding. 

Electricity Minister Kgosienstho Ramokgopa has repeatedly warned about the dire state of municipal distribution infrastructure, saying it poses the next big threat to the country’s electricity supply. 

South Africa’s electricity sector has been reformed greatly in recent years, with Eskom set to be unbundled into three entities: Generation, Transmission, and Distribution. 

Much of this reform has been focused on the Transmission division of Eskom as the legal separation has been completed, and it has begun operating as an independent company.

This will open up the grid to private generators of electricity who can effectively compete with Eskom’s generation division to supply electricity. 

While this progress is vital to bring load-shedding to a permanent end, little effort and progress has been made regarding the Distribution division. 

This area of the electricity sector is largely the responsibility of municipalities and is an important source of revenue for them. 

In recent years, many outages and equipment failures have occurred at this level, exacerbating load-shedding, as municipalities do not have the money to adequately maintain their infrastructure. 

Ramokgopa warned of such a crisis occurring earlier this year, saying the collapse of municipal infrastructure is the “next front” in the battle against power outages in South Africa. 

He is particularly concerned about the rapid deterioration of municipal infrastructure, which is likely to accelerate in the future. This, he warned, will result in outages across the country despite a stable electricity supply. 

Energy analyst and managing director of EE Business Intelligence, Chris Yelland, has also called this area of the electricity sector completely dysfunctional.

Many municipalities are unable to pay Eskom for the electricity it provides, placing it under increasing financial pressure. 

“This points to a completely dysfunctional electricity distribution sector. I do not see sufficient attention given to the reforms needed,” Yelland said. 

He said various reforms to this sector have been tried before, such as putting the responsibility for distribution into the hands of larger regions rather than municipalities. 

In effect, this would reform the electricity sector into a similar structure to South Africa’s water industry, where water boards control the bulk supply of water. 

However, Yelland said these attempts have failed and allowed the deterioration of local infrastructure to continue. 

“This sector really needs more attention now, much more attention because that is where a big crisis is brewing.”