City Power’s dangerous load-shedding request

City Power has requested that energy-intensive businesses cut their production significantly during higher load-shedding stages, which could spell significant trouble for South Africa’s economy.

This comes as load-shedding returned with full force to South African homes over the past weekend.

The utility started implementing stage 3 load-shedding late on Saturday, 22 February 2025. However, it said it had to cut more electricity after additional coal-fired units failed.

Therefore, on Sunday, 23 February 2025, Eskom resorted to implementing stage 6 load-shedding – the highest level in a year – after 10 generation units unexpectedly tripped.

These power cuts have since eased, with Eskom now implementing stage 4 load-shedding until further notice.

Electricity Minister Kgosientsho Ramokgopa said in a recent media briefing that things should return to normal this week.

“We remain on course with the generation recovery plan,” Ramokgopa said.

“There are inherent risks, and we’re doing everything possible to mitigate those, even when there is an outlier like this one where an entire station goes out.”

In the same briefing, Eskom CEO Dan Marokane said the uninterrupted power supply should resume by the end of the week.

In light of this return to load-shedding, City Power spokesperson Isaac Mangena told eNCA that the business has reconfigured its network to separate hospitals and other healthcare services from residential customers. 

This allows City Power to load-shed residential areas while keeping the lights on at hospitals. 

He said this approach has been working well, which is why most hospitals were not affected by load-shedding during stage 6 over the weekend. 

“In fact, if I recall correctly, about half of the hospitals in Gauteng are excluded from load-shedding. This is largely due to the work we’ve done,” he said.

“We have also introduced additional energy sources, such as battery storage systems and solar power, in many hospitals.”

He said this project will ensure that hospitals remain operational regardless of whether Eskom implements stage 1 or stage 6 load-shedding.

“However, I must note that as the load-shedding stage increases, the available electricity supply shrinks,” he said.

“This is because we have to give more power to Eskom and shut down more substations that would normally be excluded due to their essential load.”

He explained that, as a result, City Power has had to reduce the number of exempted healthcare facilities, including clinics, which have been brought into the load-shedding schedule.

“We have also engaged with businesses, asking them to reduce consumption,” he said. 

“Some businesses cannot switch off their machinery entirely, but we have curtailment agreements with them.”

“When load-shedding reaches higher stages – between stage 4 and stage 6 – we request that they cut production by at least 20% to 30%, depending on the required capacity.”

While this may ensure that healthcare providers are not impacted by load-shedding, it could be detrimental to South Africa’s economy at a time when exactly the opposite is needed.

At the start of 2025, President Cyril Ramaphosa emphasised the goal of accelerating economic growth to above 3%.

He said this would be done by focusing on reforms in energy, transport, logistics, crime reduction, and youth employment.

The National Treasury, in its 2024 Medium Term Budget Policy Statement, projected that South Africa’s GDP would grow from 1.1% in 2024 to 1.7% in 2025.

However, this goal may be near impossible if some of South Africa’s most important economic contributors – such as miners and manufacturers – are forced to reduce their production.

Load-shedding has a profound effect on the economy, as seen in the past few years when power cuts severely hampered economic growth in the country.

In 2022, PwC estimated that load-shedding could reduce South Africa’s GDP growth by up to 3.1%, potentially costing the economy up to 400,000 jobs. 

In 2023 – when load-shedding hit record highs – the South African Reserve Bank downgraded the country’s projected GDP growth from 1% to 0.3%, citing load-shedding as a significant contributing factor. 

The reason load-shedding has such a devastating effect on economic growth is that it disrupts business operations, reduces productivity, and discourages investment. 

Frequent power cuts force businesses to scale down production, leading to lower output and lost revenue. 

Therefore, essential sectors like manufacturing, mining, and retail suffer major setbacks, while small businesses – many of which cannot afford backup power – face closures.

In addition, investor confidence declines when a country has an unreliable power supply, leading to reduced foreign direct investment. 

Load-shedding also increases costs for businesses, as they must invest in alternative power sources like generators or solar, diverting funds from growth and job creation. 

Overall, it slows down GDP growth, limits employment opportunities, and weakens the economy.

In the most recent Electricity Update from the Minerals Council of South Africa, economist Andre Lourens said that, despite some positive trends, electricity generation has yet to recover to pre-pandemic levels. 

These positive developments include an annual increase in electricity generation and reduced reliance on emergency resources in early February.

Lourens warned that the narrow gap between peak demand and dispatchable generation capacity leaves little room for unexpected disruptions, like the ones that led to the most recent load-shedding implementation.

“Looking ahead, sustaining system stability will rely on continuous improvements in generation performance, driven by the ongoing implementation of Eskom’s Generation Recovery Plan,” he said.

“Although the full benefits of increased electricity supply have not yet translated into higher production across the mining industry, its availability continues to serve as a crucial foundation for driving future production growth.”