South Africa heading for crisis worse than load-shedding

South Africa is heading for a deeper energy crisis than load-shedding if it does not act fast to add new capacity to the grid in the coming years. 

This comes as Eskom continues to struggle to meet its own Energy Availability Factor (EAF) targets, with it averaging an EAF of 57% against a target of 70% for the current year. 

Despite the utility’s significant improvements over the past year, reliability remains an issue for its coal-fired power plants as they near the end of their design life. 

The average Eskom coal-fired plant is 41 years old and has a maximum lifespan of around 60 years, resulting in significant energy losses due to deteriorating equipment. 

Some units at power stations have been shut down for safety reasons due to the failure of their old components, necessitating complete replacement, the Organisation for Economic Co-operation and Development (OECD) said in its economic survey of South Africa. 

The lifespan of power stations can be extended, and old plants can run efficiently, but this requires increased maintenance expenditure.

While the need for maintenance has increased over time, Eskom’s spending on it has declined substantially since the late 2010s. 

As a result, the electricity generated by the utility is only a fraction of what it was in the early 2000s, before it built Medupi and Kusile. 

This has created a significant need for new generation capacity from various sources, with renewables being favoured considering the speed at which they can be deployed. 

In its fourth Light Paper, GoSolr has warned that overregulation and policy inconsistencies threaten the progress made in enabling private generation projects to connect to the grid. 

“South Africa has made progress in renewable energy adoption. However, we run the risk of going backwards,” GoSolr CEO Andrew Middleton said. 

“Our research shows that while other countries are accelerating their solar transitions, we are being held back by a tangle of regulations that penalise, rather than encourage, solar adoption.”

Middleton explained that Eskom’s chronic financial restraints and generation shortfalls mean that the national utility can no longer meet the country’s demands. 

“If we don’t get our ducks in a row – and do it fast – South Africa is going to be plunged into a deeper energy crisis,” the Light Paper read. 

While Eskom’s decline has somewhat stabilised, it is unlikely that load-shedding is fully behind South Africa. 

Load-shedding may return as soon as this winter, with Eskom entering the colder months with an EAF far below the level seen in 2024.

Breakdowns at its power plants have also crossed the threshold at which it warned that stage 2 load-shedding may be necessary. 

The graph below compares Eskom’s EAF through the first 20 weeks of the year to that of 2023 and 2024. The following chart shows its weekly breakdowns and the threshold at which stage 2 load-shedding may be needed. 

Looming trouble

Further trouble looms over the coming decades, with Eskom having to decommission some of its older power plants. 

This will leave South Africa with a significant gap in energy generation that needs to be filled to avoid substantial power outages. 

Data from Standard Bank’s Corporate and Investment Banking (CIB) division and Cresco show that the country’s long-term energy security depends on quickly bringing new capacity online. 

New capacity is needed in various forms, including renewables, gas, storage, and, potentially, nuclear in the long run. 

The report highlighted that the IRP 2024’s most significant shift is the Cabinet’s decision to keep Camden, Grootvlei and Hendrina power stations running until 2030. 

The move, designed to stabilise the grid while new capacity comes online, highlights the challenge of maintaining a reliable power supply while meeting environmental goals.

This extension does give South Africa additional time to bring new capacity online and increase flexibility, but it may not be enough. 

“Considering the looming risk of another energy crisis, which may materialise as soon as coal decommissioning is resumed, new capacity additions and RE implementation need to increase at a dramatic rate,” Cresco’s report read. 

“There is no room for error in REIPPPP Bid Window 7, gas-fuelled generation capacity additions or delays in the private sector procurement.”

The graph below illustrates the projected distribution of energy generation across a 24-hour day in 2040, based on currently planned and announced projects. 

It indicates that there will still be substantial shortfalls in energy supply during significant parts of the day, requiring ‘top-ups’ with gas, nuclear, or other types of generation. 

The Just Energy Transition Partnership is a noble and essential effort, but total generation still needs to meet demand, both annually and hourly, the report said.