100 Days of Steady Electricity Marks a Milestone in South Africa

(Bloomberg) -- In many nations, continuous electricity supply is taken for granted. In South Africa, it’s a major milestone.

The country has had 100 days of no so-called loadshedding, Eskom Holdings SOC Ltd. said in a statement on Friday. The breakthrough is the result of a recovery plan initiated in March 2023 and “aggressive” maintenance of the company’s power plants, it said.

Eskom’s failure to maintain its ageing fleet of generating facilities, coupled with mismanagement and corruption, rendered the company incapable of meeting electricity demand and resulting in record outages last year. That slowed output at South African businesses and led to the slowest rate of expansion since the pandemic in 2020, when the economy grew 0.7%.

“The absence of load shedding not only benefits our economy and businesses but also enhances the quality of the lives of our citizens,” Electricity and Energy Minister Kgosientsho Ramokgopa said in a statement. The last time Eskom was able to deliver uninterrupted power supply for that length of time occurred between September and December 2020.

Eskom, heavily indebted and facing declining revenue, has tried for years to increase repairs to coal-fired power plants that make up the backbone of its generation fleet. It received a 254 billion-rand ($14 billion) bailout in 2023 that’s being given to the utility in tranches, subject to it meeting performance criteria set by the Treasury. The transfers were reduced in February.

So accustomed have South Africans become to regular outages that when Eskom initially began reducing the power cuts, they were suspected to be an election ploy. Critics accused the utility of relying on generation from diesel-fueled auxiliary turbines that Eskom has spent billions of dollars a year on running them.

In fact, Eskom said it spent 6.2 billion rand less on the fuel in the three months through June.

The improved electricity performance is raising confidence. The South African Reserve Bank projects the economy will grow 1.2% this year, based on assumptions that include 180 days of loadshedding that it says will lower output by half a percentage point. It’s open to adjusting the outlook if the lights stay on for longer.

“The recent improvement in the power supply, with no loadshedding since 26 March, is a welcome development,” Governor Lesetja Kganyago said on May 30. “We have revised our loadshedding assumption down, but additional revisions may be required if this performance is sustained.”

More secure power supply is also resulting in some unintended consequences: imports of solar panels have slumped as fewer residences and businesses install renewable energy generators. 

The escalation of outages in the last couple of years caused a surge in demand for solar panels and batteries, with the flow of photo voltaic cells and modules from China to South Africa exceeding $180 million for the month of May alone, according to data compiled by Bloomberg NEF. That’s dropped considerably, with imports not exceeding $40 million since August last year, the data show.

Eskom also plans to rely on coal units for longer, a move that has the government pushing to renegotiate deals worth $2.6 billion in financing tied to South Africa transitioning to cleaner source of energy.  

While Eskom warns the danger of loadshedding remains, the situation may continue to improve. The utility plans to bring coal and nuclear units online before 2025 that would improve the proportion of available generation capacity that’s dipped as low as 51% over the last year and improved to 65% this month, according to Eskom data.

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