BNP Paribas warns that electricity load shedding could get a lot worse this year with no end in sight

BNP Paribas South Africa has warned that the country could experience the worst power cuts on record with at least 200 days of load shedding this year, as Eskom deteriorates even further. Photographer: Dean Hutton/Bloomberg

BNP Paribas South Africa has warned that the country could experience the worst power cuts on record with at least 200 days of load shedding this year, as Eskom deteriorates even further. Photographer: Dean Hutton/Bloomberg

Published Jan 12, 2023

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BNP Paribas South Africa has warned that the country could experience the worst power cuts on record with at least 200 days of load shedding this year, as Eskom deteriorates even further.

This comes as Eskom on Tuesday night ramped up its rotational power cuts to Stage 6 in the evenings, and Stage 4 during the day until further notice, crippled by unplanned breakdowns.

The struggling power utility has implemented load shedding every day since the beginning of the year as more than half of its generating capacity remains offline.

BNP Paribas senior economist Jeff Schultz yesterday said their long-held expectation of more acute energy supply challenges continued to materialise, and energy supply crunch will hurt even more as energy intensity falls.

Schultz also said that Eskom’s own generally optimistic projections pointed to daily persistent load shedding for at least the first half of the year.

“With 4.5 times the number of days of electricity supply cuts (load shedding) as in 2021, 2022 set another unwelcome record – and 2023 looks even worse, we fear,” Schultz said.

“Our forecasts embed an estimated 200 days of load shedding in 2023, mostly stages 3-4 compared with the prior years’ ‘norm’ of 1-2 [whilst Stage] 8 being the most serious.”

Schultz added the operational troubles at the ailing state-power utility were also evident in their monthly tracking of electricity produced and consumed.

BNP Paribas’ tracker is showing that although energy intensity/consumption in the economy has generally been falling, this was not keeping up with faltering energy production, which slid to 2004 levels in late 2022.

Eskom spokesperson Sikonathi Mantshantsha yesterday said 11 generators amounting to 5 084MW of capacity suffered breakdowns since Tuesday morning.

Mantshanthsa said this further reduced available capacity, necessitating the increase in the stages of load shedding.

“These were a unit each at the Camden, Duvha, Grootvlei, Hendrina, Kendal, and two units each at Kriel, Majuba and Matla power stations,” he said.

“A unit each at Camden, Duvha, Hendrina, Kriel, Matimba and Matla power stations have returned to service, representing 2 540MW of capacity.

“Planned maintenance is currently 5 739MW while breakdowns amount to 18 041MW of capacity.”

The ongoing power outages have had a crippling effect on the intensive-energy using industries and business activity alike, and will further dampen economic growth this year.

Deal Leaders International CEO Andrew Bahlmann yesterday said load shedding has huge implications for the food supply chain as millions of rand of food stored in cold storage facilities was at risk of spoilage without the energy to power these systems.

Bahlmann said the major logistics and food supply chain will have made alternative arrangements, but many smaller firms further down the supply chain will not have been able to afford the cost of alternative energy supplies - and this loss of food is all the more devastating to the poor during an economic downturn.

“It’s not just the food chain that suffers, but South Africa is positioning itself as a global home to major data centres which also require efficient cooling, as do hospitals and many manufacturing plants where constant temperature and humidity control is central to their production processes,” Bahlmann said.

“Therefore, Stage 6 load shedding affects not just monthly production, but results in destruction of products already within the supply chain, and deters investors from ever entering the South African market, such as in the case of data centres.

“With logistic disruption, it is difficult to quantify the situation in the container market, shipping lanes, ports, air transport and warehouses.

“However, it clearly translates into shortages of key production components, order backlogs, delivery delays, soaring transportation costs, and consumer prices.”

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