RECURRING power outages plaguing South Africa, India and other emerging market economies have been described as a threat that could significantly hamper global economic growth.
This comes as South Africa’s power utility Eskom warns of a worst-case scenario that could see the country experiencing more than 100 days of power cuts during the winter season if the national grid faces additional pressure.
Eskom last week ramped up its rotational power cuts to Stage 4 as the grid suffered numerous unplanned breakdowns at a number of power stations, but by the weekend the grid had stabilised, with the lights back on.
Citadel global director Bianca Botes on Friday said the challenges of Eskom had been apparent for a number of years, with little light at the end of the tunnel in the short to medium term.
Botes said the country’s energy crisis comes as ageing infrastructure, a lack of proper maintenance and corruption scandals have caught up with the electricity giant.
“The electricity crisis remains one of the biggest threats to the country’s growth and ability to attract foreign investments. Now, steps to enhance electricity supply in the country are topping government agendas,” she said.
Botes, however, said South Africa was not the only country facing electricity supply concerns.
India faced daily eight-hour power outages, on the back of scorching temperatures and a lack of coal supply in 2021.
The rolling blackouts created new concerns around a potential power crisis that could derail Asia’s third-biggest economy.
Last week, the International Monetary Fund (IMF) slashed its world growth forecast to 3.6 percent for 2022 – down from a forecast of 4.4 percent in January – after Russia invaded Ukraine, and China renewed Covid-19 lockdowns.
Russia’s invasion of Ukraine and the unprecedented economic sanctions that followed have thrown the global energy market into chaos, with top consumers scrambling to find alternative supplies to replace Russian coal.
Markets, however, were tight even before the Russian invasion of Ukraine, as the energy crisis and soaring natural gas prices in Europe and Asia were already a major point of concern.
According to research firm IHS Markit, major power outages impacted at least 350 million people – more than 4 percent of the global population – in 2021, as new power supply challenges have emerged on top of the more traditional ones.
Some of the largest power supply disruptions included regions that have had relatively reliable supply, including rolling blackouts, power rationing in China, and the winter storm Uri power crisis in Texas.
An IHS Markit report, "Are we entering an age of increasing power supply disruptions?", noted extreme weather conditions and changes in the energy sector as two of the newer reasons for power outages.
“The electricity dilemma is one that is, and needs to be, viewed in a serious light, as the future of economic growth hinges on the ability to keep the lights on and equipment operating,” said Botes.
Power cuts in South Africa currently cost the economy at least R500 million a day, derail activity and impact on job creation.
According to Gauteng MEC for Economic Development, Parks Tau, disruptions to operations caused by power cuts have meant that businesses have had to work under unpredictable and unstable conditions.
Tau last week said that an estimated 122 500 jobs have been lost in Gauteng alone due to Eskom's continued power cuts.
Investec economist Lara Hodes said the increasing risk of more power cuts was a threat to economic growth.
“Going forward, heightened load-shedding remains a significant risk to domestic production, while persistent geo-political tensions globally exacerbating supply side challenges remain an impediment to international trade,” Hodes said.