Load Shedding & Rolling Blackouts South Africa

South Africa is facing critical social and environmental challenges. Corruption, sluggish economy, violent crime, unemployment, an ongoing energy crisis, immigration, street gang violence, land expropriation, and drought top the list. High priorities include government effectiveness, education, and energy. Surprise load shedding yesterday emphasized the severity of South Africa’s growing energy calamity and certainly captured everyone’s attention, including mine!

Why Load Shedding and Rolling Blackouts?

I’ve experienced load shedding in South Africa, but yesterday was the first time during this visit, and I’ve been here since May. It’s interesting that there was no formal blackout notification, except for a Twitter message posted the same day as the outages. The tweet didn’t specify current outages as being “one-off” or the start of dreaded extended rolling blackouts.

The blackouts were blamed on “high levels of unexpected breakdowns at coal-fired power plants“. Eskom “cut megawatts from the national power grid due to boiler tube leaks at five generating units and the breakdown of a conveyor belt used to supply coal to the relatively new (commissioned in 2015) Medupi Power Plant”. To address recent shortages, “pumped storage and open cycle gas turbine facilities were used extensively, resulting in lower dam levels and diesel supplies“. Putting this very technical (to me) explanation aside, the gist of what’s happening seems clear.

Load-Shedding Stages

Load-shedding occurs in several “stages” – depending on the shortage necessary to meet electricity demand. Stage 1 (3 times over a four- to eight-day period for 2 to 4 hours at a time) is the least, and Stage 4 (12 times over a four- to eight-day period for 2 to 4 hours at a time) the most serious. Stages 6, 7, and 8 exist but are rarely experienced and sound terrifying! Today’s Western Cape outage was Stage 2 with blackouts lasting from 09:00 to 23:00 and running for about 2.5 hours each. Future blackouts are predicted.

Day Trip Cape Town

I was on my way from Hermanus to Cape Town for the day, when I heard the blackout news via radio. Traveling along the N2 highway, I wondered if Cape Town would be chaotic. Thankfully, there was little visible evidence of blackouts in City Centre, at least during daylight. Just the same, I decided to forgo a late evening in Cape Town and drive back to Hermanus. That meant leaving early enough to drive over Sir Lowrys Pass before dark!

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“The ruling African National Congress (ANC) has unveiled billions of dollars in bailouts for Eskom this year, but failed to agree on reforms to end the utility’s debt spiral.”

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On the way back to Hermanus, the N2 near Somerset West is often disorderly – an understatement. There’s gridlock, bottlenecked traffic, motorcycles weaving in and out between trucks and cars, carjackings, hitchhikers, vendors selling goods, road construction, animals / people crossing the highway (yes really), and overloaded bakkies (pickup trucks) with people hanging off the sides and out the back. I was driving behind children who were riding in the back of an old hatchback station wagon playing and amusing themselves by opening and closing the back hatch – yikes. We exchanged smiles and animated hand waves. Then thankfully, their vehicle exited the freeway.

Sir Lowrys Pass is a terrifying stretch of road (to me) with no median dividing traffic passing in the opposite direction. Trucks brimming with steel, bricks, lumber, and other heavy materials can tip going around sharp curves. I’ve witnessed horrific accidents along the Pass. Poor night visibility and drivers “under the influence” make it even more dangerous!

I made it back safely, just before dark. The Hermanus blackout began an hour later. Since more blackouts are expected, I charged everything, got out battery-operated lights, and sorted food for salads and other uncooked meals.

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“A new round of blackouts should be a strong incentive for the urgency to address prevailing issues at Eskom.” Piotr Matys, Currency Strategist

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Electricity Supply Commission of South Africa

The Electricity Supply Commission of South Africa (Eskom) is a state-owned power monopoly that “generates nearly all of the electricity for Africa’s most industrial nation”. The utility has amassed 450 billion Rand ($30 billion) of debt, battles corruption, and relies on government bailouts to avoid collapse and remain solvent. Eskom is struggling to meet South Africa’s electricity demands, since many of its faltering power plants are old and poorly maintained.

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“There are currently four stages of load shedding (reportedly). However, Eskom has made provision for stages 6 through to 8 as well.” The Citizen Cherly Kahla

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Eskom and South Africa’s Failing Economy

Earlier this year, South Africa’s economy suffered its “worst slump in a decade,” when power cuts left factory floors, shops, and smelters in darkness for hours. October 2019 power outages are the first since February 2019 when “Eskom-imposed blackouts that ravaged the economy and exposed the debt crisis threatening to push Eskom into bankruptcy”.

In an economy already facing sluggish growth, load shedding adds more challenges. This year, load shedding is estimated to have cost the South African economy one billion Rand (approx. $56 million USD) per stage, per day.

The sudden, unexpected return of power blackouts is an embarrassment to South Africa President Cyril Ramaphosa who, during a recent campaign to encourage foreign investment, “promised to reform the stricken utility”. Jan Oberholzer, Eskom’s Chief Operations Officer, told the press that the latest cuts will take about “2,000 megawatts of demand from the grid, and could last for a week or longer”.

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“Until 2009, Eskom was functioning successfully as a single entity. Once political corruption and state capture came into play, the power utility started floundering.” Mike Teuchert, National Head of Taxation Services

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Corruption, Bailouts, Junk Credit Rating

Years of “corruption and mismanagement under Ramaphosa’s predecessor, Jacob Zuma, left Eskom with surging costs, falling revenues, and a fleet of breakdown-prone, coal-fired power stations”. Older plants are “near the end of their productive lives, while work on newer, larger coal stations has fallen behind schedule, causing Eskom’s debts to balloon”.

This is particularly interesting to me, since I was an Eskom consultant years ago at Koeberg Nuclear Power Station. The only nuclear power plant in Africa and considered by some to be South Africa’s most stable energy source, Koeberg was scheduled to close in the 2020s. Instead, it’s being revamped to extend its operating life.

Eskom can’t pay back its debts without state support, lacks stable internal leadership, and currently has no full-time CEO. The acting CEO is businessman Jabu Mabuza. Eskom weaknesses further endanger South Africa’s credit rating, which is teetering on the verge of being cut to junk. Outages could “cost the country its investment-grade credit rating”.

The FT African Financial Summit “attracts prominent businessmen, financiers, investors, development partners, and decision-makers worldwide”. President Ramaphosa told the FT Summit that the South African government was working on “innovative ideas and new appointments” designed to turn around Eskom’s debt and “strengthen its governance“.

Moody’s thinks Eskom’s “inability to deliver electricity demand even in spring, when it’s lower than the winter months, is cause for concern”. A “comprehensive and credible restructuring plan must be implemented quickly” to avoid future blackouts that undermine the economy. Moody’s delivers its next assessment of South Africa’s economy on November 1.

Eskom Restructuring and Independent Power Producers

Ramaphosa backs proposals to reorganize Eskom’s debt by the end of October 2019. The restructure divides the utility into three separate state-owned entities under one holding company. Coal powered plant operating entities include:

• Generation
• Transmission
• Distribution

At this point, maintaining the 2019 timeline is unlikely. Some question whether keeping all three entities under Eskom will solve the utility’s financial problems. Unlike other state-owned South African enterprises, Eskom operations are vital for a sustainable economy.

Trade union allies of the ruling ANC, like the Congress of South African Trade Unions (Cosatu), “resist the proposed restructuring plan, and think it would lead to wholesale privatization”. Some say splitting the entity and not changing the ownership structure won’t result in debt reduction. They suggest selling off or privatizing one entity to help Eskom settle some of its mounting debt.

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Eskom bailouts “impact spending on vital services like schools and hospitals,” and many South Africans favor clean, renewable alternative energy sources over coal-fired power plants.

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In the midst of another load-shedding crisis, Western Cape Premier Alan Winde proposes Independent Power Producers (IPPs). He urges President Ramaphosa to consider allowing municipalities to procure alternative power. Winde insists municipalities be given the opportunity to procure power from “grid connected solar photovoltaic power plants” like 1-10 MW energy systems and claims these photovoltaic systems will bring clean power generation on line.

Are Eskom’s Coal-Fired Power Stations Deadly?

There are new medical studies about the health hazards associated with coal-fired power. According to a recent NASA Earth Science Satellite Data analysis, “Eskom’s reliance on coal for electricity is potentially deadly”. “Mpumalanga, in the Eastern Transvaal, is the second worst SO2 emission hotspot in the world, next to Russia’s enormous smelters.”

The SO2 emission hotspot is the result of high-density, coal-fired plants in Mpumalanga. “Medical research experts say high levels of air pollution can shorten human life expectancy by 20+ years.”

ANC Integrated Resource Plan

The ANC-backed government “gave assurances that their Integrated Resource Plan (IRP) would be released in September”. Now in mid-October, implementing “the IRP blueprint for generating new energy, seems like a pipe dream”.

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“The Democratic Alliance (DA) warns Eskom against using rolling blackouts as a bargaining tool for more money.”

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Democratic Alliance Plan for Eskom

The Democratic Alliance (DA) is the official opposition party to the governing African National Congress (ANC). The party is most popular in the Western Cape. It’s “broadly centrist and has been attributed with both centre-left and centre-right policies”. The DA developed a plan to make Eskom more “efficient, competitive, and profitable”. The goal of the “Cheaper Energy Bill” is stabilizing and securing South Africa’s power supply by breaking Eskom into two separate entities – generation and distribution. They will present a plan to the South African National Assembly in Pretoria.

The “re-occurrence of rolling blackouts isn’t a surprise”. The DA has “long held the view that Eskom’s turnaround strategies and recovery plans amounted to nothing”. They think the “embattled utility is more concerned about funding Eskom’s deteriorating operations than making it a stable energy producer”.

Eskom dragged the National Energy Regulator of South Africa (NERSA) to court challenging their decision to allow tariff increases below those they requested. It’s agreed that continuing rolling blackouts will have serious consequences for South Africa’s struggling economy.

The DA is trying to curb the impact of rolling blackouts. Immediate concerns include the effect on student matric exams. “They’ve received calls from principals and teachers regarding outages impacting Computer Applications Practical Exams.”

South Africa’s energy monopoly is detrimental to economic growth. The DA sees Eskom as an organization that “would let the country plunge into darkness before putting aside its pride and stabilizing the grid with Independent Power Producers”.

Most South Africans seem complacent about the country’s dire energy situation and take Eskom power outages in their stride. The prospect of living with them indefinitely doesn’t appeal, and some wonder if the ANC has a “vision for Eskom that reaches beyond its political interests“?