Web money

Record outages leave South Africa struggling to find an energy solution

The most severe blackouts in South Africa’s history have left the government scrambling to find ways to mitigate their impact on businesses and livelihoods, scrambling to buy more electricity to private producers and neighboring countries.

Africa’s most industrialized nation is facing more than four hours of power cuts in a row because state-owned Eskom cannot generate enough electricity from its old and poorly maintained power plants to meet the request.

Although the country has been facing power outages since 2008, a succession of action plans have failed to deliver lasting solutions. The government’s latest pledge to intervene comes after 6,000 megawatts of capacity were cut from the national grid over the weekend due to malfunctioning power stations.

The crisis is hammering an economy that is struggling to recover from the pandemic and restore business confidence. The duration and frequency of outages make it impossible to recharge the batteries used as backups and some companies rack up huge bills buying diesel for their generators. Small businesses have been particularly hard hit.

“We have an order book and I had to cancel some orders because we couldn’t accept them due to the prolonged power cuts,” said Sibongile Mufamade, a laundry worker in Radiokop, west of Johannesburg. , who fears losing his job. “It’s the worst we’ve seen and it’s hurting small businesses.”

President Cyril Ramaphosa has cut short an overseas trip to oversee the government’s response to the crisis and is due to return to the country later on Tuesday. He said he had held an emergency virtual meeting with his ministers and officials, and solutions were being formulated and implemented.

“We will remain seized of this matter until the situation is resolved,” he said in his weekly bulletin to the nation. The recent blackouts “remind us of how unstable our aging plants are. This gave greater urgency to the measures we announced two months ago to stabilize our electricity supply,” he said.

Read: The United States and South Africa have established a joint trade and investment task force: Ramaphosa

Eskom, which supplies more than 90% of South Africa’s electricity, said on Monday it plans to start signing deals this week to buy an additional 1,000 megawatts of power.

The utility has a nameplate generating capacity of about 45,000 megawatts, but more than half of that is offline due to outages or scheduled repairs, and it has previously warned that up to an additional 6,000 megawatts were needed to stabilize the system.

The Department of Public Enterprises, which oversees Eskom, meanwhile announced plans to buy 200 megawatts of power from other countries through the Southern Africa regional power pool.

The rand hit 17.7975 to the dollar on Monday, its weakest level since May 2020, and was at 17.7227 at 5:37 p.m. in Johannesburg on Tuesday.

The FTSE/JSE Africa All Share Index rose 1.5%, after falling for five consecutive days and closing 0.19% in the green. Mining and manufacturing companies have been hardest hit.

A number of mining companies have announced plans to build their own power plants, but it will take some time before they are operational.

“It’s hard to say what the impact on production will be. For now, the merger “has been significantly impacted but the impact on mining has been limited,” said Johan Theron, a spokesperson for Impala Platinum via text message: “We are minimizing the use of our furnaces and other ancillary equipment to prioritize the energy available for mining activity.”

Backup battery
Vodacom Group, South Africa’s main mobile operator, said it had spent around R2 billion on batteries over the past two years to help keep base stations running during blackouts, but more interruptions. longer and more frequent can only allow for intermittent service.

Rival group MTN has deployed more than 2,000 generators and thousands of batteries to keep customers connected, but the current severity of power cuts has made recharging them difficult, according to Michele Gamberini, its chief technology and information officer. .

There were a total of 106 days of outages in 2022, according to Bloomberg’s calculations. On Tuesday, Eskom pulled 5,000 megawatts of capacity from the grid, after bringing some tripped units back online, but its executives warned there was a risk the situation could deteriorate further.

“South Africa’s growth potential continues to dwindle” with each day that power cuts continue, Rand Merchant Bank economists said in emailed comments. “The outlook remains one of the most painful ahead as South Africa’s assets are fragile and prone to weakness in an environment of deteriorating fundamentals.”

Ramaphosa last announced emergency measures to reduce outages on July 25, including increasing Eskom’s maintenance budget and increasing power purchases.

Tapiwa Chasakara, a resident of Radiokop, said he was growing increasingly frustrated with government and Eskom inaction.

“These blackouts are the worst we have seen because they happened so quickly and without warning,” he said. “Long hours without electricity impact our quality of life and even our finances, as you find yourself having to buy take-out food when you could have cooked at home. I don’t have a power supply from rescue.

© 2022 Bloomberg L.P.