South Africa’s Electricity Minister on Edge Over Strained Supply

(Bloomberg) — South Africa remains vulnerable to power outages due to unplanned breakdowns at existing plants and delays in bringing new ones on line, the country’s electricity minister warned. 

“Even as I speak to you now, the system is under tremendous strain,” Kgosientsho Ramokgopa told reporters at a conference in Cape Town on Tuesday. Keeping the power supply stable is one of the things that “give me sleepless nights,” he said. 

Africa’s largest economy was subjected to years of rolling blackouts as state utility Eskom Holdings SOC Ltd., which provides more than 80% of South Africa’s electricity, failed to keep pace with demand. The almost-daily outages, which are known locally as loadshedding and reached record levels in 2023, were halted in March last year — respite Eskom attributed to improved maintenance as it delayed the planned retirement of some older plants until new capacity is added.

There have been intermittent power cuts this year, however, as some units broke down, and the reliability of plants that are being run beyond their scheduled decommissioning dates remains an ongoing concern. One of two reactors at the Koeberg nuclear plant, once regarded as Eskom’s most reliable plant, tripped over the weekend, highlighting the vulnerability of the system. 

Eskom instituted Stage 6 power cuts on Feb. 23, taking 6,000 megawatts of generation capacity off line to prevent a total blackout. 

The renewed outages “raises concerns about potential systemic weaknesses,” said Jason Lightfoot, a portfolio manager at Cape Town-based Futuregrowth Asset Management. “In addition, as winter draws near and demand is expected to surge, we need to consider the consequences of this instability and the risk of further loadshedding.”

Over the next decade, Eskom is due to shut coal-fired plants with at least 15 gigawatts of generation capacity and it has been planning to replace some of that output since early last year. Projects that will produce up to 2,000 megawatts of renewable energy “are either in implementation or under development for implementation in the next three years,” the utility said in reply to questions.

Eskom Chief Executive Officer Dan Marokane outlined expansion plans to lawmakers in December last year, which included “aspirational and unfunded” projects and envisioned the use of gas, nuclear and hydro technologies. 

An increase in private generation has helped to alleviate South Africa’s electricity squeeze, with a record 501 new facilities with a combined capacity of 4,178 megawatts registered last year, according to the National Energy Regulator of South Africa.

Government programs to procure power from large-scale projects have encountered multiple delays. A submission deadline for the first bid window to supply 2,000 megawatts of gas-fired power was extended by seven months to clarify some issues for bidders, according to a notice published last week by the Department of Mineral Resources and Energy. 

There are other energy challenges to address. One is finding a financing solution to upgrade 14,000 kilometers (8,700 miles) of transmission lines — which Ramokgopa expects before the end of the year. Another is to ensure that South Africa doesn’t fall off a “gas cliff” when supplies that are brought in via pipeline from Mozambique run out — a prospect the minister says also keeps him awake at night. 

The government is coordinating with Eskom and chemical maker Sasol Ltd. to jointly access liquefied natural gas from Qatar, but importing the fuel may “impact on price,” according to Ramokgopa. 

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