As South Africa braces for the coming winter months, there is growing concern over the state of the country’s electricity supply. According to Intellidex analyst Peter Attard Montalto, load shedding is going to be worse than many people are expecting. This is sobering news for a country that has been grappling with power outages for years now.
Commenting on recent remarks made by electricity minister Kgosientsho Ramokgopa, Attard Montalto warned that while there is a clear way out of the load shedding crisis, it requires setting aside the “madness” surrounding established energy plans. The government’s proposal to pump billions of rands back into coal has been met with mixed reactions, with energy stakeholders describing it as incoherent and nonsensical.
Attard Montalto noted that while it’s not a bad thing to question established plans, counterproposals need to be supported by data and, more importantly, they need to make sense. The analyst went on to question Ramokgopa’s understanding of the budget process and how investment in the refurbishment of coal power stations and private coal mines might work over what period. According to Attard Montalto, the plans are entirely incongruent.
In reality, Eskom has already done the calculations for what the government is proposing, and the cost is astronomical. Furthermore, the country simply does not have the funds to raise such a colossal amount of money. The time it would take to execute the plan far exceeds the country’s requirements, and it wouldn’t be sufficient to end the crisis altogether.
Despite the current situation, Attard Montalto is confident that a sensible plan through the Integrated Resource Plan (IRP) and political will can resolve the power crisis. However, even with the best plan and execution, it’s too late for the coming winter season. If things go according to plan, then this winter should be the worst point of the load-shedding crisis, although worse than people generally expect.
“The end of load-shedding may take a few years longer,” Attard Montalto said. “But we will get there quicker — taking investment sentiment along with us, if we can keep the madness at bay.”
South Africa needs to buckle up for the coming winter as load shedding becomes a growing concern. The government’s current plan may not be feasible, but the country has a clear way out of the crisis through the IRP. While it may take some time, with political will and sensible planning, South Africa could once and for all resolve its power crisis.