South Africa’s Load Shedding Woes: Economists Predict Up to 5 More Years of Blackouts

“South Africans brace for up to five more years of load shedding,” warns economist Johannes Khosa in Nedbank’s Guide to the Economy for 2023. Despite government assurances, Khosa reports that rolling blackouts are unlikely to end soon as Eskom’s turnaround is slow. Worse still for the country, load-shedding is predicted to exacerbate as demand for electricity grows in winter months. While the government pumps money into Eskom, Khosa suggests that its “strategy of throwing more ministers at the problem isn’t proving effective.”

The economic impacts of persistent electricity shortages on South African industry are profound. Khosa anticipates that load shedding will constrain business operations, and the economy will continue to suffer. The notorious Eskom, the country’s electric power utility, has received billions in fiscal support over the last decade but struggles to improve operations amid allegations of deep-rooted corruption. It’s therefore unsurprising that Nedbank, through Khosa, predicts that the load shedding problem will persist for years, hindering future economic growth and development.

The National Treasury recently allocated over R250 billion in debt relief to Eskom, which follows years of public bailouts and electricity tariff inflation above the inflation rate. Besides bearing the financial burden, South Africans will be forced to “bear the brunt” of the worsening electricity crisis. New Electricity Minister, Kgosientsho Ramokgopa, said Eskom could add 2,000MW to the grid by the end of the year, but only if maintenance is improved. This will require the cooperation suppliers and increased government funding, making Eskom’s problems the government’s to solve.

Independent power producing companies licensed through bid windows 4 and 5 may introduce some relief as renewable power output increases. Additional tax incentives could encourage citizen investment in alternative power, ultimately reducing reliance on the national grid. Still, Intellidex analyst Peter Attard Montalto warns that unless the government addresses Eskom’s load shedding crisis by introducing a coherent generation strategy and manageable policies, the problem will persist. Begging the government to ditch absurd strategies like a coal-fleet refurbishment — which would require R400 billion and several years of execution — Montalto suggests that renewables remain the most feasible solution for South Africa’s energy needs.

Also Read:   Eskom Ramps Up Load-Shedding Amid Maintenance Challenges

Winter is coming, and so is the load shedding that accompanies it. Although the load shedding is predicted to worsen, experts suggest that Eskom will falsely blame extreme weather patterns for the problem; some level of intentional load shedding should be expected. South Africa’s inability to resolve the electricity crisis could result in decades of increased electricity prices, frustration toward the government, and a national economy that never reaches its full potential.

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