Situation with Eskom deteriorating

According to a report by Meridian Economics, South Africa’s record electrical outages from last year may double by 2026 if the nation does not swiftly boost generating capacity from renewable energy sources, battery storage, and even diesel-powered facilities.

The majority of the nation’s energy is produced by the state-owned Eskom Holdings SOC Ltd., whose badly maintained coal-burning facilities have grown more unreliable, while government plans to acquire additional electricity from private providers have been plagued by delays. Last year, 2,521 gigawatt hours of energy were decommissioned.

Although certain initiatives have been made to increase production, such as exempting plants that produce up to 100 megawatts of power from licensing requirements, much more must be done to stabilize the system. More than 15,000 megawatts of additional solar energy and about 7,000 megawatts from wind farms are required, according to estimates.

In the absence of more quick and dramatic initiatives, load shedding is anticipated to expand significantly during the next several years. They said that the addition of around 1,400 megawatts of thermal capacity, where diesel fuel is generally used during times of peak demand, may offer backup power when additional renewable energy output is added to the system.

The government awarded contracts to deliver 2,000 megawatts of so-called emergency energy more than a year ago, and although power-purchase agreements were finalized with one bidder last month, legal and procedural hurdles have delayed the majority of the projects. According to those acquainted with the situation, a number of other firms that have recently been awarded contracts to deliver renewable energy to the grid under another program may have trouble finishing their financial arrangements owing to increased supply-chain costs and other obstacles.

Without additional action, the building of more than 4,000 megawatts of private power capacity secured by the government has a “high risk” of failing, according to research conducted by Meridian of Cape Town. It cautioned that local content requirements for plants posed a danger to their financial sustainability and suggested that the criteria be abolished or significantly scaled down. It also demanded an expansion of electricity procurement, an increase in contract pricing, and the provision of extra incentives.

Meridian added that if immediate action is not taken, power outages might double in 2022 compared to 2021, and the situation would grow further serious beginning in 2025, when a number of Eskom’s coal units will be shut down.