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South Africa publishes key regulations to help end load shedding

Mineral resources and energy minister Gwede Mantashe has published an amendment to the Electricity Regulation Act that will allow individuals and businesses to install up to 100MW of private power generation without a licence.

The updated regulations follow an address by president Cyril Ramaphosa in June, in which he said that Nersa would lift the threshold for licencing private power generation from 1MW to 100MW.

The belated announcement follows sustained pleas from the private sector, including several business groups, that the threshold should be raised to 50MW.

The cumbersome and costly licencing process for self-generation is seen as a major deterrent to bringing much-needed additional generation capacity onto the national grid.

According to president Ramaphosa, firms will also be allowed to sell any excess power generated back into the grid.

Load shedding 

Data published by the Council for Scientific and Industrial Research (CSIR) this week shows that the country has spent a significant amount of 2021 in the dark.

The report shows that South Africa experienced 650 hours of load shedding in the first half of the year – the equivalent of 27 full days.

By comparison, 2020 is currently the worst year of load shedding on record with 859 hours lost over a 12 month period. 2021 has already seen 76% of the load shedding experienced in 2020.

In the first half of 2021, load shedding occurred in each month, dominated by Stage 2, with most of the power cuts happening across March and June.

The full breakdown is as follows:

  • Stage 1: 63 hours
  • Stage 2: 1,096 hours
  • Stage 3: 93 hours
  • Stage 4: 32 hours

Declining trend

The CSIR pointed to data showing that Eskom’s power output capabilities have steadily declined over the last four years.

It said that Eskom’s fleet had an annual average Energy Availability Factor (EAF) of 61.3% in the first half of 2021, compared to 65% in 2020 and 66.9% in 2019.

The EAF is a measure of the availability of Eskom’s fleet of power stations.

In the first half of 2021, the EAF comprised planned maintenance at 11% (PCLF), unplanned outages at 24.5% (UCLF) and other outages at 3.2% (OCLF).

Job killer

Professional services firm PwC said that load shedding will halve GDP growth this year and cost the country 275,000 in potential jobs.

In a July research note, the group said that the 859 hours of load shedding experienced by South Africa in 2020 cost the country an estimated R75 billion in GDP and an additional 450,000 jobs.

“Put differently, last year’s 7% decline in real GDP could have been limited to around 4.7% were it not for Eskom power delivery failures,” it said.

In recent months, PwC said that its baseline scenario included an assumption that the economy will face a similar volume of load shedding hours in 2021 compared to 2020.

“This assumption still appears valid: electricity outages totalled 560 hours in H1 2021 which was close to the 576 hours recorded in the first half of last year.

“While a notable proportion of the recent power outages were experienced outside of business hours, the number of load-shedding hours in H1 2021 can be equated to the loss of 70 (eight-hour) working days.”

PwC estimates that load shedding will reduce real GDP growth by 2.3 percentage points in 2021 and at the cost of hundreds of thousands of potential jobs.

“In other words, if South Africa did not experience load shedding, real GDP growth could have been 4.6% under our baseline scenario, with up to 565,000 jobs recovered.”

Read: Government’s plan to fix Eskom and end load shedding in South Africa

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