Load shedding on cards as economic activity increases

Increased economic activity from this week is expected to send electricity demand soaring and Eskom can’t promise that things won’t get dark.

The first two weeks of 2021 saw the power utility grappling with several mechanical failures at its major power stations, with the disrepair of the Koeberg station’s Unit 1 generator forcing the country into Stage 2 load shedding last week.

According to Eskom spokesperson Sikhonathi Mantshantsha, the possibility of load shedding would remain high for the duration of this year.

The demand for electricity was expected to continue rising as many industries resumed work and, as the utility warned last week, the risk of power cuts would remain elevated until until late this year when a significant reduction in the occurrence of load shedding was projected.

“The power system remains constrained, and Eskom will communicate timeously should there be any significant changes to the supply situation,” Mantshasha said.

As companies adjust to working around the restrictions of Covid-19, Eskom was replacing the pandemic as the biggest risk to economic activity this year, according to Peter Major, director of mining at Mergence Corporate Solutions.

Industries such as mining and auto-manufacturing, which relied heavily on electricity, would lament the years industry leaders spent lobbying for privatised electricity production as the state utility battles a maintenance backlog and crippling debt.

Energy expert Ted Blom expected Eskom to experience further shortfalls from today as the utility attempts to avoid longer blackouts by only conducting load curtailment or voluntary load shedding.

By Wednesday this week, the country could enter into Level 2 load shedding and possibly Level 4 as from Thursday.

Power availability measured by the electricity availability factor (EAF) was expected to hover around 60%, whereas the ideal rate was above 80%.

By Wednesday, Blom expected this to drop to 55%, although he pointed out that because Eskom includes the production of electricity from independent power producers (IPPs), the real figure could be even lower.

Production levels in mining were expected to eventually bounce back to pre-Covid-19 levels, although high commodity prices, which kept companies afloat when productivity waned, had hidden the true effect of the pandemic on the sector.

Aside from the ailing gold and diamond trades, which have seen a slow collapse, even pre-Covid, most minerals were expected to enjoy a relatively faster recovery, if not for the threat of load shedding, Major said.

Trading Economics predicted mining production expansion in SA to stand at 3.8% over the next year. In the long-term, it was projected to trend around 5% in 2021 and 2% in 2022.

Despite seeing a rebound, the economy was still 5.8% smaller at the end of 2020.