Eskom predicts bleak year ahead with generation capacity shortfall

Eskom’s Generation Adequacy Report for the medium term predicts a bleak outlook for South Africa, with a generation capacity shortfall of more than 2,000MW for most of the year. The report provides insight into the risk of load-shedding based on “planned” and “likely” scenarios. The base scenario predicts a shortfall of more than 2,001MW for 40 of the 52 weeks ahead, while the “likely” scenario predicts a generation capacity shortfall of 18,700MW, resulting in at least stage 2 load-shedding for the entirety of the year. The South African government has announced several interventions to reduce the strain on Eskom’s ageing coal fleet, including substantial rooftop solar and other renewable energy generation rebates. Read more below.


Code red at Eskom

By Myles Illidge

Eskom’s load-shedding outlook for the year ahead paints a bleak picture, with the power utility predicting a generation capacity shortfall of more than 2,000MW for most of the year.

This is according to Eskom’s Generation Adequacy Report for the medium term, which provides insight into the risk of load-shedding based on “planned” and “likely” risk levels.

Eskom breaks down its outlook into two risk levels, the first being a base scenario of outages (planned risk level), where breakdowns reach 17,200MW.

However, it also specifies that further unscheduled outages are likely, providing a “likely risk scenario” where breakdowns reach 18,700MW.

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In the second scenario, South Africa will experience at least stage 2 load-shedding for the entirety of the year ahead.

The planned risk level is slightly better. It predicts a generation capacity shortfall of more than 2,001MW for 40 of the 52 weeks ahead and losses of between 1,001MW and 2,000MW for 11 weeks.

Each stage of load-shedding represents up to 1,000 megawatts (MW) of electricity demand that must be removed from the grid.

Stage 1 is up to 1,000MW, stage 2 is 1,001–2,000MW, and so on.

The predicted generation capacity shortfall drops to less than 1,000MW for one week towards the end of March 2024, when the power utility expects a shortfall of around 1,000MW to replenish its emergency reserves.

It should be noted that Eskom has increased the generation capacity shortfall assumption for its outlook.

The power utility’s planned and likely risk scenarios previously assumed a generation capacity shortfall of 15,200MW and 17,200MW, respectively.

These have been increased to 17,200MW and 18,700MW.

Eskom also changed its outage assumptions approach. The power utility previously assumed breakdowns would average 13,000MW throughout the year.

It has since increased the assumption to 15,000MW.

Although this is in line with the state-owned power utility’s steadily declining energy availability factor (EAF), it is at odds with the government and Eskom board’s stated goal of increasing EAF to 65% by March 2024.

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South Africa’s plan to improve generation capacity

The South African government has announced several interventions to reduce strain on Eskom’s ageing coal fleet.

In February 2023, National Disaster Management Centre head Elias Sithole classified the impact of load-shedding as a national disaster.

Former cooperative governance and traditional affairs minister Nkosasana Dlamini-Zuma declared the state of disaster via government gazette on Thursday, 9 February.

President Cyril Ramaphosa announced that his administration was declaring load-shedding a state of disaster during his 2023 State of the Nation Address.

“The state of disaster will enable us to provide practical measures that we need to take to support businesses in the food production, storage and retail supply chain, including for the rollout of generators, solar panels and uninterrupted power supply,” he stated.

The declaration of a national disaster over load-shedding has faced backlash from several entities, including civil action groups like the Organisation Undoing Tax Abuse and Afriforum, and opposition parties.

During his address, Ramaphosa also announced the formation of a new ministry — a Minister of Electricity to the Presidency.

He appointed Kgosientso Ramokgopa as Minister of Electricity to assume full responsibility for overseeing all aspects of the electricity crisis response.

“The appointed minister will have political responsibility, authority, and control over all critical aspects of the Energy Action Plan,” the president stated.

“This will help to deal with the challenge of fragmentation of responsibility across various departments and ministers, which, while appropriate under normal circumstances, is not conducive to addressing the crisis that we are in.”

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Kgosientsho Ramokgopa, Minister of Electricity

One of the fastest ways for South Africa to reduce demand on Eskom’s grid is by installing solar power systems.

During the 2023 Budget Speech, finance minister Enoch Godongwana announced substantial rooftop solar and other renewable energy generation rebates in the coming financial year.

“Individuals who install rooftop solar panels from 1 March 2023 will be able to claim a rebate of 25% of the cost of the panels, up to a maximum [rebate] of R15,000,” said Godongwana.

The incentives will only be available for one year to encourage investment as soon as possible.

Godongwana also announced the extension of the current renewable energy tax incentive for businesses.

Under the expanded incentive, businesses can claim a 125% deduction in the first year for all renewable energy projects with no thresholds on generation capacity.

“For a business with positive taxable income, the deduction will reduce its tax liability,” National Treasury said.

“For example, a renewable energy investment of R1 million would qualify for a deduction of R1.25 million.”

This article was first published by MyBroadband and is republished with permission

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