South Africa Struggles to Deal with Power Supply
On March 6 and 7, South Africa experienced mass rolling blackouts. The state owned utility company Eskom, which supplies 95% of the country’s energy supply, had to impose the power shortages after heavy rains made much of the coal at power stations too wet to burn.
Eskom has stated that “Customers can expect two to four hours of blackout at a time.” Additionally, it has requested that large industrial customers reduce their energy consumption by 10%. Many large firms have switched to generators for their power but many smaller enterprises have had no alternative to Eskom’s energy.
Domestic users were also asked to cease all non-essential functions and turn off appliances such as swimming pool pumps and water heaters.
While the recent blackouts are the third energy emergency in two weeks, South Africa had not experienced severe energy shortages since 2008. However, the 2008 blackouts cost the economy billions of dollars as factories and mines had to close, South Africa’s credit rating was downgraded and investment flowed out of the country.
Business organizations have already begun warning of the potential risks of the most recent blackouts.
Naren Rau, CEO of the South African Chamber of Commerce warned that “If we are looking at power constraints of about a day or two, then our losses would be in the lower billions, but if you’re looking at power constraints of a week or more, it’s going to escalate very fast.” Additionally, officials at London-based Nomura International PLC, have estimated that the power outages may hurt the South African Economy at a rate of .2% of gross domestic product per day.
The blackouts are representative of larger problems facing South Africa. Poor funding has plagued Eskom and the state-owned company is struggling to meet the demands of a population that will double in the next 15 years to nearly 100 million people. It has recently begun building three new coal-fired stations, one of which should have opened in December 2013, but fell behind schedule because of disputes with contractors and labor unions.
Because of its heavy depended on coal and its struggles to increase capacity and meet rising demand, South Africa has begun evaluating expanding into nuclear energy and shale gas.
Eskom’s ability to meet South Africa’s rising energy demands will play a large role in determining the country’s future.
Currently, 31% of South Africans–about 14.5 million people–live below the poverty line. These citizens are not able to cope with the effects of mass power losses as easily as their richer counter parts. In order to protect this most vulnerable part of the South African population, Eskom must correct its structural inefficiencies and increase its energy capacity.
– Martin Levy
Sources: BBC, Bloomberg, CIA Factbook
Photo: Positively Parkinson’s