South Africa: Where energy demand outpaces energy generation

Since 2007, South Africa has been battling an ongoing energy crisis. Ageing power stations, unable to keep up with rapid economic growth in recent decades, have consistently failed to generate enough electricity to meet the country’s demands.

Frequent breakdowns at power stations, many of which are over 50 years old, further limit generation capacity. Those that are functioning are under significant strain from operating at full capacity, meaning that renovations are unable to be completed, increasing the likelihood of further breakdowns.

Eskom, the state-owned electricity company, generates roughly 95% of South Africa’s total electricity. Long-standing corruption and mismanagement within the company have fuelled issues with electricity generation, dating back to the leadership of Thabo Mbeki.

Construction on new power stations has consistently been delayed due to the theft of crucial parts by workers and lack of money due to the misappropriation of funds.

To mitigate the crisis, Eskom has implemented nationwide power cuts, occurring on a near-daily basis. Known locally as ‘load-shedding,’ the scheduled power outages can leave residents without power for up to 10 hours a day.

In recent years, the situation has considerably deteriorated, reaching its peak in 2023 with the highest number of power outages since the crisis started. Eskom predicts that load-shedding will persist until at least 2027.

Locally, the power outages have led to a rise in criminality and civil unrest. When the electricity is off, electric fences, alarms, security gates and streetlights stop working, increasing opportunities for crimes such as burglaries and assault.

In the Western Cape, around 25% of total crimes happen during loadshedding, with the most common types of crime being property crime, making up 29% of crimes, followed by contact crime, accounting for 25%. Furthermore, ongoing power instability exacerbates issues such as food and water scarcity, limited hospital services and unemployment.

As the power outages worsen, this has exacerbated civil unrest, which is expected to intensify as power outages continue into 2024. South Africa’s security experts have identified civil unrest as being a critical risk for the country in 2024, fuelled by the recurring blackouts as well as the upcoming presidential elections.

Businesses operating in South Africa are also suffering from the crisis. The 2024 Allianz Risk Barometer identified critical infrastructure blackouts as the greatest risk facing South African businesses for the second year running. Power blackouts have affected all areas of the economy, including mining, retail, and manufacturing.

In addition, blackouts disrupt supply chains and hinder business operations, interrupting economic activity. The South African Reserve Bank has estimated that load-shedding costs the country roughly USD47 million a day, and in 2023, reduced economic growth by 1.8%.

South Africa’s economic decline has implications for other nations. Being the continent’s most industrialised economy, South Africa’s negative economic growth impacts neighbouring countries, reducing the growth trajectory for the entire Southern Africa.

With millions of citizens already living in extreme poverty, this presents a worrying outlook for the region in the coming years.