The Western Cape government estimates that rolling blackouts could have cost up to R12.3 billion over a year, a severe blow to the province’s economy.
With load shedding well into its third consecutive week, businesses and South Africans are counting the cost of the ongoing power cuts as Eskom battles to keep the lights on.
MEC for Finance and Economic Opportunities, Mireille Wenger provided the figure to Weekend Argus after tabling the 2022/2023 Provincial Economic Review and Outlook (PERO) report, where load shedding was fingered as a barrier to economic growth for a number of sectors.
“The impact of the rolling blackouts is devastating to businesses, especially small businesses, hitting them the hardest because they do not have the resources to buffer the shock that these interruptions create,” she said.
Wenger, however, remained adamant, that the Western Cape Government was prepared “on all fronts should load shedding at this level continue.”
“We know that the ongoing impact of rolling blackouts is compromising economic growth and has led to an estimated 1 million fewer jobs nationally. That is why we are prioritising investing in our energy resilience.”
She added: “In 2021, provisional modelling estimates of the cost of load shedding to Western Cape economy was between R6bn and R12.3bn.”
A financial services provider, the Efficient Group, has conservatively estimated that the South African economy to be between 8% to 10% smaller as a direct consequence of load shedding, while Alexander Forbes estimated the cost of stage 6 load-shedding at R4bn per day.
The PERO report highlighted how the average electricity generated in South Africa in 2021 was 6.9% less than at the end of 2011, despite the escalating cost of electricity on an annual basis.
This week Eskom boss Andre de Ruyter agreed to a meeting with agricultural lobby group AgriSA's to discuss the outlook for load shedding in the coming weeks.
The group argued that prolonged load shedding could have an impact on food security.
"With load shedding escalating as South Africa enters the summer crop planting season, the current energy crisis may have implications for food security into the coming year unless farmers can put measures in place to mitigate against the effects of load shedding,“ AgriSA said.
"Electricity is a key agricultural input. According to the Department of Agriculture, Land Reform and Rural Development statistics, the agricultural sector spent approximately R9 billion on electricity in 2021. This is more than 7% of the sector’s expenditure on intermediate goods and services. A reliable power supply is especially critical for the sector’s irrigation and water treatment."
To mitigate the impact of load shedding, three municipalities in the Western Cape, Cape Town, Stellenbosch and Mossel Bay, said they were on track to remove themselves from Eskom’s grid.
Mossel Bay’s mayor Dirk Kotzé told Weekend Argus that his municipality was the first to initiate processes to get off Eskom’s grid. But his attempts were met with a litany of regulatory barriers that were linked to self-generation thresholds.
Last year, President Cyril Ramaphosa announced the increase to the licensing threshold for self-generation projects from 1 megawatt to 100MW.
The amendments allowed a generation facility, including an independent power producer, of up to 100MW to sell electricity to an end-use customer.
“We went through the whole process, but we learnt our lesson ... It took us two to three years to get the contracts in place and then we went out for tender and we had a person that came in at about 64 cents per kilowatt unit over a 20-year period,” Kotzé said, adding that at the time regulations allowed for self-generating projects for up to one megawatt of power.
“So we adjudicated three plants (each with a one megawatt capacity) and Treasury told us no, due to that current legislation, which is now changed again, we cannot allow them to go forward ... We then got involved in litigation, which is now sorted.
“We will be going out independently in the next month or so for a 30 megawatt renewable energy plant.”
Kotzé is also pro-oil and gas as an alternative energy source to coal. Resources, Cape Town mayor Geordin Hill-Lewis said the metro did not have.
“We don’t have much oil and gas here, but it is true that it will be massive for Mossel Bay if Total goes ahead with their investment in that off shore drilling site ... but not sure how they are proposing to move off grid,” Hill-Lewis told Weekend Argus.
The City of Cape Town plans to build a solar power plant next year in its effort to end load shedding in the long run. This plant will also be the first of its kind to be connected to the province's power grid.
The plant is expected to produce an estimated generation capacity of 14.7 gigawatt annually.
The metro has now called for tenders for the planned solar power plant in Atlantis.
Hill-Lewis said the plant will be connected directly to the city's power grid, which will hopefully pave the way for more plants to be built in the future.
"This is one of many interventions to end load shedding in the long run," said Hill-Lewis.
The planned plant will start generating electricity by 2024 and will be in operation for 20 years thereafter.
On Friday the City also put out a tender for a demand response service provider to put in measures that limit high energy usage.
“That will hopefully bring in 60 MW of load that can be shifted (geyser load mainly) and result in one stage less of load shedding. (This) takes us to 3 stages of mitigation which is a big step forward in line with mayor’s promise to end load shedding,” said a source.
Premier Alan Winde earlier reassured residents of the Western Cape that the local government has plans ready to tackle load shedding while urging municipalities to put in contingency measures for chances of prolonged blackouts