Power outages in South Africa - self-consumption power plants in demand

At present, South Africa is again facing load shedding, i.e. controlled power cuts to relieve the power grid. Due to persistent power outages, demand for self-consumption power plants and battery solutions is growing among companies and private households. At present, South Africa is again facing load shedding, i.e. controlled power cuts to relieve the power grid. Due to persistent power outages, demand for self-consumption power plants and battery solutions is growing among companies and private households.

South Africa has been struggling with power shortages for years. The reason for it are ‘clapped out’ coal-fired power plants, neglected maintenance, years of delays in the completion of new coal-fired power plants and high indebtedness of the state-owned power utility („Eskom”). In order to prevent a total blackout, load shedding was introduced in South Africa. Load shedding is a measure consisting of controlled power cuts across various regions of the country on a rotating basis. More specifically, it means that South Africa has been divided into zones and the power is cut off in the respective zones at different times based on a strict schedule. The frequency of those power cuts depends on the load shedding stage (stage 1 to stage 8). The load shedding stages describe how many MW are shed from the grid. Stage 1 means that 1,000 MW are load shed, stage 2 – 2,000 MW, etc.

In November 2018, load shedding was implemented again after it had been suspended for three years. In December and January, it was initially possible to avoid further power cuts by using diesel. This very costly emergency solution turned out to be unsuccessful in February 2019 as all reserves of diesel fuel were exhausted in the country. As a result, load shedding stage 4 was immediately launched in February. Stage 4 means specifically that the power goes off each time for 2.5 hours three times within 24 hours.

As the national elections are on the doorstep in South Africa, load shedding is also a political issue. Campaign posters of the main opposition party featuring the slogan „Keep the lights on” are everywhere in the streets. In his annual State of the Nation Address, the South African President announced the splitting up of the state-owned power utility. This means that, in future, Eskom will be split into three separate entities for Generation, Transmission and Distribution under Eskom Holdings. However, privatisation of Eskom is not taken into account as a possible scenario.

A stronger focus on renewable energies and a greater opening-up of the energy market to independent electricity producers would put an end to power shortages. A new round of the public auction programme („Renewable Energy Independent Power Producer Procurement Programme- ”), which was launched in 2011 and as part of which 3,776 MW have been fed into the grid so far, is expected to commence in 2020/2021.

Load shedding creates great opportunities for German companies in the area of self-consumption power plants. The number of roof-mounted PV systems is increasingly growing in South Africa. Some municipalities also allow self-consumption power plants of up to 1 MW to feed electricity into the grid through net metering. Due to load shedding, especially battery solutions are in high demand. Both companies and private households want to cut themselves off from Eskom and the uncertainty surrounding power supply.

Entering the South African market is not complicated compared to other African countries. Especially establishing a local company is easy as the whole process takes approx. 2 weeks to complete. The South African financial sector meets the European standards. In addition, South Africa may serve as a springboard for breaking into other African markets in sub-Saharan Africa.