Electricity pylons seen below a grey cloudy sky File Picture: Henk Kruger Independent Newspapers
A FINANCE company has warned that the reduction in energy demand in the country may not indicate energy excess but could be a sign of severe economic problems, with many businesses potentially closing down permanently.
Robert Futter, executive director of Cresco Group, expressed concerns based on data provided by Eskom regarding the energy profiles of its customers.
The company fears not only is the country’s economy stagnating, but that more businesses are shutting down, leading to an excess energy supply that has allowed load shedding to be suspended for nearly 200 days.
Futter spoke to The Mercury yesterday after Cresco Group, in collaboration with Standard Bank, published a report examining the state of the country’s energy supply and demand.
The report, titled South Africa’s Current and Future Energy Demands: Risks and Opportunities, reveals that despite the suspension of load shedding, the country will not fully meet its energy demands until 2040.
Projections indicate that South Africa needs the energy supply projected for 2040 to meet the current demand in 2024.
The report warns of a possible scenario where load shedding could return on a smaller scale next year, highlighting that the grid may come under pressure if the economy begins to grow again.
Futter noted that the data from Eskom indicates a worrying trend.
“We have noticed that the demand is getting closer to supply; we fear that we may have lost demand. This view is still being developed as we gather data over the next six months. However, we believe we have lost demand permanently, which is detrimental to GDP,” said Futter.
One contributing factor is the energy profile of the grid.
For instance, the introduction of more renewable energy sources is limited to certain times of the day, often when demand is low, unlike coal, which is available continuously.
Futter mentioned that January could be particularly badly affected due to increased demand from schools and businesses reopening.
In the long term, the report warns of imbalances between energy supply and demand as the country embarks on a decarbonisation programme, and due to the difficulty in maintaining Eskom’s ageing coal fleet.
It states that underpinning the country’s energy market in 2024 and the near future is a reliance on coal-fired plants trying to operate efficiently while private sector-led investments in solar and wind power enter the generation mix.
Futter emphasised that there is no room for error between decarbonisation and the implementation of renewable projects and renewable projects currently in the pipeline must come online as scheduled.
Chris Yelland, an energy expert, noted that it is impossible to predict whether load shedding will return.
Yelland praised government intervention, particularly the president’s recovery plan, the appointment of a dedicated energy minister, and the establishment of a work stream to address various issues related to load shedding. He said these initiatives were showing signs of success.
He also pointed out that other factors have contributed to the reduction in load shedding, including the high cost of electricity, which has pushed many consumers off the grid and prompted them to seek more efficient energy solutions, such as gas for cooking and heating.
Yelland added that ongoing Independent Power Producer projects are also helping to alleviate the impact of load shedding.
He said there is a direct correlation between GDP and energy use.
"Our economic growth has been hindered by infrastructure issues, including water supply, port problems, and road congestion. While these challenges have negatively impacted energy demand, if economic growth resumes, we could see a return of load shedding.
“However, if we continue to do the right things as a country, there is no reason for load shedding to return.”
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