Power generation in South Africa is going private, but this does not mean that Eskom is being privatised.
The fate of South Africa’s energy crisis lies in the hands of the private sector. But it seems like this sector is turning to alternative sources and private providers instead of investing in Eskom.
Eskom is being replaced but not in the way you think
In February of 2024, Mteto Nyati, the chairman of Eskom’s board of directors, called for a close-to R350 billion in funds over the course of the next ten years for transmission and infrastructure. This would have to come from the private sector.
Private entities certainly heard this message loud and clear – though their reaction to the news has not been what the power utility likely expected.
Eskom, for the time being, remains a state-owned entity. However, with the energy availability factor (EAF) remaining fairly low, and the energy crisis nowhere near a resolution, it seems like South African households are taking the generation of electricity into their own hands.
Breaking down the numbers
Eskom maintains that its EAF has been trending upwards, with January 2024’s EAF showing a 5% improvement from January 2023’s 50% average.
However, this disregards the month of February 2024, which saw the return of stage 6 load shedding and a low EAF of 50.84%.
On the other hand, research by RMB Morgan Stanley shows that the private sector’s interest in generating its own electricity is booming.
Based on this data, the amount of batteries and solar panels skyrocketed in the last quarter of 2023. As a result, RMB Morgan Stanley estimates that alternative energy sources could overtake Eskom’s generational capacity as soon as 2025.
Load shedding is not the only thing motivating the change
Load shedding has been a problem plaguing South Africans for years now, but the fear of being left in the dark is no longer the only thing motivating people to move off the grid.
With the newest tariff increase of 12.74%, which took effect on 1 April 2024, South Africans are officially paying about a third more (33.8%) for their electricity than they did just two years ago.
Considering this sharp price increase, alternative power sources certainly seem much more appealing.
Will this mean the end of load shedding?
Whilst this kind of off-the-grid movement may not be the ideal scenario, this certainly means that markedly less strain is being placed on the grid as a whole.
However, several experts have warned that without concrete plans to improve and maintain the Eskom infrastructure, there is little hope that load shedding will ever end.
And while many promises have been made that load shedding will be over before the end of 2024, Eskom has already struggled to meet many of its generational targets just a few months into the year.
