The South African Reserve Bank forecasts GDP growth of merely 0.3% in 2023, with loadshedding expected to detract two percentage points from overall growth this year.

This is assuming 280 days of loadshedding at varying stages, but predominantly at stage 4, the SARB said in its Financial Stability Review.

In the first five months of this year, about 13,000 GWh have been shed, more than in the entire 2022 when 11,697 was shed, SARB calculations show.

Both years showed a significant worsening of electricity supply: In 2018, about 219 gigawatt hours (GWh) were shed, 1,326 GWh in 2019, 1,701 GWh in 2020 and 2,558 GWh in 2021.

The more frequent and higher stages of loadshedding are caused by the declining performance of Eskom’s fleet of ageing power stations, the SARB said.

The average energy availability factor (EAF) for this year so far is 52.8%, down from an average of 58.1% in 2022, 61.8% in 2021 and 65% in 2020. This sustained decline in the EAF is primarily attributable to an increasing number of unplanned outages amid increasingly frequent breakdowns of generating units at old and unreliable coal-fired power stations.

The total unplanned outage factor has averaged 35.9% in 2023 thus far; again the highest on record (the 2022 average was 31.3%).

The SARB forecasts loadshedding is expected to ease to 150 days (lowering GDP growth by 0.8 percentage points) and 100 days (reducing GDP growth by 0.4 percentage points) in 2024 and 2025 respectively, as some mitigating interventions are implemented.

Impact

The central bank said Eskom’s ongoing power supply constraints are continuing to negatively affect the productivity and profitability of businesses, and may threaten the viability of some businesses, especially SMEs. Domestic business confidence continues to slip as business conditions soured in the wake of higher stages of loadshedding.

The country is also facing inflationary risks from severe stages of loadshedding, as higher operating costs from running diesel generators are passed to consumers and higher rates of wastage and spoilage, especially along food value chains, lead to possible goods shortages.