South Africa now generates less electricity than 20 years ago

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South Africa had less electricity to distribute in 2023 than in the first quarter of 2004. The deterioration is mainly due to Eskom’s collapse and the government’s failure to heed warnings in the late 1990s and implement its own policies.

For 85 years, the power utility provided South Africa with reliable, affordable electricity. It was a well-run company which supplied more than half of the electricity in Africa in 1990.

Eskom even won the Power Company of the Year at the Global Energy Awards in 2001, showing just how great a power utility it used to be.

Fast forward twenty years, and Eskom has become a company in freefall which struggles to keep the lights on.

Over the last 15 years, Eskom’s financial and operational performance plummeted, and it is now selling less electricity than it did in 2008.

The root of South Africa’s power crisis tracks back to the early nineties and the transition to a democratic government.

By 1990, Eskom had completed a massive build programme over three decades to ensure energy self-sufficiency. It had a total capacity of 40,000MW and provided some of the lowest-cost electricity globally.

Eskom’s relatively strong position in the early 2000s due to long-term planning and forecasting can be seen in the graph below.

The graph below shows the amount of electricity produced in South Africa and the amount available for distribution.

However, that graph does not tell the full story. While Eskom managed to increase its electricity output, this was done by running its existing plants harder and not by adding any new capacity to the grid.

Moreover, in 1994, the democratically-elected ANC government shifted South Africa’s electrification policy to prioritise increased access to electricity in rural areas.

There was a rapid increase in demand for electricity, with rural access to electricity doubling by 1997 and nationwide access increasing by 20%. This greatly increased the strain on Eskom’s existing infrastructure.

A White Paper on the Energy Policy of South Africa was released in 1998, which warned that Eskom’s generation capacity would be fully utilised by 2007.

Eskom requested the government for additional budget allocations to expand their generation capacity. However, it was rejected by the Mbeki administration, which sought to run a tight fiscal ship.

As the White Paper predicted, Eskom could not meet electricity demand in late 2007, which resulted in the first national power outage in South Africa’s history.

In 2008, the government responded to the supply-demand imbalance by implementing load-shedding, which artificially lowered electricity demand by rotating power outages across the country.

The strain on Eskom’s infrastructure can be seen below, which shows the utility’s inability to ramp up supply any further and some of its units failing as they had been run hard to keep up with demand.

In response, the government commissioned Eskom to build two new coal-fired power plants – Medupi and Kusile.

However, the government refused to allow private sector participation in electricity generation.

The construction of Medupi and Kusile was beset by challenges from the outset. Rushed planning, coupled with corruption, resulted in numerous design flaws and significant delays.

Fifteen years and an estimated R464 billion later, the stations remain incomplete despite achieving partial commercial operation.

This has led to a situation where Eskom’s electricity generation capacity after the construction of Medupi and Kusile falls short of pre-construction levels.

Furthermore, intrinsic design deficiencies plague the plants, manifesting in frequent breakdowns and suboptimal energy efficiency.

These issues exacerbate the ongoing decline in the performance of Eskom’s ageing coal fleet, contributing to an escalating electricity supply deficit.