Expect load-shedding from January, financial advisory firm predicts

Load-shedding may return as early as next month but will remain at low levels until the end of 2028, when South Africans may suffer the consequences of an electricity supply deficit from January to September, an analysis by the boutique financial advisory firm Cresco shows.

This is despite assurances by the Eskom system operator in its medium-term system adequacy outlook for 2025-29 that the lights will remain on over the period.

This assurance was, however, qualified — it was based on the assumption that the availability of Eskom’s generation plant will be at an annual average of 63%.

In the week ended December 1, the energy availability factor dipped under 60% after seven consecutive weeks above that level.

The average for the year to that date was 60.12%, an improvement of almost six percentage points from the previous year’s average.

Should the energy availability factor deteriorate, it “will take the country back to the constrained system and possible load-shedding,” the system operator said.

The improved plant performance had resulted in more than 250 consecutive days without load-shedding, Eskom said in a statement, saving the utility almost R17bn in diesel costs.

Cresco assists project developers to bring projects to bankability and marketing projects to investors and financiers. It advises many large power users in SA that are embarking on alternative energy projects to ensure security of supply and move towards decarbonisation.

It is also an authorised agent for the Multilateral Investment Guarantee Agency, which is part of the World Bank Group and which provides political risk insurance to cross-border investors and financiers.

In a report on energy market projections issued jointly by Standard Bank and Cresco in October, Robert Futter, executive director at the Cresco Group, addresses the forecast energy shortfall.

He told Business Day that Cresco had in its latest forecast factored in Eskom’s improved plant performance and saw low levels of load-shedding up to the end of 2027.

Despite the significant difference between coal capacity removal and renewable energy capacity additions, the new renewable generation will be insufficient to replace the decommissioned coal generation.

The group earlier expected load-shedding at a monthly average level of stage 1 in May and July this year, but that did not occur, perhaps because of measures to reduce demand, Futter said.

Cresco now forecasts stage 1 load-shedding in January and February next year, February 2026, and February, May and July 2027. The other months are expected to be free of load-shedding.

The situation is expected to deteriorate considerably in 2028, with load-shedding varying between stage 1 and 2 in every month from January to September. The same is expected in 2029, with load-shedding intensifying to stage 3 in February and additional stage 1 load-shedding in November.

This pattern is expected to repeat itself in 2030, with October, November and December being the only months without load-shedding.

It reached this conclusion after looking at each individual generating unit, including those in the Eskom fleet, units in the government’s Renewable Energy Independent Power Producer Procurement Programme, other government-procured independent power producer projects, privately procured utility-scale renewable energy projects and embedded generation.

Its assessment of the balance between supply and demand relied heavily on data from Cresco’s own project database of about 200 independent power producer projects totalling 33GW and 133 government-procured independent power producer projects totalling 12GW.

It modelled for the use of battery energy storage systems to shift surplus energy generated at one time of the day — mostly excess solar power during the day — to times when there is a deficit, for example during the evening peak.

The use of diesel-fired open-cycle gas turbines was factored in as an electricity supplier of last resort whose operations depend on the energy deficit in any given month.

Due to the improvement in Eskom’s energy availability factor of existing coal plants, load-shedding levels were expected to remain low in the next two years, Cresco said.

“In 2027, as coal decommissioning resumes, the energy deficit is expected to start increasing.

“From 2028 onward, the situation is expected to deteriorate significantly with the national energy deficit steadily increasing.

“The main reason for resumed load-shedding is planned coal plant decommissioning, which needs to be closely paced with new generating capacity additions to ensure baseload generation replacement,” Cresco said.

While 7GW of coal capacity gets decommissioned by 2030, 25GW of wind and solar PV generation were expected to be added to the grid along with 8.7GW of battery energy storage systems, this would be supported by additional 4GW of embedded PV.

“Despite the significant difference between coal capacity removal and renewable energy capacity additions, the new renewable generation will be insufficient to replace the decommissioned coal generation,” it said.

“Due to the prolonged utilisation of coal plants, the grid is expected to remain unstable and unreliable with possible frequent unplanned outages.”