How Blackouts Could Derail the Economy of South Africa
Blackouts are very rarely a good thing.
They do, however, come in varying degrees of bad. For South Africa, blackouts present a massive issue that the country has yet to solve. The thing is, these blackouts aren’t the result of a catastrophic grid failure, but actually managed by Eskom Holdings, a state-owned utility. The grid can’t handle peak electricity usage, and Eskom has repeatedly asked consumers, both residential and commercial, to cut down on usage during this time. For industrial consumers, this could mean reduced production and decreased profits.
When consumers don’t comply, Eskom runs managed blackouts to keep the grid stable. As Bloomberg’s Paul Burkhart points out, Eskom just can’t keep up.
“The state-owned utility can’t provide reliable electricity to run Africa’s second-largest economy,” he writes. “It has a long-term plan to expand generating capacity by more than 40 percent, while facing a 225 billion-rand ($20 billion) funding shortfall through 2018. The company has faced supply shortages for years and has said it may be another five years before it can guarantee the lights will always be on.”
Eskom argues that these blackouts are necessary to keep the grid from completely collapsing.
“If South Africa experienced a complete blackout, it would take us two weeks to restart the system,” Dr. Steve Lennon, sustainability executive for Eskon. “The consequences would be severe across the entire country and in every sector.”
So, what would that mean for South Africa’s economy?
To put it plainly: not great things.
As previous stated, blackouts can derail industry production. On top of that, it also can drive industry from the region, as skepticism could cause businesses to think twice before moving in. This effectively halts any economic growth in the region.
“Eskom is in dire straits,” Teneo Intelligence’s southern Africa risk analyst Anne Fruhauf said. “South Africa cannot dream of reaching a higher-growth path without an increase in baseload capacity.”
As Eskom provides more than 95% of the country’s electricity, it’s very aware of the issue.
“Eskom is committed to keeping the lights on whilst at the same time maintaining a sound basis for sustainable operations,” the company told Burkhart in an email.
Under the direction of a new CEO, Eskom is looking to increase its capacity through new plants and upgraded infrastructure. However, these efforts have been marred by setbacks and construction delays.
There is certainly support behind the company, as failure simply isn’t an option.
“It has to succeed,” Eskom’s former CEO Jacob Maroga told Burkhart. “It’s the heartbeat of the economy.”
Hydrostor receives $4m funding for A-CAES facility in Canada
Hydrostor has received $4m funding to develop a 300-500MW Advanced Compressed Air Energy Storage (A-CAES) facility in Canada.
The funding will be used to complete essential engineering and planning, and enable Hydrostor to plan construction.
The project will be modeled on Hydrostor’s commercially operating Goderich storage facility, providing up to 12 hours of energy storage.
Hydrostor’s A-CAES system supports Canada’s green economic transition by designing, building, and operating emissions-free energy storage facilities, and employing people, suppliers, and technologies from the oil and gas sector.
The Honorable Seamus O’Regan, Jr. Minister of Natural Resources, said: “Investing in clean technology will lower emissions and increase our competitiveness. This is how we get to net zero by 2050.”
A-CAES has the potential to lower greenhouse gas emissions by enabling the transition to a cleaner and more flexible electricity grid. Specifically, the low-impact and cost-effective technology will reduce the use of fossil fuels and will provide reliable and bankable energy storage solutions for utilities and regulators, while integrating renewable energy for sustainable growth.
Curtis VanWalleghem, Hydrostor’s Chief Executive Officer, said: “We are grateful for the federal government’s support of our long duration energy storage solution that is critical to enabling the clean energy transition. This made-in-Canada solution, with the support of NRCan and Sustainable Development Technology Canada, is ready to be widely deployed within Canada and globally to lower electricity rates and decarbonize the electricity sector."
The Rosamond A-CAES 500MW Project is under advanced development and targeting a 2024 launch. It is designed to turn California’s growing solar and wind resources into on-demand peak capacity while allowing for closure of fossil fuel generating stations.
Hydrostor closed US$37 million (C$49 million) in growth financing in September 2019.