Analyst predicts Stage 7 load shedding

South Africans should anticipate load shedding to worsen in 2023, according to Intellidex analyst Peter Attard Montalto, who predicts stage 7 – or greater – load shedding by the middle of the year.

Attard Montalto told The Money Show on 702 that load shedding remained one of the biggest threats for South Africa in the coming year, perhaps more so than a predicted global recession and political wrangling over important policy issues.

“We forecast stage 7 load shedding in July, on average – the peak may be higher – with stage 6 (average) in February,” he said.

Following a significant number of failures at its stations, Eskom was compelled to initiate stage 6 load shedding this week. While the country was previously only scheduled to experience stage 6 load shedding in the nights, with stage 4 during the day, more breakdowns required a switch to all-day stage 6 load shedding.

Stage 6 load shedding is the greatest degree of outage imposed in South Africa thus far; nonetheless, analysts claim that blackouts are higher when major industrial customers’ load is curtailed.

There were severe worries about the formal transition to stage 7 in December 2022, when Eskom shut down unit 1 of the Koeberg Nuclear Power Station. The station is the most dependable in Eskom’s fleet, with two units producing close to 1,000MW of electricity each.

Unit 1 will be unavailable until at least June 2023, with Unit 2 slated to go down in October. Even if everything goes as planned, South Africa will be 1,000MW short for the majority of the year. This is aggravated by the fact that around 3,000MW will be down until 2024 owing to severe failures at the Medupi and Kusile power facilities.

Having 4,000MW offline is bad enough, but Eskom is also dealing with fuel troubles, having spent more than twice its budget in 2022, and important infrastructure around the nation is being seriously damaged by outages or taken by thieves when the electricity is out, resulting in many more blackouts.

The country’s main cities, including Johannesburg, Cape Town, and Tshwane, sent advisories to citizens this week, warning of infrastructure damage and increased criminality owing to the high levels of outages.

Despite the numerous maladies and inconveniences associated with high levels of load shedding, Attard Montalto claims that the economic impact on South Africa is less severe than anticipated.

“The economic impact is less than what we would have said a year ago because there’s been so much adaptation,” he said.

“There has probably been about 1.2 gigawatts (1,200MW) of unregistered rooftop solar in South Africa in the last year, a large number of batteries, a huge amount of diesel and backup generation and batteries put in for business in the last year.

“So the economy is remarkably resilient – the problem is it’s not going anywhere particularly exciting. It’s sort of clinging on by its fingernails instead of getting anywhere positive in this environment,” he said.

Speaking about South Africa’s position in the world economy, Attard Montalto predicted a global recession. He believes that the exact definition of a recession is irrelevant because the globe will undoubtedly experience one.

This will have little impact on South Africa, which will likely weather the recession “pretty well,” according to him. South Africa does not participate in global market commodity cycles because to local challenges with Transnet, ports, and infrastructure, but it will gain from a general increase in commodities.

Speaking about South Africa’s position in the world economy, Attard Montalto predicted a global recession. He believes that the exact definition of a recession is irrelevant because the globe will undoubtedly experience one.

This will have little impact on South Africa, which will likely weather the recession “pretty well,” according to him. South Africa does not participate in global market commodity cycles because to local challenges with Transnet, ports, and infrastructure, but it will gain from a general increase in commodities.

Local political noise over things like the South African Reserve Bank’s mission will likewise have little influence, he says, because the section 25 problem around land expropriation shown that changing the country’s Constitution is difficult.

“This is not a short or medium-term issue,” the analyst said, adding that load shedding is a major concern and that determining its impact on South Africa will be difficult this year.