How Eskom, Africa's biggest electricity producer, ran out of power

South Africa generates a lot of electricity. 41 194 megawatts if that means something to you.

This simplified explanation hopes to help you understand why, if we supposedly have so much capacity, we are struggling to keep the lights on.

South Africa has lots of coal.

In the 80's South Africa built enough coal-fired power stations to last for over 20 years and there was so much capacity the electricity price was the among the lowest in the world (and still is). Electricity in South Africa was like petrol in oil rich nations, there was so much of it, it was almost free.

South Africa was also not concerned with providing electricity to all of its citizens.

The Kendel Power Station in Mpumalanga is the largest coal-fired power station in Africa

Eskom

Fast forward 20 years and we have a democracy that is looking to grow the economy and connect more and more South Africans to the grid. South Africa had connected 85% of the population to the grid in 2013 compared to the global rate of 80%, the developing world rate of 74% and 30% of Sub-Saharan Africa.

Some of the deals to help the economy saw big electricity users like ore smelters negotiate deals that justified having ore mined in another country and brought to South Africa to be processed because the electricity was so cheap. Building a smelter is not cheap though, so the electricity price was not based on what it cost to generate but what the value of the processed ore was and those deals were set to remain for a long time.

World Bank data 2010-2014

South Africa has 32 power producing plants, 5 of those are new or nearing completion

Eskom

Eskom and the Government (the owning shareholder) recognised that capacity would be reached around 2005 and began looking for a private partner in the 90's to buy a stake in Eskom and to help pay for building the new capacity. Unfortunately the very cheap electricity and the amount of money that would be required meant no-one was willing to invest.

Eskom changed how it managed it coal supplies in 2000 the impact was having less coal stockpiled and access to coal supplies that were from a greater number of sources, while it had merit to do this, the limited time to get it running optimally was not resolved by the time the crisis hit in 2008 and added to the difficulty in securing enough coal.

With time and capacity running out South Africa's electricity demand exceeded the supply in 2007 and load shedding became a household word.

If you would like to know more, see our section on what Eskom did next or the section about how we generate that 41 000 megawatts.


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