Current situation

Since April 2015 there has been a marked decline in instances of load shedding, due to reduction in energy demand, more efficient maintenance of generators and (to a lesser extend) additional generation capacity brought online [GreenCape, 2016]. Eskom’s demand from South African users have decreased by 5,5% from 2011 to 2016, with a 2,5% decrease from 2014 to 2016 [StatsSA, 2016b].  No load shedding has been introduced since November, 2015, with Eskom having around 38000MW of capacity on hand, whilst the demand forecasted around 33000MW, leaving excess capacity of 5000MW [NUS, 2017-03], such that Eskom have asked the Alumnium smelters which had been shut down due to the energy shortage, to go back online and are considering decommissioning five (5) coal fired power plants before the end of their lifespan to make way for renewable energy generation. Electricity exports have increased to attend to the oversupply with a 31.6% increase in the six months leading up to November 2016, with the sale of electricity to Botswana, Namibia, Zambia and Zimbabwe [NUS, 2016-12].

To further understand the current situation of an oversupply of generation capacity reference can be made to the forecasted demand and the updated demand forecast as illustrated in the figure below.

Figure: Electricity generated, actual demand and demand forecast

The National Energy Regulator (Nersa) approved a 9.4% electricity hike to Eskom for 2016/17 [NUS, 2016-03], which means that the cumulated total increase in the electricity tariffs are 445% from 2008 to 2016 [Nersa, 2008-2016].

First noted [OECD, 2013] that the electricity prices in South Africa are still below the OECD average and need to reflect  the real marginal cost of power production in the country. Effectively this means that Eskom is generating electricity at a loss. This has been further iterated in the follow up report which suggest that it is highly unlikely that Eskom would be able to finance additional generation capacity [OECD, 2015].

Eskom’s electricity sales in key segments, such as industrial, mining and commercial sales, are relatively stagnant, either at or nearing a 15-year low. Prices of a number of alternative technologies are declining and consumers are increasingly defecting from the grid, negatively impacting Eskom’s revenue and business model. In response to recent price increases and supply concerns, customers are improving energy efficiency and making their own generation decisions. [Eskom, 2016a].


Eskom (2016a) ‘Integrated report’, 31 March 2016

GreenCape (2016) Energy Services: Energy efficiency and embedded generation

NUS Consulting, (201x-xx), ‘South Africa Market Energy Report’, NUS Consulting,

Organisation for Economic Cooperation and Development (2013), ‘OECD Economic Survey: South Africa 2013’, March 2013

Organisation for Economic Cooperation and Development (2015), ‘OECD Economic Survey: South Africa 2015’

Statistics South Africa (2016b) ‘Electricity generated and available for distribution (Preliminary)’, December 2016