The latest bout of power outages is set to add some of the most devastating blows to an already-ailing South African economy. Both the economic recovery and Eskom’s ability to turn the corner look bleak.

At the beginning of September, Stats SA reported that South Africa’s gross domestic product (GDP) has decreased by 0, 7% in the second quarter of 2022.

This decline matches economists and analysts’ predictions, which ranged between a 0, 5% decline and a 1, 2% decline, Business Tech reports.

This is in contrast with the surprise growth in the first quarter of the year – though this has also been revised downward from 1,9% to 1,7%.
“The year-on-year growth in GDP was also flat, at just 0,2% from 2021. South Africa’s economy was hit with some of the highest levels of load-shedding on record during the second quarter of the year, while industries were also battered by heavy flooding in KwaZulu-Natal,” it reports.
Eskom has implemented electricity outages for more than half of the days in the second quarter, according to Bloomberg calculations, adding to the record blackouts in the financial year through March that hobbled economic output products and machinery division also made notable negative contributions to growth.
The agriculture sector decreased by 7,7% in the second quarter, contributing -0,2 of a percentage point to GDP growth. Decreased economic activities were reported for animal products.
Mining and quarrying decreased by 3,5%, contributing -0,2 of a percentage point to GDP growth. Decreased economic activities were reported for gold, coal, manganese ore and diamonds.
The trade, catering and accommodation industry decreased by 1,5%, contributing -0,2 of a percentage point to GDP growth. Decreased economic activities were reported for wholesale and retail trade.
Construction decreased by 2,4%, contributing -0,1 of a percentage point. Decreased economic activities were reported for residential buildings and construction works.
The unadjusted real GDP at market prices for the first six months of 2022 increased by 1,4% compared with the first six months of 2021.
The publication also reported serious doubts about South Africa’s plans to add 5,200MW of renewable energy to the grid faces pressure from a perfect storm of global events, which will push up prices and hamper progress.
It quotes Business Leadership South Africa chief executive officer, Busi Mavuso, as saying the country risks falling behind in its plans as many countries turn to renewable energy in reaction to growing demand and geopolitical events that have erupted over the last few months.
This is while South Africa itself is in crisis and desperate for new power generation amid the worst levels of load-shedding on record.
Mavuso pointed out key events that create a storm for future energy plans:
● Eskom’s grid is under constant pressure, with load-shedding becoming more frequent and higher stages more common.
● California had warnings of blackouts last week as extreme temperatures led everyone to switch on their air conditioners and put the grid under unprecedented pressure.
● The EU and the UK are facing record gas and electricity prices, leading to a cost-of-living crisis. The EU is desperately trying to reduce its reliance on Russian gas for energy.
● China plans to add at least 100,000MW of renewable energy over the next five years.

This means there is a global rush on components for solar and wind energy production that will complicate global supply chains and capacity, Mavuso said – just as South Africa is planning an aggressive ramp-up in build rates of its own.
“Already, we have been tripped up by global conditions. Round 5 of the Renewable Energy Independent Power Producers Programme has been caught out by delays between the finalisation of preferred bidders and financial close,” Mavuso said.
Financial close happens when all financial terms, including the amounts needed for capital expenditure and the cost of finance, are agreed upon and signed off. Up to that moment, projects are vulnerable to moving market prices.

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