Posted On: 05/02/2025

Eskom Loadshedding and Tariff forecast

Excerpt: After over 300 days without loadshedding, Eskom’s grid failings returned with Stage 3 cuts sweeping SA this weekend. But the “rabbit out of a hat” that enabled this streak was not just diesel – it was solar. Continued rapid renewable growth is essential to keep outpacing rising demand and deteriorating coal plants. The race is on to avoid the loadshedding party ending around 2026-27.

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Eskom, South Africa’s beleaguered power utility, abruptly reminded the nation this weekend that the grid remains on a knife-edge. The return of Stage 3 loadshedding after over 300 days of reprieve sent people scrambling for diesel and dusting off their backup power plans.

How did we get here? Why could Eskom suddenly supply uninterrupted power for months, only to relapse in an instant? And most importantly, what does the forecast for the coming years hold? Separating facts from speculation yields important insights.

Not Just Diesel A common refrain holds that Eskom simply burned through diesel reserves to avoid loadshedding in 2022-23. “Running the grid on fumes,” some pundits proclaimed. The diesel burn certainly played a part, but the full explanation is more nuanced and more hopeful.

In fact, Eskom was saved by the collective actions of South Africans themselves over the past year. A surge of private solar installations, totaling nearly 2GW, shaved peak demand by roughly two stages worth of capacity. Had this not occurred, no amount of diesel could have kept the lights on. Demand growth also slowed, and some large consumers like Mittal even shuttered operations due to high tariffs and unreliability. Previous Eskom leadership did not have this unexpected slack in the system.

The solar boom created breathing room for critical maintenance that had been deferred for years. Much work remains, as the recent breakdowns of multiple generating units demonstrates. But the starting point is far better.

Renewables Race Looking ahead, the key dynamics are rebounding economic growth, accelerating renewable installations, and the deteriorating coal fleet. Credible estimates see confidence and investment driving increased electricity demand starting around 2025.

The trajectory thereafter depends on the race between new solar and wind capacity versus new demand and ailing power stations. If renewables maintain their brisk pace of the last 12 months (2GW) and ramp up further, we could see another 4GW+ by 2025, giving SA a fighting chance.

Conversely, if clean energy additions slow while demand recovers post-2025, the specter of loadshedding looms large. Current projections suggest a confluence of these factors in the 2026-27 timeframe.

In short, the next 2-3 years are critical for building on the progress made and “baking in” sufficient renewables to ride out future demand growth. The inevitable decline of the coal fleet means we are in an energy transition whether we like it or not. The only question is how bumpy the ride will be.

Tariff Treadmill As if the grid challenges were not enough, electricity users must also contend with relentless tariff increases. Eskom’s 12.7% hike for April 2025, approved by energy regulator Nersa, will be followed by further double-digit raises in the coming years. These escalations consistently outpace inflation, meaning that in real terms, electricity is becoming more expensive each year. Solar currently produces energy at a rate of around 65c per KW/h vs Eskoms Tariffs of R3,40 KW/h producing massive savings.

Left unchecked, this tariff increase will see power costs double every 5-6 years. For businesses already struggling with thin margins and an erratic supply, this is an existential threat. Many will be forced to either drastically cut usage or close up shop entirely. Households too will feel the squeeze, as the rising costs ripple through the economy.

The only way off this treadmill is to decisively break free from reliance on Eskom’s coal-powered grid. Every kilowatt-hour generated by solar panels on a business or home roof is one less that must be bought from the utility at ever-escalating rates. When coupled with batteries, these systems can power a business right through loadshedding windows, keeping the lights on and the machines running.

Terawatt’s Contribution At Terawatt, we are proud to be playing our part in this essential transition. In the last year alone, we installed over 1MW of solar PV for our commercial and industrial clients. These systems are generating clean, reliable power and insulating firms from loadshedding and tariff hikes.

But to truly move the needle, efforts like these must be replicated across thousands of businesses and households nationwide. The stakes could not be higher. If we fall short, all signs point to the rolling blackout party ending in the latter half of this decade, with severe economic consequences.

Fortunately, South Africans have already shown the way forward. Sustained, large-scale private investment in renewable generation, coupled with supportive policies, is our only viable path to keep the lights on. The future is solar, but we are in a race against time.

I hope these insights have been helpful in understanding our current situation and the task ahead. If you would like to explore how your business can contribute to and benefit from the energy transition, please don’t hesitate to contact me at 0849293710.

Together, we can help build a brighter, more sustainable future for South Africa.