Big Shift in Load Shedding for South Africa Thanks to Renewable Energy Boom

The South African Reserve Bank (SARB) has some good news for the country’s economic growth prospects – improvements in load shedding and energy availability are coming quicker than previously projected.

This positive shift is being attributed to two main factors:

1) Better performance from the struggling power utility Eskom.

2) A surge in private investment into renewable energy sources by households and businesses across South Africa.

The SARB’s latest Monetary Policy Review in April 2024 has cut its estimates on the negative impact load shedding will have on GDP growth compared to previous projections.

Originally, in April 2023, the bank calculated that load shedding would reduce GDP growth by 2.0 percentage points in 2023, 0.8 percentage points in 2024, and 0.6 percentage points in 2025.

However, the new April 2024 review has lowered the expected hit to growth in 2024 down to just 0.6 percentage points. For 2025, the impact is now seen as only 0.2 percentage points.

As the SARB stated: “Our forecasts indicate a modest growth acceleration from this year as these supply-side constraints relax. In particular, we expect that the load-shedding burden will ease somewhat.”

It quantified the improvement, noting: “While we estimate that electricity shortages took 1.5 percentage points off gross domestic product last year, we think this will moderate to 0.6 percentage points this year and 0.2 percentage points in 2025.”

The big driver of this positive outlook is the influx of private renewable energy projects from homes and businesses investing in solar, wind and other sustainable sources. This aligns with analysis from Nedbank highlighting the renewables boom as a key factor.

While Eskom’s performance has improved, the SARB makes it clear the primary thanks goes to the renewable energy revolution happening across South Africa. With households and companies taking energy resilience into their own hands, the nation’s crippling load-shedding issue finally has a light at the end of the tunnel.

As the SARB summed up: “The near- and medium-term outlook is for GDP growth in South Africa to increase, albeit slowly, as the electricity supply improves gradually.”

(~ source, 25 April 2024)