South Africa narrowly dodged total grid collapse, says Nedbank chief economist

Nedbank chief economist Nicky Weimar said that South Africa narrowly avoided a total blackout in February, with the grid almost shutting down completely.

She was speaking during a Nedbank Private Wealth webinar on 30 March 2023, which included comments regarding load-shedding.

When asked about the possibility of a total blackout, Weimar said that “it almost happened in February”, with electricity demand almost outstripping supply.

Eskom’s grid is designed so that if demand exceeds supply, it automatically shuts down for safety reasons and to ensure that the grid can be rebooted quickly.

For Weimar, this was a “wake-up call for businesses to prepare for such an eventuality”.

Load-shedding is implemented for this reason – to artificially reduce electricity demand and ensure it does not outstrip supply resulting in a grid collapse.

This wake-up call has been heeded by government and business alike, with Eskom revising the code of practice to enable it to extend the load-shedding schedule to stage 16.

Thomas Conradie, acting head of generation at Eskom, confirmed they are working on higher stages than the current peak of stage 8.

Businesses preparing for a blackout

Businesses have begun engaging in contingency plans to keep operating throughout a grid collapse and total blackout.

Standard Bank has partnered with local industry, the South African Reserve Bank (SARB), and the broader authorities to prepare for this scenario.

The central bank has been preparing plans to respond to a national or regional electricity grid failure since 2015.

Last month, the South African Reserve Bank, through the Financial Sector Contingency Forum (FSCF), said it was preparing contingencies for a national grid failure.

“As part of these preparations, the FSCF has been in regular contact with Eskom, the petroleum industry and the telecommunications industry,” the SARB said.

Many other South African telecommunications, retail, mining and financial services companies have also said they have been preparing for a total grid collapse.

As part of their total blackout preparations, MTN has set up “war rooms” to ensure critical sites remain operational, and the JSE stocked up on diesel to run its operations for seven days.

A total grid collapse isn’t “highly probable, but you have to plan for that,” said MTN CEO Ralph Mupita.

Food manufacturers and retailers like Tiger Brands, Pick n Pay, and Dischem were forced to invest millions in backup power utilities.

The United States Government has also advised its stakeholders in South Africa to start thinking about disaster management plans for a total Eskom grid collapse.

Sim Tshabalala, Standard Bank CEO

Fallout from a blackout

A US Government minerals and energy expert explained that a total blackout presents several dangers.

The primary threat is the time it takes to bring a system back up from that total collapse. “Eskom estimates, in the best case scenario, it would take 6 to 14 days to restart the power grid,” he said.

Sim Tshabalala, CEO of Standard Bank, told Business Day the potential collapse of SA’s power grid would result in devastating social and economic consequences.

He said a total blackout would cause the collapse of municipal infrastructure and services, food shortages, and water problems.

In turn, the country would experience widespread social unrest, which could lead to “certain scenarios that are just so bad that they’re too ghastly to contemplate”.

It echoes previous comments from former Eskom executive Robbie van Heerden that a blackout would be a disaster “akin to civil war breaking out”.

He explained that during a blackout, darkness, no or minimal telecoms, water schemes running dry, social unrest, and looting would occur.

“A blackout is a risk South Africa cannot afford to take,” Eskom said. “It is no exaggeration to say that it would, in all likelihood, be a monumental and unprecedented national catastrophe that would threaten many lives.”

The utility has repeatedly stated that it will take the necessary steps to prevent the grid from going down.

This article was first published by Daily Investor and is republished with permission.

Now read: Names of corrupt Eskom officials handed to Minister Pravin Gordhan

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South Africa narrowly dodged total grid collapse, says Nedbank chief economist