FTI Consulting South Africa published a report on the Energy Transition in South Africa in February 2020, which covered the shape and pace of South Africa's energy transition across the power, liquid fuels and mining sectors.

A few weeks later, a somewhat distant health and economic shock in China and Europe rapidly became front and centre in South Africa. In this follow up article, we focus on the power sector and explore the developments during 2020. We review how events this year have impacted the energy transition of decarbonisation and supply diversification in the power sector.

A Bleak Start but Cautious Optimism in Early 2020

South Africa entered 2020 recuperating from power supply shocks in December 2019. Eskom had implemented record setting rounds of load-shedding and Stage 6 was implemented for the first time in the country.

The higher frequency of nationwide blackouts was a further setback to the economy and confidence in the power sector and the state-owned entity, Eskom. South Africa was already going into recession at the start of this year, with negative GDP growth in Q4 2019 and Q1 2020. Power supply problems constrained our economic growth.

Discussions on energy transition continued and South Africa appeared to be on a path of an incremental and gradualist energy transition path.

Discussions on the issue of security and monopoly of power supply became louder. Many solutions were proposed such as:

  • Consumers reducing their reliance on Eskom through the adoption of behind-the-meter solar photovoltaics (PV) and battery storage technologies at a time when solar grid parity economics improve further.
  • The emergence of companies with "virtual utility" business models that enable and control the proliferation of distributed generation and participation of prosumers in the energy system, with greater convenience and lower cost for customers.
  • A move towards decentralised supply, with smaller, lower carbon installations replacing large fossil fuel power plants.

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