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Although accounting for 17% of the global population, only 2.5% of recorded global deaths resulting from Covid-19 were recorded in Africa by the end of October 2020. This is attributed at least partly to the young median age of the population in many African countries.
Despite relatively low case fatality rates related to Covid-19, Africa experienced a significant economic impact of the pandemic – with only 15% of Africa''s trade occurring within the continent (36% of annual trade volume is with Europe, 14% is with China and 6% is with the UnitedStates) and 8.5% of Africa''s GDP stemming from tourism, the economy is closely connected to global markets.
GDP in sub-Saharan Africa is expected to contract by 3% in 2020 and return to 2019 levels in 2021. South Africa, the second-largest economy by GDP on the continent, is particularly affected by the economic slowdown, and is forecast to decline by 7.8% in 2020 and to see only a mild rebound of 3.1% in 2021.
The impact on demand was significant, driven by the contraction of the economy and measures to contain the pandemic. South Africa, for example, experienced a 23% year-on-year drop in electricity demand in April, and lower, but still significant, reductions in May (14%) and June (5%). Overall, South Africa''s electricity demand is expected to decline by more than 5% in 2020 compared to the previous year. For the whole continent, a demand reduction of around 2% is expected.
The African electricity sector is characterised by its large geography, limited interconnection and trade, improving electrification and prevailing system adequacy issues. In the most recent World Bank Doing Business 2020, customers in 10 of the 24 African participants (42%) experienced on average at least 24hours of outages over the period May 2018–May 2019, while 19 (79%) experienced at least 2hours of outages. In comparison, only 5% of European countries had customers experiencing at least 24hours of outages, while Asia reported 13%.
While electricity trade between countries is relatively small due to poor interconnection, a number of regional power pools exist to encourage regional co‑operation through the development of projects of regional importance.
Meanwhile, in southern Africa a tender was launched in February 2020 for the construction of an interconnector between Mozambique and Malawi, which would connect Southern African Power Pool member Malawi to the rest of the power pool for the first time.
While load shedding is something that is endured throughout the continent due to capacity shortages, persistent drought and a lack of investment, this has not always been the case in South Africa.
However, in 2018 the current electricity crisis in South Africa was demonstrated again via load shedding and has been worsening ever since, culminating in 2019 when load shedding reached Stage 6 (or a capacity shortage of 6000MW) for the first time in December of that year. Prior to this, the worst load shedding that had been experienced was Stage 4, or a shortage of 4000MW.
At the beginning of 2020 a similar trend continued until demand greatly reduced in late March due to a lockdown to contain Covid-19. The lockdown, one of the hardest in the world, where freedom to travel and non-essential services were severely limited, began on the 27March 2020 and was gradually relaxed from 1May in a staged approach. During the initial lockdown, the deviation of net demand from original forecasts was in excess of 11000MW, and on average almost 6000MW during weekdays.
While the lockdown-induced suppression of demand in South Africa has gradually subsided as the various restrictions have been lifted, the underlying problems of capacity and energy shortage remain. This was revealed when, from July 2020 onwards, intermittent load shedding periods resumed following the relaxation of lockdown restrictions to Level 3, which allowed the resumption of most economic activity.
As of 25October2020, 1240GWh of load shedding had already occurred in 2020, despite the relief over the period of hardest lockdown. This included 837 hours of load shedding, which is already higher than the 530 hours that occurred in 2019, with estimates1 suggesting that the volume of load shedding for the year has already surpassed that of 2019.
South Africa is now actively trying to address its capacity constraints since the most recent electricity crisis and adoption of the Integrated Resource Plan 2019, which led to ministerial determinations for the procurement of around 11.8GW of new generation capacity. In addition, the government of South Africa released the Economic Reconstruction and Recovery Plan in October 2020, which details the steps to rebuild the economy post-Covid-19, with energy security one of the key components highlighted in the plan.
Meanwhile, the latest bid window (Bid Window 5) of the REIPPP is also expected to be launched before the end of January 2021, which would see the resumption of the programme and lead to the procurement of up to an additional 6800MW of renewables in the form of wind and solar PV. In addition, Eskom have launched a tender for an 80MW/320MWh battery storage project at a range of locations across the country, which will form part of the first phase of Eskom''s 800MWh battery storage programme.
The South African government also published its own roadmap for unbundling of the state-owned utility in 2019 in an effort to offer more transparency in the governance of the utility, while improving operations and cutting wasteful expenditure, amongst other proposed benefits. The Department of Public Enterprises proposed a deadline to achieve unbundling at the end of 2021 to which Eskom has committed itself, although the CEO of Eskom did indicate that full legal unbundling may only be achieved in 2023 considering the broad stakeholder consultation required.
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