Following a few years of sluggish growth, in August 2016, South Africa pulled ahead of Nigeria, which has a population three times as large, to again become the largest economy in Africa, according to the International Monetary Fund (IMF). The country has a solid list of achievements: its demographic growth is now under control, its school attendance rate is the highest in Sub‑Saharan Africa, it attracts the most foreign investment on the continent and, according to statistics, 85% of its population has access to electricity1.
South Africa has a huge energy appetite. It accounts for nearly 30% of the continent’s total energy consumption but only 4.6% (55.4 million people) of its population2. It has the biggest vehicle fleet on the continent: 180 vehicles per 1,000 inhabitants – North Africa only recently passed the 100 mark – compared to an average of 44 for the continent as a whole3. In addition, final oil product consumption rose by 20% from 2004 to 2014.
85%: The percentage of South Africa’s population that has access to electricity, although supply is frequently disrupted.
An Aging Grid and the Dominance of Coal
South Africa has two weaknesses, however:
- Due to a lack of adequate investment, the country’s electrical grid is in bad shape (one third of powerIn physics, power is the amount of energy supplied by a system per unit time. In simpler terms, power can be viewed as energy output... stations are routinely idled), and networks continuously operate near full capacity. In the face of rapidly growing demand, the state power utility Eskom must frequently resort to load shedding. Not only does this pose problems to the population, especially in the poorest areas, it seriously hampers industrial activity, costing the economy one percentage point of annual growth, according to the government’s own estimates.
- Like China and India, South Africa’s dominant source of energy is coalCoal is ranked by its degree of transformation or maturity, increasing in carbon content from... , which provides 92% of its electricityForm of energy resulting from the movement of charged particles (electrons) through a conductor... . South Africa is the world’s seventh-largest coal producer and possesses 95% of Africa’s total coal reserves. It even exports one quarter of its supply, mainly to India. The mining industry is inefficient, however, plagued by repeated strikes and declining competitiveness. In order to increase electricity output, in 2008 Eskom began construction on two gigantic coal-fired power plants, Medupi and Kusile, each with an installed capacityThe power generation capacity of a particular plant. It is usually expressed in megawatts (or sometimes even gigawatts)... of 4,800 megawatts. But at the end of 2016, the plants were still unfinished and facing significant cost overruns.
A Bumpy Ride for Diversification
Diversifying its energy supply is a challenge for South Africa. The country produces practically no oil or gas. During the apartheid era, after the international community imposed an oil embargo, the country produced fuelFuel is any solid, liquid or gaseous substance or material that can be combined with an oxidant... from coal using the Fischer-Tropsch processChemical process invented in Germany in 1923 in which a mixture of carbon monoxide and hydrogen... . Natural gas, meanwhile, is imported from neighboring Mozambique.
The situation could change if the existence of shale gasShale gas is found in deeply buried clayey sedimentary rock that is both the source rock and the reservoir for the gas... reserves – considered vast by some U.S. studies – is confirmed and the country decides to develop them4. In March 2016, the government announced that exploration would begin in a few months. Several international companies expressed interest in applying for a license. However, estimates of shale gas resources remain uncertain, and the economic cost of extraction has yet to be determined. As is happening elsewhere, a debate is raging over the danger posed by hydraulic fracturingMethod of enhancing the productivity of oil or gas reservoirs with low permeability... , particularly on the water resources in the semi-arid Karoo region.
South Africa still depends heavily on coal, which accounts for 90% of its total electricity generating capacity.
Renewables and Nuclear Energy
South Africa began investing in renewable energyEnergy sources that are naturally replenished so quickly that they can be considered inexhaustible on a human time scale... only recently. From practically zero in 2013, installed wind power capacity rose to more than 1,000 megawatts by the end of 2015. Photovoltaic (PV) solar power has experienced similar growth, with capacity rising from 40 megawatts at end-2012 to 1,120 megawatts at end-2015. By comparison, France’s PV capacity was 6,200 megawatts at the same date.
In the hydropower sector, South Africa is involved in the Grand Inga project in the Democratic Republic of the Congo. The Inga site comprises several dams which, if expanded, would have a substantial capacity of 40,000 megawatts. The electricity produced by the dam could be exported to numerous African countries in the north and the south. To ensure the project’s financial viability, in 2013 South Africa promised to buy half of the electricity (2,500 megawatts) produced by the future Inga III dam.
South Africa is also eyeing nuclear energyEnergy produced in nuclear power plants. The enormous amount of heat released during fission of uranium atom nuclei is transferred to water... as a way of diversifying its energy supply. It already operates the continent’s only nuclear power station in Koeberg, located a short distance from Cape Town. Its two reactors, built in the 1980s by Framatome (now Areva), provide 5% of the country’s electricity. The government has announced a nuclear procurement plan that would bring six to eight new reactors on stream by 2025 and supply nearly 10,000 megawatts of additional power. Several countries are competing for the project, including Russia, China and France.