As South Africa approaches the peak of its winter season, concerns about a possible grid collapse and subsequent blackout have arisen due to the ongoing mismanagement at Eskom, leading to the deterioration of electricity supply in the country. It is important to assess the validity of this fear in context.
Historically, complete, and widespread grid collapses on a national or international scale are extremely rare. Most documented blackouts, such as the three-week blackout in the Philippines commonly known as “Mindanao blackout” in 2013 or the blackout in New York in 1977, have been localised in nature and were attributed to natural disasters rather than overload on the grid. Power grids are designed with redundancies and safeguards to prevent such collapses from occurring. Even in the unlikely event of a grid collapse, experts do not anticipate it to last for an extended period.
However, what investors should be most concerned about is the possibility of prolonged periods of high-level loadshedding as Eskom works to manage the strain on the grid. Loadshedding of anything above stage 6 for most of winter as predicted by several experts will be enough to kneecap the economy. The market has already shown signs of concern, with investors selling off local stocks in anticipation of further challenges.
While the risk of a complete grid collapse remains low, the potential for extended periods of loadshedding should not be underestimated. Investors and stakeholders should be prepared for the impact it can have on the economy and take proactive measures to mitigate risks. Continued monitoring of the situation, diversification of investments, and implementing contingency plans will be crucial in navigating the challenges posed by prolonged loadshedding and ensuring the resilience of businesses and the overall economy.