Aslina Wines, an independent winery located among the rolling vineyards of Stellenbosch near Cape Town, counts a large generator among its most prized inventory. The company relied on the machine to keep running during South Africa’s worst power cuts, which affected the country for 332 of 365 days in 2023.
The winemaker was lucky. As the blackouts became increasingly severe, suppliers without generators “took a hard hit,” said Bradwin Persent, operations and logistics coordinator at Aslina, as did many of the country’s struggling small businesses.
Then, in March, the power outages suddenly stopped. Even as the Southern Hemisphere descended into winter, when electric heaters and the sun’s early setting increased demand, Eskom, the troubled state-owned company that generates most of South Africa’s power, managed to keep the lights on.
It has been seven months since the country’s last blackout. The South African government’s plan, so far, has been successful. It involved changing Eskom’s leadership, valuing employees and pausing the energy transition process, postponing the retirement of coal plants and investing in the restoration of outdated structures.
Persent, from the winery, is satisfied with the sequence, but has no plans to get rid of the generator. “We are happy,” he said, “but we are not relaxed.”
READ MORE: Aramco CEO says energy transition is ‘visibly failing’
Million-dollar losses
For years, chronic blackouts have crippled South Africa. First implemented in 2008, they cost the economy up to R899 million a day, according to central bank estimates, and were a big reason by which the African National Congress lost its majority in last June’s elections. Attempts to fix the corruption-eroded system have failed over the years — a comprehensive privatization plan collapsed; an effort to add generating capacity dragged on and never fully materialized. And inside power plants, theft and sabotage have become more audacious.
Now, the situation appears to be stabilizing. The effects of recent and long-standing reforms have radically improved employee morale, according to experts, analysts and officials, which has made all the difference in helping Eskom get back on its feet. The decision to postpone the retirement of three coal-fired power plants also played a big role.
This move “brought confidence”, said Malekutu Bizzah Motubatse, president of the Highveld region of the National Union of Mining Workers, where most of Eskom’s coal plants are located. “The government was able to listen to us.”
READ MORE: Companies slow down investment in green hydrogen
Recovery with new leadership
Eskom’s recovery began to attract attention in March, when the country went week after week without blackouts. This happened when Dan Marokane took over as the company’s new chief executive. He soon won workers’ support early by calling on them to fix broken power plants and reinvigorate the company’s management structure — a shift from previous leadership, whose focus had been on the coal transition.
Shortly afterward, the company announced it would keep its three coal plants open, delaying plans that employees feared would trigger mass layoffs.
Galvanized by these developments, as well as the return of bonus payments from the previous year, workers helped with much-needed repairs. This increased generating capacity to the highest levels in four years — to 67% in July, compared with 51% in January — and ensured the longest run without power cuts in five years.
At the same time, a $14 billion debt relief plan went into effect. Across the country, the proliferation of solar panels, a popular alternative to relying on Eskom, has eased pressure on the grid. Coal theft declined as the price of the mineral fell. Mills were allowed to send parts back to their original manufacturers for repairs, resulting in more reliable operations.
Fighting crime
Efforts to suppress crime also yielded results. While former president Jacob Zuma’s government looted the utility’s bank accounts, petty sabotage and theft ran rampant at power plants. Contractors were known to steal and resell parts multiple times, and thieves would replace entire truckloads of coal with rocks. However, between April and August this year, a joint effort between the police, the national prosecutor’s office, the revenue service and a special investigation unit reduced crime by 28% compared to the same period the previous year.
Efforts by law enforcement and the courts have produced “phenomenal results”, said Lumkile Mondi, an economist at the University of the Witwatersrand who has written extensively about Eskom.
It has been a long time since Eskom officials have had reason for optimism. Not only was the company publicly vilified every time the lights went out, but workers were also expected to function under nearly impossible circumstances. Stations undertaking major repairs had parts held up in complicated processes, performance-related bonuses were suspended for years, and intimidation linked to corruption was common.
During a tour of Eskom power plants last year, amid record blackouts, South African Electricity Minister Kgosientsho Ramokgopa acknowledged that employees were simply not being valued. “Before you could get to the engineering questions, you could see there were culture questions there, how people are discouraged and just essentially told they are incapable,” he recalled during a meeting in Cape Town.
A group of German consultants brought in by the government to assess the situation came to the same conclusion. “The current crisis can only be overcome in power plants,” said the report led by vgbe energy eV, describing stations run by unmotivated workers and training programs that have been forgotten or neglected.
With working conditions improved and blackouts at least paused, South Africa’s economy is projected to grow by more than 1% this year, which could help reduce the country’s 33.5% unemployment rate – one of the worst globally. It could also help boost the coalition government that took power this summer after the African National Congress lost its majority.
Analysts had mixed reactions to the company’s recovery. Eskom’s performance “exceeded our expectations,” wrote Raine Adams, an analyst at fund manager Allan Gray, in comments to Bloomberg. Chiedza Madzima, head of operational risk research for BMI-Fitch Solutions, described the firm as “painting a bright picture for now”. But, she warned, Eskom is not expected to return to pre-pandemic production levels until 2027, and that only if it can secure robust support from Transnet, a state-owned logistics company struggling with its own financial and operational problems, and if being able to install 14 thousand kilometers of transmission line, a prospect she described as “very unlikely”.
Looking for alternatives
Pieter Engelbrecht, the chief executive of Shoprite, Africa’s largest supermarket chain, said the company will continue to limit its dependence on Eskom. “We are not stopping in terms of introducing alternatives,” he said. Reliability isn’t the only concern — as utility electricity rates have increased sixfold since 2007, investors and businesses have begun looking elsewhere for more affordable power.
Despite the challenges, Marokane, the new CEO, is looking beyond damage control and toward expansion. Eskom is currently looking for an executive to lead its new clean energy division, and the utility anticipates bringing a further 2,500 megawatts online by March, Marokane said, the equivalent of a small to medium-sized thermal power plant.
At best, this could create a virtuous cycle. Yvonne Mhango, Africa economist at Bloomberg Economics, noted that an Eskom recovery would help drive the expansion of job-creating, energy-intensive sectors such as manufacturing in South Africa.
For now, employees are hopeful, said Motubatse, the union leader. Getting through the winter without power outages for the first time in five years was a triumph, he said, and one that highlighted the importance of coal plants. Affirming his group’s “full confidence” in Eskom’s board and CEO, he struck a note of optimism. “We believe these are the glory days for Eskom.”
