Following the recent weeks of load shedding in the country, GreenCape estimates that over the past two weeks the power cuts have cost the local economy R75-million an hour.
The City of Cape Town Mayoral Committee Member for Economic Opportunities, James Vos, comments on the impact of load shedding on the City.
“Without a doubt, the cost to the economy is real and it is certain to cost billions of rands. In addition, the potential for businesses shedding jobs to keep trading is the intrinsic unquantifiable cost which we need to mitigate wherever possible.”
The power cuts have a large negative effect on small businesses, and many are unable to afford the costs associated with investing in a generator.
Cape Town contributes more than 70% of the Western Cape’s Gross Domestic Profit (GDP). The province currently contributes an estimated 14% to the national GDP.
“It is therefore clear that the economic burden of load shedding will be felt by Cape Town,” the City says.
Manufacturing industries are heavily reliant on electricity to function and are located in urban areas, making them more vulnerable to power cuts.
Economist Dr Azar Jammine has said the direct impact of load shedding on the South African economy was between 0.1% and [email protected] of the GDP.
Reports from the March 2018 Western Cape Energy Consumption and CO2 Emissions Database show that the energy consumption by different sectors for the province in 2015/16 was as follows:
– Residential consumed the most electricity at 42%
– Industry used 31%
– Commercial used 17%
– Agriculture used 6%
Although the service sector is the biggest contributor to Cape Town and the province’s GDP and is less reliant on energy for economic activity, there will be a detrimental economic impact on productivity among others.
Vos highlights the resilience of the residents of Cape Town during load shedding but explains that it can influence potential investment into the city.
“The longer term effect is far more worrying for me. We need to be deeply concerned about investment decisions that are potentially being deterred by load-shedding. The uncertainty of supply places small businesses and manufacturers in the supply chain at risk.”
He said that the City is working towards becoming less dependent on Eskom as an electricity source for the city.
“The City is acutely aware that it needs to diversify its supply of electricity. One way to do this is by purchasing electricity directly from independent power producers (IPPs). At present, National Government policy allows IPPs to only sell electricity to Eskom, which is controlled through the issuing of generation licences.”
In an effort to move towards the use of IPPs, the City is challenging National Government in the courts on an “urgent basis” for the right to purchase renewable energy directly from IPPs.
Vos says that load shedding impacts each and every household, in more than one way.
“We encourage young people to become entrepreneurs and to start their own businesses but Eskom’s load-shedding raises the big question of how their businesses will survive without electricity, which of course impacts negatively on their household income.”