• Sunday, June 23, 2024
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Africa’s coal demand falls by 3.1% in 2021 amid crippling economic conditions

Africa’s coal demand falls by 3.1% in 2021 amid crippling economic conditions

The total coal demand on the African continent declined in 2021 amid the economic fallout from the Covid-19 pandemic, a new coal report by the International Energy Agency (IEA) has shown.

According to the report, the demand for the product fell by 3.1 percent to 189 metric tonnes (Mt) in the period.

“Due to continued weak demand from South Africa, the continent’s coal demand is forecast to decrease for the third year in succession to 180 Mt (-9 Mt).”

However, until 2025, the agency expects consumption to rebound to 2021 levels (~190 Mt), which is below the pre-pandemic level of 2019.

South Africa accounts for about 88 percent of coal consumption in Africa and was behind the continent’s demand decline from 2020 to 2022.

In 2022, South African coal consumption is expected to fall from 166 Mt to 157 Mt (-5.5 percent), in part reflecting the country’s very slow economic recovery from the pandemic shock.

IEA projected that the economic growth is expected to ease to 1.6 percent in 2022, after 4.9 percent the previous year and a pandemic-induced slump of 6.3 percent in 2020. Despite efforts to increase the reliability of the power system, rationing persists in South Africa.

In June, a strike at South Africa’s state-owned utility Eskom disrupted the operation and maintenance of the power system.

Eskom announced stage six of load-shedding at the end of June, which means demand cuts of 6000 megawatts (6 gigawatts) from the grid. The situation eased after the strike ended in July but delayed maintenance and unplanned outages led to continuing load-shedding.

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In September, the rolling blackouts reached record levels, forcing a return to stage six of load-shedding. So far, 2022 has been the worst year of load-shedding on record. From January to November, there have been at least 155 days of reported load-shedding.

The country has ~46 gw of generation capacity, sufficient to meet a peak demand of just ~32 gw. However, less than 60 percent of the capacity is available, leading to a gap of ~6 gw.

In response to the current situation, the government announced a plan to attract more private investments in new generation capacities, raise Eskom’s maintenance budget and start electricity imports from Botswana and Zambia.

“We project South Africa’s coal consumption to increase by 5.3 percent from 2022 to 2025 as the coal power plant fleet’s performance increases,” the IEA said.

A proposed large-scale 3300 mw (3.3 gw) coal-fired power plant project in the Musina-Makhado energy and metallurgical special economic zone has been cancelled and replaced with renewable sources.

The funding of other coal power projects in African countries, such as Zimbabwe, Botswana, Tanzania, and Mozambique, is also in the balance.

“In our forecast, we do not expect any new coal-fired power plants to be commissioned in Africa by 2025,” the report read.

Also, the report noted that there were 26 grid-connected power stations in Q1 2022 consisting of 19 gas, four hydro, two steam, and one gas/steam-powered plants.

It said the plants’ average available generation capacity during the quarter was 4,712.34MW representing a 13.78 percent decrease (-753.38MW) compared to 5,465.72MW recorded in 2021/Q4.

“The total energy received by all DisCos in 2022/Q1 was 7,300.05GWh while the power billed to the end-use customers was 5,649.21GWh indicating an average billing efficiency of 77.38 per cent.

“This billing efficiency is an increment of +1.02 pp from the 76.56 per cent recorded in 2021/Q4,” it said.