Based off high-frequency data, the impact of record load-shedding during the first quarter of this year is “more muted than previous estimates would suggest”, financial consultant Intellidex said on Friday.

The company explained that it could account for about R300-million per stage per day so far but said that this was only from a small number of sectors.

First-quarter gross domestic product (GDP), however, may show an impact of about R500-million per stage per day, Intellidex added.

“We had a small hand to play in popularising the R1-billion per stage per day load-shedding cost estimate as a rule of thumb and so feel it is our duty to refine the number when [more] data becomes available,” the company said.

The R1-billion per stage per day estimate is a rule of thumb based off of estimates that the National Energy Regulator of South Africa (Nersa) and State-owned Eskom use for load-shedding, gathered from a range of sectoral studies of the cost of unserved energy, it explained.

The base estimate is about R75/kWh, which gets converted into the rule of thumb, Intellidex noted.

Intellidex further explained that it had now taken the high-frequency data and modelled it against a time series of the total amount of load-shedding a month.

Data from 2014 until now was reviewed, including small periods of load-shedding in between.

By sector, the following load-shedding impacts were experienced by the three biggest contributors to South Africa’s GDP:

• Retail: R6.80/kWh
• Mining: R4.40/kWh
• Manufacturing: R17.80/kWh

In total, this amounts to R29/kWh and, assuming a constant effect of load-shedding across stages and across the period, equates to about R290-million per stage per day.

“It would be simple to say that if we multiply this R290-million per stage per day figure by three, we would get our R1-billion, but the impact on other sectors will be lower,” Intellidex noted, adding that the financial and business services that run on generator capacity would have seen a minimal impact.

The company further said the same could be said of government expenditure and transport, which should have experienced only a small impact.

Combined, these account for 45% of GDP.

“Assuming the rest of GDP was impacted at the same average rate, then we might see a maximum of around R500-million per stage per day,” Intellidex said, noting that its estimates could range on the high side. 

“For now, we will say we can account for R290-million per stage per day from high-frequency data and that the final number incorporating other sectors will be higher, but we await first-quarter GDP to run a fuller diagnostic, when that is out in a few weeks’ time”.

The lower impact means that first-quarter GDP will not have been as badly affected as expected originally, but Intellidex said that it would not be revising its 2019 GDP forecast of 1% higher yet.

“We still see an unpredictable but significant risk of load-shedding during the winter months. The system is still being run at, in effect, a zero safety margin, as can be seen from [the utility’s] system updates. As a result, it is luck and weather which will be main determinants of if the system is pushed over the edge,” the consultancy lamented.