Zimbabwe has significantly increased power cuts across the country due to an El Niño-induced drought, which has drastically reduced water levels at the Kariba Dam, the world’s largest man-made reservoir. This reduction has severely impacted the country’s electricity generation capacity.
The southern African nation, currently in winter, has extended rotational blackouts from approximately two hours to as much as 10 hours per day. These extensive outages are forcing businesses to rely on generators and solar power to maintain operations.
Energy Minister Edgar Moyo informed lawmakers that the Kariba Dam, which has a storage capacity of 1,050 megawatts, is currently producing only 214 megawatts on average due to water rationing caused by low inflows into the lake. As of June 24, the lake’s usable storage was just 12.46%, a sharp decline from 31.3% a year earlier, as reported by the Zambezi River Authority.
“With the loss of over 800 megawatts, it becomes extremely challenging to meet the country’s power demand,” Moyo stated. Zimbabwe’s power demand is estimated at 2,200 megawatts, while the current supply stands at 1,206 megawatts, primarily sourced from the thermal-fired power station in Hwange, according to the Zimbabwe Power Company.
Neighboring Zambia, which also depends on Lake Kariba for power and is experiencing its worst drought in nearly 60 years, increased its power outages to 12 hours daily in May. The country has also cut back on electricity exports from 520 megawatts in February to 281 megawatts in June, according to its power utility, Zesco Ltd.
Zesco has reported “significant difficulties” in balancing available power supply with demand due to the adverse effects of El Niño. “This has drastically suppressed hydro power generation at our major power stations,” the utility stated.
Analysis:
The current situation presents both challenges and opportunities for investors and businesses in Zimbabwe and the region. The increased reliance on generators and solar power suggests a potential market for renewable energy investments. Companies involved in the supply and maintenance of solar power systems and generators could see increased demand.
From a financial perspective, businesses may face increased operational costs due to higher energy expenses, impacting profit margins. However, those investing in alternative energy solutions may find long-term benefits in reduced dependency on unstable power supplies.
Moreover, the broader economic impact includes potential disruptions in manufacturing and service industries, possibly affecting the overall economic growth of the country. Investors should closely monitor these developments and consider diversifying their portfolios to mitigate risks associated with energy supply instability.
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