In a picturesque valley two hours’ drive south-east of Cape Town, Berene Sauls is running way behind schedule. The crush from her latest harvest was delayed, bottling often slows to a standstill and she’s been forced to repackage badly labelled batches of Pinot Noir and Chardonnay.
The culprit? An energy crisis that’s causing rolling blackouts across South Africa, impacting industries from mining to agriculture.
“It’s stressful,” said Sauls, who founded Tesselaarsdal Wines in 2015 and has been in the wine industry for 22 years. “We have eight hours of work production and only four hours of power.”
Decades of underinvestment in dilapidated coal-fired power plants has left Eskom struggling to keep the lights on. Unable to meet demand, it resorts to outages that can last as long as 12 hours a day, leaving schools, hospitals, restaurants and businesses relying on backup generators. The central bank estimates load shedding curbed economic growth by as much as 3.2 percentage points last year and forecasts just 0.4% growth this year.
South Africa’s more than 300-year-old wine industry has been badly hit, with load shedding impacting all stages of production, from irrigation to bottling.
If power cuts interrupt watering the vines can experience “partial stresses”, which can reduce the size and number of fruit, according to Wanda Augustyn, the communications manager for Vinpro, an industry body.
“We expect measurable, but not a catastrophic, impact,” from disrupted irrigation, she said. “At this stage it still has a big impact on producer profitability due to additional capital layout to realise the same harvest size and quality.”
Eskom woes
Once harvested, grapes become overripe or damaged if refrigeration or climate control is disrupted, according to industry associations. The power cuts can jeopardise the timely crushing and pressing of grapes, while fluctuating temperatures can adversely effect fermentation processes, resulting in off-flavours.
Load shedding also halts bottling lines, leading to production delays and wastage of packaging materials. Saul’s small winery cannot afford a generator for its packing shed, leaving her team in a frantic rush to prepare, label and package bottles before the next four-hour power cut. She’s so far managed to fulfil large orders and avoid lost sales.
“We can’t sell it if we don’t have the means to package it,” said Sauls, who has maintained production at about 10 500 bottles a year.
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Power is not only sporadic, it’s also more expensive, with energy regulator Nersa allowing Eskom to increase prices to help it maintain its ailing plants.
“The costs of paying for electricity supply at inflated rates, as well as having to pay for diesel costs to run the two generators at our premises — this has vastly exceeded the budgeted amounts,” said Elunda Basson, award winning cellar master at the renowned Steenberg Vineyards. The larger farm encompasses a spa, a hotel and an 18-hole golf course and was established in 1682 along the breathtaking Constantia Valley, 30 minutes outside of Cape Town. “It is not easy, but at least we can still produce at full capacity to supply the local market and export.”
The winery is getting cost estimations for off-grid options including solar, inverters and batteries. “Consumers are also struggling,” Basson said. “We have only increased wine prices by 7% this year. It’s impossible to recover the entire cost from price increases.”
The wine industry contributed more than R55-billion to GDP last year, with exports worth R10-billion, according to industry group Wines of South Africa.
The 2023 harvest is estimated at about 1.2 million tonnes, 14.2% smaller than last year, according to South African Wine Industry and Information Systems, an industry association. The drop is attributed to a combination of factors, including cold, wet weather, and the uprooting of vineyards due to disease. A lack of electricity in intensively irrigated areas negatively impacted crop sizes.
The government of the Western Cape, which is home to the majority of South Africa’s wine industry, was so concerned by the blackouts that it commissioned a report on the impact. Officials are concerned that irrigated wine grape production isn’t sustainable if load shedding gets worse than stage 6 — a level reached on numerous occasions this year at which Eskom cuts 6GW from the power grid.
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The national government has announced a fund to help farmers invest in alternative energy sources. Support is critical, especially for smaller wineries, according to industry body South Africa Wine.
“For now, bigger cellars may handle this crisis best,” CEO Rico Basson said. “Smaller farms and cellars may, however, experience a lot of challenges because it is just too costly to invest in generators.” — (c) 2023 Bloomberg LP