Tax Incentives for Renewable Energy Solutions
During the delivery of the 2023 Budget Speech, Minister of Finance, Enoch Godongwana announced a series of tax incentives to promote self-generation and renewable energy.
Given the country’s energy crisis, South Africa experienced over 200 days of load shedding in 2022, Roger Hislop, energy management systems executive at CBI :energy, believes this proposal is a much-needed step toward promoting the use of clean energy and reducing our reliance on fossil fuels, while in the short term giving households a foot up in their energy resilience.
“The announcement is very welcome as a positive step. Not only will this reduce the country’s reliance on the national grid and ease pressure on Eskom, but it is also a significant development towards promoting clean energy and reducing the country’s carbon footprint,” he adds.
While the government’s proposal to provide tax incentives for renewable energy solutions is a positive step towards addressing this issue, Hislop points out that the tax incentive is limited to private households and is offset against their personal tax liability – it’s not “free money”.
Businesses will still need to come up with their own plan to ensure continued operations during long bouts of load shedding. “Furthermore, the tax incentive is against the panels only, not the most expensive components: the battery storage and inverters. It is battery storage that provides critical energy security to make sure machines and computers are still running where solar generating capacity is insufficient, especially as the days get shorter coming into winter.
“Businesses will still need to foot the entire cost of a solar system. Because the batteries and inverters are extremely pricey, the smart thing to do is to implement load management which will stop the inverter from being overloaded and tripping, and prevent the battery from draining unnecessarily. Someone heating their leftover pizza in the company kitchen at lunchtime could flatten the batteries, crippling the business,” he explains.
Hislop says that businesses should as their first step implement managed smart metering at several key points in their electrical network. “This enables them to gather and analyse real-time electricity consumption data to help them identify where energy is being consumed, when and by what, so that the business can identify low-hanging, energy-guzzling fruit, and plan around further measures that can be put in place to reduce energy consumption.”
