Ramaphosa’s tax incentives a ray of light for solar panel roll-out to ease SA’s energy crisis
It’s a win-win for all involved. Businesses and households need to free themselves from the curse of Eskom, and the rise in productivity levels that comes with reliable energy will more than compensate the Treasury for the tax breaks that are looming.
President Cyril Ramaphosa announced that tax incentives would soon be unveiled to allow households and businesses to tap solar energy using rooftop panels. It’s low-hanging fruit that is welcome, and an acknowledgement that the economy needs to move beyond the shambles that is Eskom.
Ramaphosa said the initiative was part of the action plan he had announced last July to address the energy crisis – a crisis that has gotten a lot worse since then.
The tax incentives, which Finance Minister Enoch Godongwana will outline in his Budget speech in two weeks, would aim “to unleash businesses and households to invest in rooftop solar”.
“As indicated in July last year, and with a view to addressing the load shedding crisis, we are going to proceed with the roll-out of rooftop solar panels. In his Budget Speech, the Minister of Finance will outline how households will be assisted and how businesses will be able to benefit from a tax incentive,” Ramaphosa said.
Read more on Daily Maverick: Ramaphosa outlines ‘extraordinary measures’ to deal with SA’s energy crisis ‘existential threat’
“National Treasury is working on adjustments to the bounce-back loan scheme to help small businesses invest in solar equipment, and to allow banks and development finance institutions to borrow directly from the scheme to facilitate the leasing of solar panels to their customers,” he said.
This is an initiative that banks will fall over themselves to provide finance for at a time when they are increasingly reluctant to touch new coal projects.
It’s simply a win-win for all involved. Businesses and households need to free themselves from the curse of Eskom, and the rise in productivity levels that comes with reliable energy will more than compensate the Treasury for the tax breaks that are looming.
It also helps to move South Africa down the road to de-carbonisation, which is crucial if the economy is to remain competitive and access markets that will throw up obstacles to goods and services with a heavy carbon footprint. And, as a bonus, it’s good for the environment.
For banks extending finance and those receiving it, the initiative will also add value to the assets involved. A household or business with reliable solar power is worth more than one without.
And it adds to Ramaphosa’s January announcement that customers with solar panels will soon be able to sell power back to the grid.
Read more in Daily Maverick: “Solar panel customers will finally be able to sell excess electricity into the SA grid“
“One of the potent reforms we have embarked upon is to allow private developers to generate electricity. There are now more than 100 projects, which are expected to provide over 9,000MW of new capacity over time,” Ramaphosa said.
This is also a sector that has huge potential for creating jobs and opportunities and just in itself adding to gross domestic product (GDP).
It’s a no-brainer that should have been implemented long ago, but better late than never.
“Behavioural change has seen the South African public adapt to and mitigate the impact of load shedding. For example, in 2022, the country imported more than R5-billion worth of solar panels — up from around R4-billion in the preceding year,” accountancy firm PwC said in a recent report.
Read more in Daily Maverick: “PwC estimates rolling blackouts knocked up to five percentage points off SA’s 2022 GDP growth“
“We estimate that these panels will provide an additional 2,000MW of generating capacity in 2023,” the report said. “Put differently, based on varying usage patterns, these off-grid solar panels could be saving the rest of the country from an additional stage of load shedding at any given time.”
So South Africans and businesses who can afford to do so have been installing solar panels even without the benefit of incentives. Hopefully now, many more will have the incentive to do so. And the government is providing them with the means to reduce their reliance on Eskom while also providing it with some power – an acknowledgement that the economy needs to move on from the ailing SOE.
“The energy crisis is an existential threat to our economy and social fabric,” Ramaphosa said in his Sona. And business as usual is not going to address this crisis. DM/BM