During the delivery of the 2023 Budget Speech yesterday (22 February), Minister of Finance, Enoch Godongwana announced a series of tax incentives to promote self-generation and renewable energy.

As the country’s energy crisis unfolds, South Africa experienced over 200 days of load shedding in 2022 and every day in 2023 has so far brought load shedding.

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.”

Dr Rethabile Melamu, CEO of the solar photovoltaic industry association( SAPVIA), cautions solar panels alone do not protect end users against loadshedding.

“The solar panels incentive is limited and does not address those households that can’t access instruments for the purchase of solar systems. At best those who install panels will only get up to R15 000 back from their taxable income.

“Based on a 25% cap this could translate to a solar system of R60 000 which will not make a meaningful impact for the average household without storage. This can get households 6 to 7kWp solar PPV panels without storage. We also need more clarity as the rebate seems to incentivize higher tax rate paying people.

“SAPVIA is on record indicating that an average household tends to purchase a 5kW hybrid system, including panels and battery storage which ranges from R95k to R200k depending on the components used.

“It looks as if the incentives announced for business is better.

“Incentivising solar PV is a step in the right direction. However we urge government to consult with SAPVIA as industry experts to finetune and improve the design of relief packages and financial instruments.”