'Grab solar tax benefit - Eskom on the down'

GEORGE NEWS - Individuals and businesses should jump at the opportunity presented by the tax incentives for new alternative power generation installations announced last week. So says chemical engineer and energy expert Corneels Schabort.

"I see only a negative trajectory for Eskom, and I think we should read the signs from Government that say, 'make your own plan, because we can't help you," Schabort told George Herald.

He says although the rebate for individuals is not much, he foresees that companies will seize the opportunity for benefitting from the massive incentive granted by National Treasury.

Businesses will be able to claim a 125% deduction in the first year for all renewable energy projects, with no thresholds on generation capacity.

This incentive will only be available for investments made before 28 February 2025. As an example, a renewable energy investment of R1m would qualify for a deduction of R1,25m.

Private individuals who invest in rooftop solar will receive a tax rebate of 25% of the cost of any new and unused solar PV panels installed between 1 March 2023 and 29 February 2024. The rebate is not applicable to inverters or batteries and is capped at R15 000 per individual.

It's big for businesses

Schabort foresees that businesses "will go big". "This is good news and something truly positive, but it sends a message that government realises that it can't do without the help of the private sector. It makes sense to give businesses bigger incentives than individuals.

"When one looks at the economy of scale, it is cheaper per unit power if you install a lot of panels in one place, such as on the roof of the Garden Route Mall, than putting in, say, 10 small complete solar systems, each with its own panels, batteries and inverters at private homes in George."

The incentive for private individuals is only applicable to solar panels, the cheapest component.

"This means people will pay a little less for panels, but panels without an inverter are useless. And panels with an inverter but without a battery are also useless, because what do you do at night? You have to store that power somewhere. So we are grateful, but it's not the private individual who will benefit as much, but rather companies that will receive the full subsidy on their installation."

Stage 8 'a question of time'

Schabort warns that the implementation of stage 8 load-shedding is just a question of time.

"The schedule on Wednesday 23 February showed that the country is already at stage 7. On the one hand they are telling us we must remain calm, the situation will not worsen, but on the other hand we already experience stage 7. So how far are we from stage 8? I'm not seeing how things are being turned around. There is not yet evidence that things are being resolved."

Increase in demand

Managing director of Specialized Solar Systems in George, Peter Bergs, says they have already been experiencing an increase in demand because of the extended load-shedding periods. The tax benefit should result in a further rise.

"From a business perspective, it makes financial sense as the rebate is for the entire system. Unfortunately, for homes it is only the panels that get a rebate."

He says, though, that a positive consequence of the individual rebate will be that legislation pertaining to certificates of compliance will now be enforced when homeowners claim the tax benefit.

This tweet by Eskom spokesperson Sikonathi Mantsha on Wednesday 22 February shows 7 093MW load-shedding. This indicates stage 7, says energy expert Corneels Schabort.

Availability of components

Bergs says availability of components has been a challenge ever since the Covid pandemic, which caused supply chain and logistics problems. Clearance at the ports and Transnet's woes have added to the situation. "Also the whole world is pushing for renewables and is clambering for components, which pushes up the demand."

The majority of panels are imported, but there is a small manufacturer in South Africa. There are requirements for the use of local content in large projects, however, Government recently relaxed these stipulations in terms of solar panels, making it easier for companies doing installations to meet the conditions.

Corné Gouws, owner of Solar Power in George, also expects an increase in demand. "The decision to take up this opportunity or not is a no-brainer. It would be silly not to make use of it."

Gouws says solar panel stock is in "a bit of a crisis" due to the already existing big demand, but a large consignment is expected to land (from China) by the end of March.

He advises the public to make sure that they contract an established solar company that can provide references.

"Because of the great demand and activity in the market, a lot of cowboys have come onto the scene. It is important to know that you will receive after-sales service. We are hearing some horror stories."

Corneels Schabort