South Africa’s Minister of Finance Enoch Godongwana introduced two new tax measures to simplify and accelerate consumer adoption of solar energy technology during the 2023 National Budget Speech on Wednesday.
The new tax measures include the introduction of a 25% rebate on households that install new solar panels from 1 March 2023, and will be available for a period of one year. The tax rebate for residential customers will be available up to a maximum of R15,000 and will not cover inverters and batteries.
The Minister also announced a 125% deduction of the cost of all renewable energy assets – namely solar, hydropower, biomass and wind – for businesses. The incentive applies to assets brought into use for the first time from 1 March 2023 onwards and cover all project sizes. The incentive will be available for a period of two years.
In addition to the two new tax reforms, government will also revamp its bounce back loan guarantee scheme to boost the participation of commercial banks to help small businesses fund renewable projects. Changes to the scheme will apply in April 2023 and will include the government carrying 20% of the loss on defaulted loans offered by banks for renewable projects.
“The aim of these incentives is to encourage businesses and individuals to invest in renewable energy and increase electricity generation [to help] reduce pressure on the grid and ease load shedding,” he said.
The move follows state utility Eskom announcing the continuation of stage six load shedding on February 20 due to the breakdown of eight generation units.
