Goodbye rooftop solar tax breaks in South Africa

 ·21 Feb 2024

The 2024 Budget tabled by finance minister Enoch Godongwana has passed by with no mention of extending the rooftop solar rebate for individuals, marking the end of the line for the tax break at the end of February.

Announced during the 2023 budget, the solar tax rebate for individuals offered up to R15,000 rebates for individuals looking to install new solar panels in the country.

The break came with a host of rules and limitations, applying only to new solar panels acquired after March 2023, and explicitly excluding other components of a solar setup, such as inverters and batteries.

As per Treasury’s initial announcement, the rebate for individuals will end on 29 February 2024.

Businesses have access to a different tax incentive, which will still run an extra year, with the deadline for that set for February 2025.

The only mention of the incentive in the budget is the Treasury’s review of the tax break, which it said has “promoted the installation of solar panels that are now generating 5,200 MW of electricity for households and businesses”.

With no extension on the former rebate, however, South Africans still looking to get the tax break have only one more week to get in.

According to Rein Henkemans, CEO of Alumo Energy, the loss of the solar tax break shouldn’t have too much of an impact on South Africa’s booming solar market, though, arguing that it was not very good to begin with.

“At first, the thought of the much-touted 25% rebate sounded rather tempting, but further examination proved it to have more holes in it than Swiss cheese,” he said.

First, taxpayers would have had to spend upwards of R60,000 to get the full benefit of the incentive (the R15,000 rebate), and in many cases this was more than what most homeowners needed to spend to meet their needs.

Second, the solar panels are also the most affordable part of a setup, he said, so the rebate never really helped the average household looking for a comprehensive setum which required batteries, inverters and installation.

Third, the CEO said that he has also seen a trend towards more affordable solar models like rental or rent-to-own, which never qualified for the incentive to begin with.

“In other words, the people that would be the most motivated by this R15,000 enticement, would ironically be the least likely to be able to afford paying for the entire system upfront to gain the rebate’s full benefit.

“This means that the rebate, which was intended to encourage the uptake of solar systems, was mostly dead in the water from the get-go,” he said.

Even without the tax incentive, Henkemans said that the main driving force behind solar adoption – persistent load shedding, rising electricity prices and the need to ensure productivity – still persist, and will keep the market going.

“The loss of this rebate won’t make any real difference to the solar industry. Those who were planning on installing a system and reaping its benefits will likely proceed as intended,” he said.

Read: The big hope for solar in South Africa

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