Long wait for rooftop solar in South Africa

The urgency of the tax rebate associated with rooftop solar and the time it would take for homebuyers to get their hands on photovoltaic panels has come under question.

Speaking to CapeTalk, Paul Roelofse, a certified financial planner, said that due to how the financial year and the tax filing timeline are laid out, homeowners could have to wait far longer than expected to feel the benefit of the recently announced incentive.

“I’m going to have to wait a good 18 months before I get my money back. I’m putting down my money to help Eskom’s pressure points, and I’m only going to get a refund down the road,” said Roelofse.

He said that the incentive fails to address the urgent need households face to shift away from the grid.

He added that it is tailored toward those people with enough initial capital to make the down payment on solar panels off the bat – excluding cash-strapped South Africans, who make up the majority of the population.

“A whole spectrum of people are left out of this equation. It’s really targeting certain people who have capital right now to relieve them from Eskom for a bit. It’s not an incentive at all. I think it misses the mark of how urgently people want to get through this load shedding,” said the financial planner.

The incentive also does not cover batteries, labour costs or inverters – some of the most expensive components of moving off the grid.

Instead, the government should have zero-rated solar panels for a more immediate benefit, Roelofse said.

The belief that zero-rating would have been a better approach echoes that of Busi Mavuso, the CEO of Business Leadership South Africa (BLSA).

Mavuso said that alongside zero-rating renewable components, the government could reduce supply-side costs by removing customs duties on solar panels. It could also apply grants or additional tax deductions for taxpayers when they file returns.

During his latest budget speech, finance minister Enoch Godongwana announced a couple of initiatives to encourage homeowners and businesses to make the shift toward renewable energy with the aim of assisting the embattled Eskom.

According to the finance minister, starting 1 March 2023:

• Individuals who install solar panels on their rooftops can receive a rebate of up to 25% of the panels’ cost, with a maximum rebate of R15,000.

• Businesses can decrease their taxable income by 125% of the investment they make in renewables.

Roelofse noted that, in practice, if you spend R40,000 on solar, you will only get R10,000 back – and if you spend more than R60,000, the rebate is capped at R15,000.

There is also now growing concerned over the availability and price of photovoltaic panels.

Prior to the incentives, Solana Energy, a solar provider, reported that households had imported over R2.2 billion worth of solar photovoltaic panels (PV) in the first five months of 2022 alone – this can only be expected to increase, given the incentive.

Daniel Haitzler, a managing director at solar PV company IBC Solar South Africa, told News24 that there are longer lead times for installations and product supply in the country.

Customers currently have to wait between four to six weeks until they have their hands on PV panels.

The South African Photovoltaic Industry Association (Sapvia) added that equipment supply shortages in the markets have led to increased installation times.

Read: Stage 5 load shedding returns this week – here’s the new schedule