While solar seems to be the solution to load shedding for many South Africans, experts warn that installation should be cost-effective, compliant and adequate for the home’s needs.
As South Africans contend with the likelihood of advanced load shedding stages for the foreseeable future, more homeowners are looking at ways to mitigate the impact of prolonged power outages on their daily lives.
In response, Finance Minister Enoch Godongwana announced during his budget speech that South Africans can receive up to R15,000 in tax rebates for solar panels starting from 1 March – leaving many considering solar energy sources as their pathway towards an uninterrupted power supply.
How the tax break works
- Who can claim: Individuals who pay personal income tax can claim the rebate against their tax liability. This rebate is not intended for solar installations at business premises.
- What can be claimed: Individuals can claim a rebate to the value of 25% of the cost of new and unused solar photovoltaic (PV) panels, up to a maximum of R15 000 per individual.
- What are the limits: Only new and unused solar PV panels qualify. Only solar PV panels with a minimum capacity of 275W per panel (design output) qualify for the rebate.
Other components of a system – batteries, inverters, fittings or diesel generators – and installation costs do not qualify. Portable panels will also not qualify.
- When is the rebate in effect: The rebate applies to qualifying solar PV panels that are brought into use for the first time in the period from 1 March 2023 to 29 February 2024.
- How you can claim: Individuals will be able to claim the rebate if they have a VAT invoice that indicates the cost of the solar PV panels separately from other items, along with proof
of payment, and a Certificate of Compliance evidencing that the solar PV panels were brought into use for the first time in the period from 1 March 2023 to 29 February 2024. PAYE taxpayers will be able to claim the rebate on assessment during 2023/24 filing season. Provisional taxpayers will be able to claim the rebate against provisional and final payments.
This incentive will be included in the annual tax amendments. A draft version of the legislation will be published for public comment no later than the publication date of the 2023 Draft Taxation Laws Amendment Bill.
Other things to take into account
According to MortgageMe director Andrea Tucker, while solar provides a single, cost-effective solution for homeowners, “cost-effective” doesn’t necessarily mean easily affordable.
“In the same way that we always advise prospective homeowners to have a budget in mind and finance in place for a home, we also recommend that solar shoppers do a needs assessment, cost it and then research the options for financing their solar installation,” said Tucker.
This will ensure solar buyers don’t over-extend themselves and risk their financial health in the pursuit of escaping load shedding.
Given that Eskom’s problems are unlikely to be resolved any time soon, solar installation will almost certainly enhance the resale value of a property or attractiveness to potential renters, said Tucker.
Because of this, finance groups such as banks see solar as an excellent investment – provided it is installed professionally, compliant with relevant regulations, and is adequate for the home’s needs, she added.
Based on the homeowner’s budget and finances, Tucker said that banks typically offer the following:
- Adding the cost of solar to a home loan on registration of the bond;
- Extending home loans to cover the cost of installation; or
- Financing solar as a rent-to-buy option or even on a subscription basis.
“Many options make it cost-effective depending on your immediate needs and ability to outlay a large amount upfront or pay it off over time. It is certainly looked upon favourably by banks and finance houses, making it easier for homeowners to choose solar,” she added.
Considerations before deciding to go solar
According to Versofy Solar co-founder and CEO Ross Mains-Sheard, there are several things prospective solar buyers should do before deciding on installing solar in their homes.
Prospective solar buyers should:
- Talk to friends, neighbours and their community for recommendations of companies that they have used;
- Assess your home’s energy needs based on historical usage patterns;
- Assess your home’s capacity to support solar panels, taking into consideration the surface area of the roof, orientation, pitch, and exposure to the sun;
Once you have completed these exercises, you can determine – in conjunction with a reputable solar installation company – the capacity of the solar panel and storage system you need to install, said Mains-Sheard.
If you have determined that solar energy is an adequate solution, Mains-Sheard then suggests that you consider the following:
- Get the necessary approvals including from the municipality, homeowners’ association, body corporate etc.;
- Shop around and get multiple quotes to ensure the best value for money;
- Ensure that your installer is accredited and uses only the best quality materials; and
- Ensure your solar system is maintained regularly and that it is insured the same as any other household asset.
He added that solar installation is not only about the number of panels but also the storage capacity of the captured solar energy based on the size of the home and appliances that people wish to keep on during a power outage.
“There is also the possibility that in the future, surplus energy generated may be sold back into the grid, which may provide a modest return on your investment. The Western Cape is certainly moving forward with this, and it is hoped that the rest of the country will follow suit,” said Mains-Sheard.