Massive tax change for solar in South Africa

 ·2 Jul 2024

Solar panels will now face a 10% import tax, with industry players mixed on the development.

Minister of Finance Enoch Godongwana has gazetted a 10% import tax on solar panels.

The decision comes amid what can only be described as a solar boom in the country. Over 5,000 MW of rooftop solar was installed across the country following heightened load shedding in the first half of 2023.

The increased use of solar and the subsequent low demand on the grid are critical reasons that load shedding has been suspended for over three months in South Africa – a rare occurrence considering Eskom’s poor performance over the last 15+ years.

Source: Government Gazette

Bryan Groenendaal from Green Building Africa said the new import tax is part of the South African National Renewable Energy Master Plan, which was published by the now-separated Department of Mineral Resources and Energy.

The plan prioritises supporting local demand for renewable energy by unlocking market demand and system readiness, driving industrial development through renewable energy value chains and building local capabilities in skills and innovation.

Viren Gosai, General Manager at ArtSolar, said that the recent imposition of the 10% duty has created unrest among importers.

Importers claim that local panels are inferior and South Africa lacks the technology to produce globally relevant panels.

Gosai, on the other hand, said that local PV manufacturing can ensure national economic resilience by creating sustainable jobs and supporting local education and training programmes.

Local manufacturing also aligns with sustainability goals as it reduces carbon emissions associated with transportation.

It also means that the local industry is less susceptible to shifts in global supply chains.

We need renewables

Despite last year’s solar boom, experts from Rhodes University said the rate of change is not happening fast enough.

Solar PV contributes less than 5% of South Africa’s energy mix despite the sunny climate.

Currently, less than 10% of households use solar power regularly.

The experts said that financial barriers were the main reason solar was not adopted across the country.

Lower-income households, for instance, lacked the collateral to get solar loans.

Moreover, there are personal and societal concerns, such as the belief that solar electricity is less potent than other sources and that solar panels are at increased risk of threat.

Municipalities and Eskom also do not support the shift as they profit from selling coal-powered electricity to customers.

That said, renewable energy projects are currently sustained civil construction activity in South Africa, according to the latest FNB/BER Civil Confidence Index.

Nevertheless, there has been a shift away from solar projects to wind.

Although solar energy is key to the nation’s energy transition, it is limited because it cannot be harnessed at night or during cloudy conditions.

Wind energy can be harnessed at any time of the day, making it a superior baseload power source.


Read: 3,500 jobs saved in South Africa – for now

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