Small businesses, poor households may miss out on tax incentives to install solar power

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There are fears that many small businesses and poor households who cannot afford to install alternative energy will miss out on government tax incentives.

Last week, Finance minister Enoch Godongwana announced that National Treasury will be providing tax incentives to South African businesses and households to encourage a rapid move to renewable energy.

But some say the cost of installation is already too high and a model that suits the majority should be sought.

As of today, private households and individuals who install rooftop solar panels will be able to claim a rebate of 25% of the cost of the panels, up to a maximum of R15 000.

To qualify, the solar panels must be purchased and installed at a private residence and a certificate of compliance for the installation must be issued from 1 March 2023 to 29 February 2024.

But there are concerns about how small businesses and poor households will even afford these installations.

“Most of our members are 100% dependent on Eskom, they cannot afford generators. The take-up will only be done by big businesses,” says Black Business Council’s Kgankie Matabane.

Solana energy is a new solar installation business based in Durban that’s committed to playing in the energy space. It installs solar solutions for commercial and residential spaces. And although it has different price points, it admits that solar installation is not cheap.

“For your backup, your normal backup, that would be your inverter and battery that is 3 KWH system will cost you R59 000,” explains Marketing Manager at Solana Energy Nkululeko Biyela. According to Biyela, the Australian model is significantly superior.

Even if users buy and install solar, the incentive will only be paid back in the tax year of 2024.

“R15 000 is still better than nothing in my view,” says CEO of Sach Accounting, Paul Chitate.

The rebate is only available for solar PV panels and not inverters or batteries, to focus on the promotion of additional generation and the incentive will be available for one year.