How South African’s Proposed Solar PV Tax Incentive Works

Announced during his February 2023 budget forecast, South Africa’s Minister of Finance, Enoch Godongwana, outlined a new tax incentive scheme aimed at encouraging households to invest in clean, solar energy. 

Under this blueprint, any individual that invests in a new or expanded solar array between 1 March 2023 and 29 February 2024 will be able to claim 25% of the cost of the PV panels, up to a maximum of R15 000, from government via their annual tax return form. 

Engineered to incentivize South African homeowners to make a timely decision when it comes to being altogether less reliant on the national grid, it’s noted that the solar tax rebate does not extend to the actual installation cost of a system, nor the inverter, batteries or materials required to bring a solar PV system online.

Using this scheme, should an individual purchase 10 solar PV panels at a cost of, say, R4 000 each, the rebate amount is R10 000 (25% of R40 000). Should the user purchase 20 panels at this same cost per unit, the rebate is capped at R15 000. 

Other requirements when it comes to being able to claim on this tax incentive are that the solar PV system must comprise new or previously unused panels of at least 275W capacity, and that the installation must be connected via a home’s mains distribution board. A certificate of compliance is mandatory. 

Designed around an individual homeowner, while the scheme does apply to those living within a sectional title development, it does not extend to a body corporate, meaning each home would need to claim separately. 

Reacting to the announcement, CEO of The South African Photovoltaic Industry Association (SAPVIA), Dr Rethabile Melamu, expressed disappointment that experts in the field were not consulted before the final decision was made. “Solar panels alone do not protect end users against loadshedding,” she said. “The solar panels incentive is limited and does not address those households that can’t access instruments for the purchase of solar systems. Based on a 25% cap this could translate to a solar system of R60 000, which will not make a meaningful impact for the average household without storage. SAPVIA is on record as indicating that an average household tends to purchase a 5kW hybrid system, including panels and battery storage, which ranges from R95 000 to R200 0000, depending on the components used.”