Solar for Businesses: Savings & Impact

Many South African businesses have been left with little choice but to explore a solar PV solution in order to keep their respective production lines operating, yet the benefits of harnessing energy from the sun stretch further than simply maintaining productivity. 

Exacerbated by the shortcomings of the national power supply grid, many South Africans have taken it upon themselves to become less reliant on this often-erratic source of electricity and are instead looking towards the sky. 

Our part of the world enjoys up to 2,500 hours’ worth of sunlight per year. Together with steady advancements in both solar PV and inverter technology, as well as solar backup battery solutions, it makes sense that we might harness the power of the sun both at home and in business. 

With many big businesses in South Africa having already made significant inroads into supplementing their everyday energy requirements via a solar PV solution, let’s look at the broader benefits of such an investment. 

There’s no license required 

The South African government has made it altogether less complicated to move ahead with respective plans for a solar PV system to be installed at businesses across the country. While technical and environmental requirements and regulations remain, there is no requirement for a license to be obtained before proceeding.

For clarification, below is a list of the exceptions on offer from the government:

Generators exempted from licensing and registration with the National Energy Regulator of South Africa (NERSA):

• Your generator is utilised for private use only, as a backup source of electricity, in the case of a power outage. 
• Your generator does not have a point of connection to the distribution network.
• Your generator, of no more than 100 kW, is connected to the grid and the electricity is for your own use only.

Generators requiring registration:

• Your generator has a maximum capacity of 1 MW.
• Your generator has a point of connection (whether you are exporting energy into the grid or not).
• Your generator supplies electricity to a customer or related customer(s), even 100 kW and below.
• Your generator is used for demonstration purposes only, for a maximum period of 36 months.
• Your generator produces electricity from waste, or industrial residues.
• Your generator was exempt from licensing prior to the amendment on 26 March of Schedule 2 of the Electricity Regulation Act.

Generators requiring licensing:

• Any generator with a capacity above 1 MW.
• Any generator, irrespective of size, supplying electricity to more than one non-related customer

Solar PV solutions are scalable

The advantage of a solar PV installation is that through considered planning at the start of the project, your business can add panels or even battery storage capacity at an incremental rate as required, ideally as your production outputs and thus profits expand. One clever solution is to install solar PV panels on the roof of carports in the employee parking area. 

It’s cost-effective 

Solar remains one of the most cost-effective forms of energy generation available. Via a neatly integrated solar PV solution, your business is wholly less reliant on the national grid, able to continue operating through periods of load-shedding and able to significantly reduce monthly electricity expenses. 

Tax incentives 

As of 1 March 2023, the Section 12B capital allowance provides for accelerated depreciation of 125% of the initial costs in the year the business started using the solar system. A company that invests R150 000 in a solar system can deduct VAT of 15% on the total installation charge (subject to a valid VAT invoice being issued by the supplier) with an income tax saving of 27% for companies. If the R150 000 is VAT exclusive, the income tax savings will be R40 500. There is no limit on the amount that can be claimed for income tax purposes, though this deduction is only valid for the initial costs of the solar system.

Feeding back into the grid

With the government continuously looking at ways of stabilising the national grid, one solution is to incentivise and even reward companies for feeding excess energy harnessed via solar PV solutions back into the grid, amongst others. 

It’s green

Ultimately, by harnessing the power of the sun we become altogether less reliant on energy generated via coal or nuclear solutions, something that many businesses around the world are cognisant of. One of the most prolific consumers of energy in the world, the automotive manufacturing sector, is leading the way by setting lofty targets to become completely carbon-neutral in the next 25 years – a goal that will ultimately rely heavily on both solar, hydro and wind energy generation.