Up to 25%! South Africa launched the roof photovoltaic tax rebate plan

Up to 25%! South Africa launched the roof photovoltaic tax rebate plan

According to foreign media reports, South Africa's Finance Minister Enoch Godongwana said recently that the department plans to launch a new tax rebate plan to provide incentives for the new installation of rooftop PV in private homes. From March 1, 2023, individual users who plan to install rooftop photovoltaic systems can apply for tax rebates up to 25% of the cost of photovoltaic modules, up to 15000 rand (about 814 dollars).

The tax rebate plan for private rooftop photovoltaic systems aims to solve the serious load reduction problem in South Africa. Its budget is R4 billion rand (US $216.7 million), and the cost of inverter, battery energy storage system or installation is not included in the tax rebate. However, some industry insiders criticized that the plan could not completely solve the problem of load reduction in the country.

Godongwana said in his budget speech: "The load reduction in 2022 reached a record level, lasting for 207 days, compared with 75 days in 2021. In response, we need to take decisive action to add additional capacity to the grid."

This tax refund plan only applies to PV modules with a minimum power of 275W, and portable PV modules are excluded. The PV module must be part of the distribution system connected to the private residence. The tax refund is applicable to eligible PV modules that are put into use for the first time between March 1, 2023 and February 29, 2024.

The plan does not include the investment and installation of battery energy storage system, inverter and diesel generator. The South African Photovoltaic Industry Association (SAPVIA) criticized this decision.

Rethabile Melamu, CEO of South African Photovoltaic Industry Association, said: "The tax rebate of PV modules alone cannot protect the end users from the impact of load reduction. The incentive of PV modules is limited, and does not solve the power supply problem of those households who cannot purchase PV systems. According to the upper limit of 25%, this may require household users to spend 60000 rand to install 6kW~7kW rooftop PV systems, which will not have a significant impact on ordinary households without energy storage systems The records show that household users tend to buy 5kW photovoltaic+energy storage system, and the price varies from 95000 to 200000 rand according to the components used. "

Melamu said that the South African Photovoltaic Industry Association (SAPVIA) welcomed the South African government's incentive plan, but also urged the government departments to consult industry experts to design such plans more effectively. However, the South African government also announced the expansion of its renewable energy tax incentives for enterprises, with a total budget of R 5 billion.

Godongwana said: "There is no threshold for the scale of eligible photovoltaic projects. This incentive measure will last for two years to stimulate short-term investment."

The current plan allows enterprises to deduct 50% of their renewable energy investment in the first year, 30% in the second year and 20% in the third year. This applies to photovoltaic systems with installed capacity of more than 1MW, as well as investment in wind power generation facilities, photovoltaic systems, hydropower and biomass energy facilities. Investors of PV projects with a scale of less than 1MW can deduct 100% of the cost in the first year.

Under the expanded preferential tax policy, enterprises will be able to apply for 125% deduction in the first year without being limited by the project scale.