Renewable energy tax incentives drive billions into SA's commercial solar sector

Remember the interest in solar and other alternative energy sources sparked by ongoing loadshedding?

Well, the tax incentives provided by government have certainly paid off for South Africa's commercial solar sector, reports alternative investment fund manager Jaltech.

In conversation with Stephen Grootes, company partner Jonty Sacks says rooftop and commercial solar have been flourishing year-on-year for at least the last five years.

Added to the pressures of past power cuts, was the realisation that our electricity costs would just keep rocketing, as we have indeed been seeing.

Sacks believes the uptake of solar would probably have increased in the absence of loadshedding as well, but not on the scale it has happened.

"At the peak of loadshedding, yes CFOs and CEOs needed to make decisions really rapidly because they would experience half a day without electiricity...but the government did do a survey recently where a large portion of participants indicated that had it not been for the tax incentive, they wouldn't have considered solar."

The beauty of an incentive is that it encourages the private sector to do what government hasn't done, he says, 'and we know how the private sector can execute quicker and better than government, and that is what tax incentives have achieved'.

Jaltech points out that the investment comes as the solar sector adapts to the expiry of Section 12BA’s enhanced allowance in February 2025, which had temporarily boosted tax relief to 125% for renewable energy assets.

The permanent Section 12B allowance continues to support investment, though at a more modest 100% tax deduction.

To listen to Jaltech's Jonty Sacks in conversation with Stephen Grootes on 702's The Money Show, click on the audio link below: