Budget Speech bye bye: Solar tax rebates didn’t make the list

Solar tax rebates did not make it onto this year’s budget speech, leaving many South Africans disappointed.

Finance Minister Enoch Godongwana delivered the 2024 budget speech on Wednesday.

Despite his mention of renewable energy, Godongwana was mute on the solar incentive.

Introduced last year, the solar tax incentive was geared towards getting households to invest in solar – giving them a 25% tax rebate on solar panels.

Although the one-year lifespan was made clear from the onset, some hoped it would be extended. Unfortunately for them, it was not.

ALSO READ: Solar panel incentive: Time is running out

‘A step backward’

GoSolr co-founder and CEO Andrew Middleton was disappointed by the exclusion of the household solar incentive from this year’s budget speech.

He said he’d hoped government would extend the incentive to include other components in addition to solar panels.

“The removal of the household incentives for solar panels seems like a step backward when it comes to giving households the ability to access clean and renewable energy and elevate the pressure on the energy grid,” Middleton said.

GoSolr like other solar companies benefitted from last year’s uptake as result of the incentive.

“The incentive has had a big impact on solar investment for businesses which can be seen by the 350% increase over the last year on rooftop solar in businesses and households,” he explained.

ALSO READ: Government calls for public comment on renewable energy tax incentives

Renewable energy

Meanwhile, National Treasury proposed an increase in the limit for renewable energy projects that can qualify for the carbon offsets regime: from 15 MW to 30 MW.

Furthermore, carbon tax was increased from R159 to R190 per tonne of carbon dioxide.

Weighing in, head of Global Resources at Schroders, Mark Lacey said the measures were a positive but long-term step.

“The measures taken by the finance minister are sensible, but impact South Africa’s grid system in the long term, not the short term,” he said.

Undoubtedly, Lacey believed the new limit would improve project returns for developers, enabling them to benefit from economies of scale.

Although he considered the carbon tax step in the right direction, adding it was consistent with global standards, he felt it wasn’t enough.

“The overall level of carbon taxes (at $10/tonne) is extremely low compared to other countries globally and is unlikely to significantly change corporate investment rates in the short term,” Lacey explained.