With load shedding being one of the country’s problems, most companies are affected by the load shedding and looking for ways that can reduce the damage caused by load shedding.
A tax incentive is making it easier for business owners that are looking to go solar.
in February 2023, section 12B tax incentive, in terms of businesses, individuals or trusts taxpayers will be able to claim a 125% deduction in the first year for all renewable energy projects, without a threshold on generation capacity, the minister of finance announced this enhancement.
However, according to reports, the adjusted incentive will be available only for investments brought into use for the first time between 1 March 2023 and 28 February 2025.
Rooftop solar is a go-to choice due to its minimum maintenance, most components are highly durable with a long lifespan and energy costs reduce over time. With the enhanced section 12B, tax incentives have encouraged investments such as Jaltech to raise retail capital from South African taxpayers specifically to fund solar projects in South Africa.
Jaltech partner Jonty Sacks said: “From the perspective of companies who are looking to raise capital for solar, Section 12B has now become very appealing, as fund managers have raised capital and can offer rates way better than traditional financial institutions because we are not subject to the same regulations as they are.
“There is a whole new pool of capital available for solar installations, but it has to be used before February next year or the taxpayers will miss out on the tax deduction within this financial year.”
Fund managers can offer funding to property or business owners at more competitive rates than traditional funding options.
“Traditional institutions are only able to fund a portion of a project, but since section 12B fund managers are not subject to banking legislation, we can fund an entire project. The terms we offer are also more attractive,” said Sacks.
“Solar installers also benefit as they now also have access to section 12B funding for their clients or new and existing projects they operate. This has unlocked a number of projects which simply took too long through traditional funding channels.”
Sacks concluded, “The likelihood of Eskom supplying the South African market with reliable electricity in the next two years is remote. If it eventually achieves this, the cost of electricity will likely be significantly higher than the cost of producing energy through solar.”
