Industry organisation the South African Photovoltaic Industry Association (SAPVIA) urges businesses to take advantage of the government’s renewable energy tax incentive before it expires on February 28.

The enhanced deduction for renewable energy (Section 12BA) incentive allows businesses to deduct 125% of their capital investment in renewable energy assets brought into use between March 1, 2023, and February 28, this year.

This incentive offers significant financial benefits, making now the best time for businesses to invest in renewable-energy solutions. After this deadline, the deduction will revert to the standard 100% deduction.

Incentives were introduced to encourage private-sector investment in renewable energy and support South Africa’s transition to a more sustainable energy future.

“By claiming the enhanced Section 12B deduction, businesses can reduce their taxable income significantly. Tax incentives help businesses recover their initial solar investment more quickly,” SAPVIA says.

National Treasury has launched an online survey to assess the effectiveness of these incentives, and invites all beneficiaries and stakeholders to share their experiences. The survey aims to collect data to evaluate whether these measures have met their objectives and to help shape future tax policies.

Further, the solar energy tax credit (Section 6C) was a short-term incentive for individuals who installed rooftop solar panels between March 1, 2023, and February 29, 2024. It was only available for the 2023/24 tax year, allowing qualifying individuals to claim up to 25% of the cost of new and unused solar PV panels, capped at R15 000 per individual.

While this incentive is no longer available, its impact on residential solar adoption is being evaluated.

“These incentives have played a crucial role in driving renewable-energy investment. We urge businesses that qualify to take advantage of the remaining time to implement qualifying projects before the deadline,” says SAPVIA CEO Dr Rethabile Melamu.

SAPVIA is advancing the adoption of renewable energy and working with stakeholders to ensure a sustainable energy future for South Africa, she says.

Solar energy reduces reliance on the national grid, decreasing electricity expenses over the long term.

These incentives promote renewable-energy generation, and ease pressure on the country’s power grid. By switching to solar energy, individuals and businesses contribute to reducing carbon emissions and achieving sustainability goals, says Melamu.