Up to 25%! South Africa Launches Tax Rebate Scheme for Rooftop PV

According to media reports, South African Finance Minister Enoch Godongwana recently stated that the department plans to launch a new tax rebate scheme to provide incentives for newly installed rooftop photovoltaic in private homes. From March 1, 2023, individual users who plan to install rooftop photovoltaic systems can apply for a tax rebate of up to 25% of the cost of photovoltaic modules, up to a maximum of ZAR 15,000 (about 814 US dollars).

The tax rebate scheme for private rooftop PV systems, aimed at addressing South Africa's severe load curtailment problem, has a budget of ZAR 4 billion ($216.7 million) and does not cover inverters, battery storage or installation costs.

This tax rebate program is only applicable to photovoltaic modules with a minimum power of 275W, and portable photovoltaic modules are excluded. Photovoltaic modules must be connected to part of the private residential electricity distribution system. The tax rebate applies to eligible photovoltaic modules that were first put into service between March 1, 2023 and February 29, 2024.

The government has also announced the expansion of its renewable energy tax incentive for businesses, with a total budget of ZAR 5 billion. From March 1, 2023, businesses will be able to reduce their taxable income by 125% of the cost of an investment in renewable energies.

“There will be no thresholds on the size of the projects that qualify, and the incentive will be available for two years to stimulate investment in the short term,” said Godongwana.

The current scheme allows businesses to deduct 50% of their renewable investments in the first year, 30% in the second, and 20% in the third year. This applies to PV projects above 1 MW in size, along with qualifying investments in wind energy, concentrated solar, hydropower, and biomass. Investors in PV projects below 1 MW in size can deduct 100% of their costs in the first year. Under the expanded tax incentives, businesses will be able to claim a 125% deduction in the first year without thresholds on the size of projects.