- Electricity Minister Kgosientsho Ramokgopa says his department is “advocating” for the tax incentive for solar PV to be extended to batteries and inverters.
- Solar rooftop installations more than doubled since July 2022.
- At the briefing on Monday, Ramokgopa said that there had been significant progress to limit load shedding but that the country was not out of the woods yet.
- For climate change news and analysis, go to News24 Climate Future.
Electricity Minister Kgosientsho Ramokgopa said the government wants more businesses and households to opt for rooftop solar, and efforts are under way to push for a tax incentive to be extended to inverters and batteries part of solar PV systems.
The minister was speaking on Monday during a briefing about the progress of the Energy Action Plan.
Ramokgopa noted that solar rooftop installations had more than doubled to over 4 500MW, since July 2022. He said that the state wants to encourage this, especially through tax incentives that were announced by Finance Minister Enoch Godongwana in February.
Government is offering a 25% tax incentive to households on their solar PV panels. The incentive has been effective since 1 March 2023 and will run until 29 February 2024. Claims are capped at R15 000. The incentive strictly applies to solar panels – and not to inverters or batteries. But Ramokgopa said the incentive must be extended to these components.
“We are advocating for, as a department, that we need to have that incentive to be extended to components of that ‘self-generation mix’ that carries the heaviest capital cost… It shouldn’t just be restricted to PV but also should be extended to batteries and inverters,” he said.
An expanded incentive would see a “considerable uptake” of solar PV systems.
READ | SA imported an entire Eskom power station’s worth of solar panels – in just 6 months
Treasury allocated R4 billion in relief to individuals installing solar panels. Government also allocated R5 billion for the expansion of the renewable energy tax incentive to companies, according to the 2023 Budget Review. Businesses can claim a tax deduction of 125% on the cost of renewable energy projects – this includes solar PV, wind, biomass, hydropower and concentrated solar. The incentive applies for two years – 1 March 2023 to 28 February 2025.
Government also launched the energy bounce-back loan scheme earlier this year for households and small businesses to raise the finances they need to install solar PV. Government guarantees solar-related loans on a 20% first-loss basis, which means government would carry 20% of the loss on defaulted loans.
The loan scheme runs until 30 August 2024 and can be accessed through commercial bank loans.
READ | All you need to know about how the solar PV tax incentives will work
A feed-in-tariff that will apply to households and businesses that sell excess power back to the grid should also help boost the rollout of rooftop solar PV, Ramokgopa added.
The City of Cape Town is the first in the country to offer residents and businesses cash for selling excess power back to the municipality. Before, the city would just credit their electricity bills.
Given these existing interventions, Ramokgopa noted that it is also necessary to have a financing instrument introduced for poor households to also be able to tap into these renewable energy resources. A small household system costs more than R80 000.
The current system only benefits those with “unencumbered cash” and who have the “right liquidity position” and the “right risk profile” to be able to raise money from banks. Essentially, only middle- and high-income earners can benefit from solar PV rooftop installations.
Ramokgopa said the poor can’t access these energy generation technologies because they do not have the capital resources required for it. “We want to levelise and equalise that,” he added. He did not indicate what kind of instruments or solutions government was considering in this regard.
Load shedding prospects
At the briefing on Monday, Ramokgopa said that there had been significant progress to limit load shedding but that the country is not out of the woods yet. “But we are beginning to show sustained, improved performance over an extended period of time,” he said.
The generation capacity for the month to date in October has been 28 883MW. This is roughly 1 400 MW higher than the May 2023 baseline of 27 410MW. In the latter part of last week (16-20 October), available generation capacity breached the 30 000MW mark, Ramokgopa noted.
Eskom has also managed to bring down the unplanned outages – from 17 369MW to 13 527MW on average.
Last week, acting Eskom CEO Calib Cassim told News24 there had been a positive impact on available generation capacity since Unit 3 of Kusile came back online at the end of September.
This helped keep load shedding to Stage 2 during evening peaks for the first two weeks in October, Cassim said. This is expected to continue with the return of Unit 1 – which happened last week.
Unit 2 is expected to return to service in November, and Unit 5 will be online by December.
READ | ‘Turning the corner’: Electricity minister strikes optimistic note after progress at Kusile
Eskom’s energy availability factor (EAF) – which measures plant performance – last week was at 60%, said the power utility’s senior manager in the generation office Eric Shunmagum, who was also at the briefing.
Shunmagum noted that as the EAF has improved, there has also been less use of Open Cycle Gas Turbines (OCGT), that run on diesel. The use of OCGTs was less than budgeted for in the last month, he added.
Load shedding relief
Ramokgopa acknowledged the unreliability of ageing coal plants.
“We are doing everything possible to restore the reliability of units. But we can’t take away the fact that they are ageing… As they are ageing power stations, the kind of performance we expect is also going to taper down,” he said.
“You can’t solely rely on these power stations,” he added.
The reason efforts are being made to improve their performance is because it is the “shortest way” to relieve load shedding, Ramokgopa explained.
There must still be a focus on getting new generation capacity online. This includes that of private power plants, located near the old stations because there is existing transmission capacity to connect these projects to the grid. Ramokgopa said the licensing processes for these renewable energy plants should be quicker because these areas have already been demarcated for power generation.
German consultancy vgbe recently completed a technical assessment on the potential for operational improvements at old coal fire power stations. The firm was commissioned by National Treasury as part of its conditions for a decision to take on R254 billion of Eskom’s debt.
Shunmagum noted that Treasury had engaged with Eskom about the assessment. Eskom has been working with vgbe on the recommendations – some of which have been challenged by the power utility.
Shunmagum said Eskom requested “objective evidence” for the recommendations in question – he did not specify what they are. There were also other areas where Eskom and vgbe found common ground- specifically on the improvement of skills.
“We are working together with National Treasury to ensure the report is fair and balanced,” said Shunmagum.
Shunmagum said that Eskom will address the recommendations from the final report handed over by National Treasury.
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