BUSINESSES that act quickly can still take advantage of the substantial 125% income tax incentive available for solar energy projects completed and operational by this tax year-end (28 February 2025).
To meet the deadline for this generous incentive, taking into account preparation and construction timelines, businesses should sign up with a solar operator by mid-October 2024 at the latest to realistically be operational before March 2025.
The key to success is simply partnering with the right solar developers offering end-to-end, customised solar solutions.
The solar tax incentive offers a 125% tax write-off for solar energy investments in the first year, resulting in immediate savings. As an example, if a solar project costs R10 million, including supporting structures, batteries, and wiring, the reduction in taxable income would be R12,5 million. At a corporate tax rate of 27%, this could translate into tax savings of up to one-third of the system cost.
Looming deadline
“If you’re thinking about going solar to achieve energy independence, ensure business continuity, and save on electricity costs, now is the time to take action. Waiting will result in the limited-time tax incentive being lost to your business,” says Richard Flamand, co-country lead for South Africa at candi solar. Candi solar is a Swiss solar power developer, financier, and operator with a strong portfolio of over 110 MW of distributed solar projects across South Africa and India.
Business benefits
Renewable energy offers financial, environmental, and operational benefits. Energy savings are immediate through reduced electricity bills, while generating independent power mitigates the impact of outages, ensuring business continuity. Furthermore, consuming renewable energy demonstrates a commitment to sustainability, enhancing a company’s brand image.
So, how can a business access the solar tax incentive and unlock these long-term benefits? Flamand believes the key to success is partnering with the right provider that expertly manages the project from consultation, financing and installation to maintenance and performance management.
“A full-service approach reduces risks and allows businesses to remain focussed on their core operations, while real-time performance monitoring with proactive system maintenance ensures a reliable, efficient solution,” he says.
“At candi solar, we offer a range of end-to-end solar solutions and customisable contract terms. We also provide financing options, such as PPAs (Power Purchase Agreements), which allow businesses to buy power at up to 50% less than Eskom or municipality rates without owning the solar assets, and our PLIS (Performance-Linked Instalment Sale) option, with savings similar to a PPA contract, but with the added benefit of owning the solar asset so that businesses can benefit from the solar tax incentive.”
A bright future
“The SARS tax incentive for solar power is a win-win for South African companies: it incentivises sustainable practices and reduces tax burdens while paving the way for a more secure, cost-effective energy future,” concludes Flamand.
