Frequently asked questions

What is the Section 12B tax incentive?

Essentially a 28% discount on your solar system.

Section 12B of the Income Tax Act makes provision for a capital allowance for movable assets used in the production of renewable energy. The incentive makes allowances 100% asset accelerated depreciation in first financial year that the asset is brought online. Currently, company tax in South-Africa is 28%. With this incentive, you can deduct the value of your new solar power system as a depreciation expense from your companies’ profits. This reduction can also be carried over to the next financial year as a deferred tax asset. In effect it is the same as getting a 28% discount on the price of your solar system!

How many sunshine hours do we get in South and Southern Africa?

More than 2 500 hours of sunshine per year.

Most areas in South Africa average more than 2 500 hours of sunshine per year, with an average solar-radiation level range of between 4.5 and 6.5kWh/m2 per day. This represents a huge opportunity for the South African market to take advantage of. Furthermore, South Africa is considered a relatively dry country, with national rain levels remaining low around an average annual rainfall of only 464mm compared to the world average of 806mm. This presents another great advantage of South Africa’s solar resource.

What are the typical electricity tariff increases?

On average, 13% per annum and expect that number only to go up.

Traditionally, electricity tariff increases are supposed to be somewhat inline with the inflation rate.

From the 2008 electricity crisis onwards, there is a clear and sharp inflection point for electricity tariffs in South Africa. From 2007 to 2019, electricity tariffs increased by 446%, whilst inflation over this period was 98%.

Based on the currently approved increases for 2020 and 2021, the total increase in electricity tariffs from 2007 to 2021 will be 520%. By then, electricity tariffs would have increased more than 5-fold in 14 years.

Considering the current serious state of Eskom’s debt and the fact that the country probably cannot afford for Eskom to fail, consumers can likely expect a continuance of much higher than inflation electricity price increases over the next several years.

What is Carbon Tax and how can a solar system help reduce it?

Installing a solar system for an average medium sized business can reduce their emissions by over 180 tonnes per year, to the tax value of R 22 008.

As per the South African government’s plan to implement carbon taxing, company’s will be taxed R120 per tonne of CO2 emissions.

A typical 100 kWp solar system (enough for a small to medium sized business) will reduce that company’s emissions by about 184 tonnes per year. To put this into perspective, this would be the same as planting 69 400 trees, driving 615 978 kms less, or taking 32.6 cars off the road, all resulting in a saving of R 22 008 per year.

Do you have any other questions?

Get in touch

info@blueecho.co.za | +27 79 892 8197