Eskom’s revenue likely won’t suffer due to increased rooftop photovoltaic solar (PV) uptake aided by tax incentives launched for residential and business customers on 1 March 2023.

This is according to EE Business Intelligence managing director Chris Yelland, who believes applying rooftop solar incentives is a win-win for everybody in South Africa.

MyBroadband asked Yelland whether Eskom’s revenue would suffer due to the solar incentives as wealthy residential customers — those who contribute the most to its residential revenue — install solar systems.

However, Yelland said the change would help Eskom rather than damage its revenue.

He explained that while it is likely that Eskom’s wealthier residential customers will opt for solar, the power utility is already unable to meet its commitments, meaning it won’t necessarily be losing customers.

“I think everybody is the winner in these circumstances because, for example, the more people that install rooftop solar PV, the less load-shedding there will be,” said Yelland.

“It will help Eskom, it is not able to meet its commitments already, so it’s not like it will be losing customers.”

Yelland explained that Eskom already has a 5,000MW to 6,000MW shortfall — electricity demand it is unable to supply to customers.

“So, people that are doing rooftop solar PV will actually be helping Eskom and Eskom will not be losing revenue, because it’s losing [that] revenue already,” he said.

“Those that can afford it also win because they have increased security of supply. I think it’s a win-win for everybody involved,” he added.

Yelland argued that Eskom would be able to rely on revenue generated from its remaining residential customers and industrial clients.

“They just need to adapt their business model to the changing circumstances. All companies to do this,” he said.

It’s no secret that Eskom must completely restructure, stated Yelland.

“It’s going to create a new independent group company that is going to be carved out of Eskom to create a level playing field for thousands of generators becoming part of the generation mix.”

Yelland added that other restructuring processes revolve around unbundling the power utility into separate transmission, generation, and distribution entities.

Disappointing solar incentives for homeowners

Finance minister Enoch Godongwana announced the rooftop solar incentives for Eskom’s customers during his 2023 Budget Speech.

Residential customers received a 25% rebate up to R15,000 from 1 March 2023. Business customers can apply for a 125%  rebate on their solar panels.

National Treasury published an accompanying FAQ document explaining that government proposed the incentive programme to encourage households to invest in clean generation capacity, which could help solve South Africa’s energy crisis.

“The incentive will only be available for one year to encourage investment as soon as possible,” the document said.

Customers must meet the following criteria to qualify for the rebate:

• Only new and unused solar PV panels qualify to ensure that the capacity is additional to what the country already has.
• The panels can be installed as part of a new system or an expansion of an existing one.
• Solar PV panels must have a minimum capacity of 275W per panel to qualify.
• Other components such as batteries, inverters, fittings, diesel generators, or portable panels do not qualify.
• Installation costs do not qualify.
• Solar PV panels must be installed at a residence that an individual mainly uses for domestic purposes.
• The installation must have a certificate of compliance in terms of the Electrical Installation Regulations 2009.
• The solar PV panels must form part of a system connected to the private residence’s main distribution board.
• The rebate applies to qualifying solar PV panels brought into use for the first time from 1 March 2023 to 29 February 2024.

Businesses can claim a 125% deduction in the first year for all renewable energy projects with no thresholds on generation capacity.

“For a business with positive taxable income, the deduction will reduce its tax liability,” National Treasury said.

“For example, a renewable energy investment of R1 million would qualify for a deduction of R1.25 million.”

“Using the current corporate tax rate, this deduction could reduce the corporate income tax liability of a company by R337,500 in the first year of operation.”

---