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PwC says more green incentives are a step in the right direction

1st March 2023

By: Marleny Arnoldi

Deputy Editor Online

     

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In the wake of national government announcing various incentives to get local businesses to invest in renewable energy generation as part of the solution to the national energy crisis, as well as advancing decarbonisation, professional services firm PwC says, equally, businesses have to improve their environment, social and governance (ESG) credentials.

Currently, loadshedding is the number one brake on economic and employment growth, the firm states. Aside from the newly announced solar incentives for businesses and households, it says, South African legislation already provides several other green grants, incentives and relief measures that encourage companies to implement climate change mitigation measures.

PwC estimates that loadshedding reduced potential real gross domestic product growth by five percentage points last year, costing the country 600 000 potential jobs.

On a positive note, PwC says businesses and households are already investing in renewable energy generation. The firm cites research conducted by Moneyweb finding that South African households and businesses installed 1 500 MW of solar photovoltaic (PV) generation capacity in 2022.

There is currently 4 550 MW of installed solar capacity outside of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

The South African Photovoltaic Industry Association expects another 2 300 MW of solar capacity to be added this year, which, added to the existing capacity, will almost equal the REIPPPP-related capacity at just under 7 000 MW.

PwC says one of the benefits that can potentially unlock more solar installations in commercial buildings and residences is the concept of net billing. This would compensate prosumers based on the actual market value of electricity.

The firm explains that this is achieved by balancing what the prosumers consume to keep their lights on, with the surplus that they inject into the grid.

Alternative mechanisms such as a feed-in tariffs work on a similar basis, but with the provision that excess energy injected into the grid is compensated at a predetermined tariff.

Private households will, from next month, be able to claim a 25% rebate on the cost of solar PV panels; however, the incentive has been limited to solar panels only and not batteries and inverters, which encourages surplus solar power generation for feeding into the national grid instead of being exclusively used for household consumption through battery storage.

Some of the existing green grants, incentives and relief that aim for more climate change mitigation investment include a deduction in respect of energy efficiency savings, allowances on environmental treatment, recycling or waste disposal, capital allowances on roads and fencing linked to renewable energy facilities, research and development grants and additional allowances for a company engaged in a project that has been approved as an industrial policy project.

PwC has encouraged parties that are interested to learn more about some of government’s latest green incentives to reach out, especially since many of the incentives require an understanding of a business’s carbon footprint.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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