Green Economy Journal Issue 57

ENERGY
ENERGY
It’s time for
SOLAR
TO SHINE
Green Economy Journal
interviews the CEO of SAPVIA
SAPVIA CEO, Dr Rethabile Melamu, believes that the wide deployment of solar PV and broader
renewable energy technologies can support a resilient energy system in South Africa. Will the tax
relief programme anchor our green economy transition? The Journal caught up with Dr Melamu,
the illustrious leader at the coalface of it all.
Please tell us about your first year as CEO of SAPVIA.
It has been an incredible year. A year of immense growth, stretching
and learning. I inherited a good and a growing brand, with a lean but
supportive team and the Board. Leading a member-led organisation is
unique and it is like nothing I’ve done before. It is rewarding to be of
service, but is it not without its unique demands of attending to the
vastly different needs of 500+ members.
I hope to continue to meet and to add value to all members. This
year has been challenging for all South Africans, but together with our
members, we are providing an alternative and immensely sustainable
solution to the loadshedding and energy security challenges. Overall,
it is a privilege to work with and alongside those that are providing
solutions to the most pressing challenges.
Does government consult with SAPVIA for matters relating to the
development, regulation and promotion of solar PV in South Africa?
Most definitely, we have had good engagements with different spheres
of government, from national, provincial and to the local level. For
instance, we have supported the Department of Mineral Resources
and Energy (DMRE) as well as the Department of Trade, Industry
and Competition (the dtic) in the development of the South African
Renewable Energy Masterplan (SAREM).
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We have contributed to Eskom’s grid planning and access processes
in partnership with our sister association, South African Wind Energy
Association (SAWEA) and we enjoy a great relationship with the
Independent Power Producers Office (IPPO).
That said, we have called on the powers that be for more involvement
in the decision-making that involves our sector and members. For
instance, we would have valued engagement in the design of tax
incentives for the solar PV sector. We have views on areas that needed
to be prioritised.
Please talk to us about policy certainty in this space.
There is generally a commitment to the transition towards a lowcarbon
energy mix. This is evident in government’s recent regulatory
reforms that removed the need for independent power producers
who develop private projects to hold a generation licence, which has
been touted a good move. This aims to speed up the addition of new
generation capacity to the grid. The results are beginning to show,
with 0.5 GW of utility scale projects registered with the National Energy
Regulator of South Africa (NERSA) in the first months of 2023.
The Integrated Resource Plan is being updated to comprehensively
address the current change and long-term planning. However, there
is more to be done to effectively enable the roll-out of embedded
generation projects and the development of grid infrastructure to
enable uptake of new generation capacity, in particular renewable
energy projects. That requires for Eskom and municipalities to
create rules, regulations and tariffs. A clearer articulation of Just Energy
Transition action as well as the envisaged role of the industry is needed.
A nationwide wheeling framework for private projects will further
enable ease of project developments.
How will a rapid growth in solar installations affect the market?
SAPVIA estimates that the installed solar PV capacity exceeded 1 GW
for the first time in 2022. We have seen substantial growth in private
projects registered with NERSA and not signed up. We are expecting
sustained growth, especially in the private sector where investment in
utility scale renewable energy projects both for direct consumption,
i.e. behind the meter or embedded generation, and for wheeling,
where generation and consumption are at two different sites.
Dr Melamu, do you have any reservations about the rooftop solar
PV tax incentives? If so, what are your concerns?
The individual tax incentive has prioritised middle to high-income
households who already have access to capital to invest in solar PV
systems. This completely leaves out low-income households, who are
not able to access instruments availed by financial institutions and
other industry players. The fact that incentives cover modules alone
while most households install hybrid systems (PV, inverter and battery
system) is a surprise. The administrative requirements for accessing
the tax incentive are confusing – mainly that only a certificate of
compliance is required for accessing the incentive, which covers the
part of the system that is not incentivised.
SAPVIA has indicated that the waiting period for the installation
of solar PV is increasing. Why is this?
There is a shortage of skilled installers with adequate experience and
training. Those reputable installers tend to be inundated. As such,
SAPVIA is working with various partners such as the Energy and Water
Sector Education Training Authority (EWSETA), the Small Enterprise
Finance Agency (SEFA) and the Small Enterprise Development Agency
(SEDA) to increase the pool of installers.
Please talk to us about the importance of economies of scales
and predictable demand for facilitating investments needed for
the manufacture of solar PV installation components.
This is mainly driven by increased demand for PV components,
exacerbated by the frequent episodes of loadshedding. First, there
needs to be an understanding of localisation potential, that’s why
SAPVIA developed a study to assess opportunities along the solar PV
THE RENEWABLE ENERGY TAX INCENTIVE
The tax incentive available for businesses to promote renewable
energy will have no thresholds on the size of the projects that
qualify and the incentive will be available for two years to
stimulate investment in the short term.
Businesses can deduct 50% of the costs in the first year, 30%
in the second and 20% in the third for qualifying investments in
wind, concentrated solar, hydropower below 30 MW, biomass and
PV projects above 1 MW. Investors in PV projects below 1 MW can
deduct 100% of the cost in the first year. Under the expanded
incentive, businesses will be able to claim a 125% deduction in
the first year for all renewable energy projects with no thresholds
on generation capacity.
The incentive will only be available for investments brought into
use for the first time between 1 March 2023 and 28 February 2025.
SOLAR TAX BREAKS
In the 2023 Budget Speech, a R9-billion tax relief programme
was introduced to support the clean energy transition. While
R4-billion is for households that install solar panels, R5-billion
will go to companies through an expansion of the renewable
energy incentive. The tax incentive available for businesses will be
temporarily expanded to encourage rapid private investment to
alleviate the energy crisis. The current incentive allows businesses
to deduct the costs of qualifying investments over a one- or threeyear
period.
Government’s proposed rooftop solar incentive for households
means that individuals will be able to receive a tax rebate to the
value of 25% of the cost of any new and unused solar PV panels.
To qualify, the solar panels must be purchased and installed at a
private residence and a certificate of compliance for the installation
must be issued from 1 March 2023 to 29 February 2024.
Solar-related loans for small and medium enterprises on a 20%
first-loss basis were confirmed by government.
There is a shortage of skilled
installers with adequate
experience and training.
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