More solar price pain for South Africans

South Africa’s shifting renewable energy policies, including tax rebates and new import tariffs, have made investing in solar power more complex, with more potential price hikes looming.

According to Harcourts South Africa, these considerations are forcing property owners to weigh upfront costs against long-term savings and incentives.

Recent fiscal measures, including tax rebates, new import tariffs, and talks about registration fees, are reshaping the financial and, ultimately, decision-making landscapes for those investing in solar power.

The drive for sustainable energy has seen both encouragement and new economic considerations. A key incentive for individuals was a tax rebate, which allowed individuals to claim 25% of the cost of new solar PV panels, up to R15,000.

The rebate applies to qualifying solar photovoltaic (PV) panels brought into use for the first time from 1 March 2023 until 29 February 2024.

The initiative was available to homeowners and tenants paying for installations, and aimed to boost solar adoption within the timeframe.

However, a new 10% import tariff on solar panels now adds to upfront costs. The South African government introduced this general import duty on solar modules and panels in July 2024 to support local manufacturing.

This follows a 2017 request from local solar panel maker Artsolar, which said the duty was a good way to boost the local solar panel manufacturing industry.

For those looking at investing in solar, this tariff directly affects investment calculations, since many panels are imported.

This creates a complex scenario for property owners weighing the financial viability of solar. Unfortunately, these tariffs could become even more expensive in the near future.

Recently, the International Trade Administration Commission (ITAC) gazetted its plans to review 82 tariff codes for components used in the assembly and manufacturing of solar and wind power equipment.

Proposals include increasing their tariffs by up to 30%. The Association for Renewable Energy Practitioners (AREP), however, has criticised these plans.

It raised concerns about how the increases could affect small-scale solar power users, including homes and small businesses.

“By increasing system prices, the tariffs risk placing solar energy further out of reach for lower- and middle-income consumers,” Arep said.

Solar remains a good investment

“The shift to renewable energy is undoubtedly beneficial,” said Richard Gray, CEO of Harcourts South Africa. It offers long-term electricity savings, energy independence, and a smaller carbon footprint, all increasingly valued by property buyers.

“The tax rebate spurred interest and accessibility. However, the import tariff adds a new dimension to financial planning. Property owners must balance the tariff’s immediate impact against the rebate and long-term advantages.”

The broader real estate sector, including developers and landlords, is also affected. Landlords find that solar installations make properties more competitive and can justify higher rents due to lower tenant utility costs.

Developers increasingly include solar in new builds to meet demand for sustainable, cost-efficient homes.

“Investing in solar is now a more complex decision,” Gray said. “It involves initial costs including the tariff, potential rebates, potential future costs and changing requirements, financing, and projected electricity savings.”

“Thorough research, multiple quotes, and understanding tax implications are vital. The long-term value of solar remains strong, but the short-term financial landscape is more intricate.”

Harcourts South Africa advised viewing solar not just as an expense, but as an investment yielding significant financial and lifestyle returns. Careful planning and staying updated on policy changes are key.

“South Africa is moving towards greater energy sustainability, and policies will likely continue to evolve,” Gray added. “We recommend consulting experts to explore the full implications of any tax on solar installations.”