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Dear Minister Godongwana and @TreasuryRSA – THIS is a Valid Suggestion for Solar Incentives

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During his State of the Nation Address on 9 February, President Cyril Ramaphosa said that the Minister of Finance, Enoch Godongwana, would reveal a tax incentive related to rooftop solar for households and businesses during the 2023 Budget on 22 February.

As is customary every year this year Finance Minister Enoch Godongwana has once again invited South Africans to make inputs on what they would like to see reflected in the upcoming National Budget Speech. Citizens are encouraged to submit their views on: municipal finances, government spending priorities and what these should be, addressing a large budget deficit, stabilising State-Owned Entity finances, managing the energy crisis, tax revenues and debt sustainability. Should you still wish to do so then contributions can be sent through this link https://bit.ly/3ruszsi  on the National Treasury website.

Here then is our small contribution Minister:

The Minister needs to remember that these days before people take any action they ask a simple question; “What is in it for me?” Very few people act altruistically and for the greater good so any form of incentive needs to take that into account whilst also catering to the greater good.

At present the root cause of our loadshedding woes is that there is too little power being produced to service consumers across the country.

As a result the entire country has retreated once again into a ‘laager mentality’ wherein most people are desperate to ensure that they alone have power to run their fridges, routers, fridges and a few lights.

If one compares the price of a reasonably sized (5 kW) grid-tie only system with a 5 kWh Lithium Ion backup system (with three solar panels) the prices are surprisingly close.

BUT, when you look at the return on investment for both, the Grid Tie system will pay for itself within around 6 years WHEREAS the back-up only system will NEVER pay for itself.

ALSO, when you look at the fixed price you will pay per unit of electricity produced over the life of the system then there is no comparison – less than R0.70 as opposed to over R2.60 per unit.

IN ADDITION, a Grid-Tie only system has lower maintenance costs.

PLUS, Grid-Tie systems can send electricity back into the Grid thereby helping the entire country reduce loadshedding – almost like crowdfunding a solution!

SURELY a government that cares and seeks a “better life for all” will encourage it’s citizens to rather spend money on product that will offer a long term return on investment (Grid Tie only) rather than one that is, strictly speaking, just a consumer good that costs money?

“It is our contention that the Minister should HEAVILY incentivise Grid-Tie only solar installations,” says Straton Solar.

There are a number of reasons why this make sense:

  1. No heavy batteries and the associated mining and transport concerns
  2. Excess power being pumped back into the grid can be measured and compensated for
  3. Grid Tie only systems don’t ‘waste’ electricity on keeping batteries topped up
  4. Grid Tie only systems are quicker and easier to install
  5. Municipalities will make more money from the sales of electricity to Grid Tie only systems during peak hours

Government could do the following:

Heavily incentivise Grid Tie only solar panel numbers per household based on a standard 5 kWh system and then have a downward sliding scale from that point on for systems larger than 5 kW. Training subsidies could stimulate new entrants into the market. Incentives could be ‘bumped up’ for areas in dire need of assistance. Government could place Grid Tie only on the roofs of ATTP (Assistance To The Poor) homes that are suitable and go into a contract with the homeowner who will get an additional quota of free power should they keep an eye on and do minimal maintenance on the system that government has installed. Stimulate the local manufacturing market for inverters and Solar Panels. Insist on Tier 1 panels and solar equipment only. And, most importantly, run the incentives lean, mean and clean.

Let’s not run like a bull into a China Shop with a whole slew of incentives but rather start with the root cause which is the lack of electricity across our entire country and how we can ensure that “what is in it for me” is adequately taken care of whilst solar installations the country over send excess power back into the grid. The first step then is the root cause which can be adequately addressed by Grid Tie only systems.

Eventually Government/Eskom could develop/install huge storage mechanisms for the abundant free power being sent back into the grid. That power could be sold back to the consumer during peak hours which would help with loadshedding and make clean power available to consumers.

And then, if necessary, government could introduce further incentives for hybrid battery back up solutions as well. But, maybe after a few years we will not need to buy back up batteries for our homes and business.

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.