Steady Shift to Solar
Category Property news
At the recent State of the Nation Address (SONA), President Cyril Ramaphosa announced that the Electricity Regulation Amendment Bill will be tabled this year, which will establish a competitive electricity market instead of one dominated and adversely affected by a single, failing service provider.
This announcement comes hot off the heels of the City of Cape Town's own announcement that they will pay cash for power fed into the local electricity grid from commercial suppliers from June 2023 and from residential suppliers in 2024. Further decisions about incentives and tax breaks for solar panel installations will be discussed during the upcoming budget speech.
"In his budget speech, the Minister of Finance will outline how households will be assisted, and how businesses will be able to benefit from a tax incentive," Ramaphosa said.
For homeowners hoping to install solar PV systems, this is the ideal time. The National Energy Regulator of South Africa (Nersa) has approved a rate of 78.98c/kWh for this financial year and the city will add a 25c/kWh incentive tariff on top of that. The city aims to buy solar-generated electricity from as many city-supplied customers who are willing to sell.
The cost of a solar PV system depends on the property's specific needs and ranges from R2 000 for small panels to up to R200 000 for panels that generate up to 10 kWh, but rental options are also available for a monthly fee on a contract or on through a rent-to-own arrangement. Excess electricity generated can be fed back into the grid for a feed-in tariff, which reduces the time needed to recoup the initial capital investment or cover the rental fee for a solar PV system.
However, the process of supplying power back into the grid incurs extra costs, such as the installation of a bi-directional electricity meter and possible administrative fees. The savings on electricity and municipal feed-in will decrease the time needed to recover the initial investment or the monthly rental amount but homeowners will need to weigh up the cost, energy usage, and self-reliance level to decide on the option that best suits their needs.
Installing solar panels has also been shown to increase property value by up to 4% but this is dependent on several factors that impact their effectiveness. For example, the size of the solar installation will depend on how many panels the roof can hold, which affects the amount of electricity that the homeowner can generate, use and sell. A higher quality panel will have a longer lifespan, while a good warranty will ensure that the panel can be maintained for the long term.
With support from the government that may include tax breaks and additional benefits, installing solar panels is a viable financial investment that provides long-term savings, increased property value and a positive return on investment.
Author: Greeff Christie's International Real Estate
