Solar Incentives and Waste Regulations — South Africa

📗 Column

South Africa is one of Africa’s largest solar PV markets, reaching an installed PV capacity of 5.8GW in 2021^[1]. In recent years, the country has been gearing up to deploy more renewable energy, including solar, to address the ongoing energy crisis and achieve its decarbonization targets specified in the Nationally Determined Contribution (NDC). How prepared is Africa’s leading solar market to deal with the increasing amount of solar PV waste? In this post, we will look at the recently announced solar energy incentives and waste regulation in South Africa.

©STOATPHOTO - stock.adobe.com

Green tax incentives in Budget 2023

The South African government is taking an active role in accelerating solar energy installation. In February 2023, Finance Minister Enoch Godongwana announced a R9 billion tax incentive plan for South African households and businesses to increase the country’s renewable energy capacity, including solar. According to South Africa’s 2023 Budget Review, R4 billion is allocated to the rooftop solar tax incentive for households, while R5 billion is secured to expand the existing renewable energy tax incentive for businesses^[2][3].

• Rooftop solar tax incentive for households:
  • Individuals can claim a tax rebate of 25% of the cost of new and unused solar PV panels, up to a maximum of R15 000 per individual.
  • In order to qualify for the rebate, solar PV panels must have a minimum capacity of 275W per panel (design output).
  • Solar PV panels must be brought into use for the first time between March 1, 2023 and February 29, 2024^[4].
• Expansion of renewable energy tax incentive for businesses:
  • Under the current tax incentive, businesses can deduct the cost of qualifying renewable energy investment — wind, concentrated solar, hydropower below 30 megawatts (MW), biomass and photovoltaic (PV) solar projects above 1 MW — over one or three years (first year: 50%, second year: 30%, third year: 20% of the costs). An exception applies for PV solar projects below 1 MW, where 100% of the costs are deductible in the first year.
  • The expanded incentive allows businesses to deduct 125% of their renewable energy investment costs in the first year. The expansion applies to all renewable energy projects, and there will be no thresholds on energy generation capacity^[2].

What is the expected volume of solar PV waste in South Africa?

According to a 2016 report by the International Renewable Energy Agency (IRENA) and the International Energy Agency Photovoltaic Power Systems (IEA-PVPS), South Africa is expected to generate 1 million tonnes of solar PV waste by 2050^[5].

Waste Regulations in South Africa

On May 5, 2021, South Africa introduced the Extended Producer Responsibility (EPR) Regulations for the electrical and electronic equipment sector, the lighting sector, and the paper, packaging and some single use products under Section 18 of the National Environmental Management Waste Act (NEMWA)^[6]. The EPR scheme extends the producers’ and importers’ responsibilities for identified products to the post-consumer stage. For example, producers and importers of solar PV panels are required to collect, recover and recycle used solar panels at the end of their useful life. The legislation sets out annual targets for mandatory take back, recovery and recyclability of products while requiring producers to register with the Department of Environment, Forestry and Fisheries^[6][7].

South Africa’s introduction of EPR in 2021 has been a vital step toward realizing a circular economy for solar PV panels. However, as the number of solar installations continues to grow in South Africa, there remain challenges, such as establishing a robust secondhand market for used solar PV panels and increasing recycling capacities within the country. If these challenges are addressed, South Africa has the potential to position itself as a regional hub for solar reuse and recycling.

References

[1] The International Renewable Energy Agency (IRENA), “Renewable capacity statistics 2023.” Accessed: Apr. 09, 2023. [Online]. Available: https://www.irena.org/Publications/2023/Mar/Renewable-capacity-statistics-2023

[2] Government Communication and Information System, “Government introduces renewable energy, solar tax incentive”, Accessed: Mar. 15, 2023. [Online]. Available: https://www.sanews.gov.za/south-africa/government-introduces-renewable-energy-solar-tax-incentive

[3] National Treasury Republic of South Africa, “BUDGET 2023 Budget Review.” Accessed: Apr. 10, 2023. [Online]. Available: https://www.treasury.gov.za/documents/national%20budget/2023/review/FullBR.pdf

[4] National Treasury Republic of South Africa, “Frequently Asked Questions Solar Panel Tax Incentive for Individuals.” Accessed: Mar. 15, 2023. [Online]. Available: https://www.treasury.gov.za/documents/National%20Budget/2023/2023%20Budget%20FAQs%20-%20Solar%20Panel%20Tax%20Incentive.pdf

[5] IRENA and IEA-PVPS, “End-of-Life Management: Solar Photovoltaic Panels,” 2016. Accessed: Jan. 05, 2023. [Online]. Available: https://www.irena.org/publications/%202016/Jun/End-of-life-management-Solar-Photovoltaic-Panels

[6] Department of Environment Forestry and Fisheries, NATIONAL ENVIRONMENTAL MANAGEMENT: WASTE ACT, 2008 (ACT NO.59 OF 2008). Accessed: Apr. 09, 2023. [Online]. Available: https://www.gov.za/sites/default/files/gcis_document/202105/44539gon400.pdf

[7] Department of Forestry Fisheries and the Environment, “Registration in terms of the: Regulations regarding extended producer responsibility, 2020.” https://www.dffe.gov.za/event/deptactivity/extendedproducerresponsibility_regulations2020registration (accessed Apr. 10, 2023).

Author: Saki Kobayashi / 小林 さき