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Renewable Incentives A Ray Of Light In Budget 2023

22 February 2023

Renewable Incentives A Ray Of Light In Budget 2023

As expected, the 2023 Budget Speech was a sobering account of South Africa’s debt levels; and the electricity crisis with its potential impact on South Africa’s growth ambitions. However, there was a reason for hope in the renewable energy incentives for business, writes Broll Property Group, Group CEO, Malcolm Horne. Finance Minister, Enoch Godongwana’s 2023 Budget Speech, was, on the whole, a dire account of how much work needs to be done to move South Africa onto a more sustainable economic growth trajectory. Yes, it was heartening to hear that South Africa’s economy in 2022, now sitting at R4.6 trillion, had surpassed pre-pandemic levels, showing that a strong economic recovery is in progress. For the real estate sector, this bodes well. However, the impact of continued energy insecurity on South Africa’s growth trajectory was, rightly, where most attention was focused. As the Minister noted frankly, South Africans experienced more days with load shedding (207) than without in 2022, a considerable jump from the 75 days experienced in 2021. In short: keeping the lights on was an increasingly expensive endeavour last year, and continues to be at the start of 2023. A ray of light A point of hope for South Africa’s private sector was the announcement of tax incentives to help businesses invest in renewables from 1 March 2023. This, if leveraged wisely, could represent an opportunity for businesses to achieve a level of energy independence - something that’s necessary if the private sector is to continue delivering the jobs and growth South Africa sorely needs. The provision (available for the next two years) allows businesses to reduce their taxable income by 125 per cent of the cost of an investment in renewables. Essentially, it means businesses can divert some tax costs toward going green. It’s also good to note that there is no threshold on the size of renewable projects. There are two reasons why this is a reason for optimism: Firstly, it’s somewhat of a lifeline for a private sector that’s struggling to cope with the rising cost of doing business. The second is that it represents an opportunity to grow South Africa’s renewable energy sector, something that the country has needed to do for some time. Navigating the journey to going ‘green’ As the Minister noted, “The energy and electricity sector, here at home and globally, is undergoing a rapid process of systemic change. Green technologies are becoming cheaper, and the deployment of low-carbon solutions is accelerating.” The renewable energy sector in South Africa doesn’t just represent a much-needed alternative for energy-strapped businesses and consumers. It’s also an avenue for growth that can create jobs and help South Africa’s economy grow sustainably. Looking at alternative energy solutions is an obvious and necessary step that the commercial real estate sector must take. However, as with all important steps - plan wisely and consider your options carefully. Making the change to renewables can be complex - from understanding what’s possible and what the practical considerations are to navigating the regulatory environment. For this reason Broll Property Group has been investing heavily in solutions like our Energy, Water, and Sustainability (Broll EWS) division, to help clients navigate this journey. A thoughtful, deliberate renewable energy solution isn’t just a quick fix to keep the lights on today - it should be an investment that helps you grow.

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Broll Property Group

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