Amid fiscal constraints ahead of the 2024 Budget speech next week, Finance Minister Enoch Godongwana is expected to cut incentives for solar energy installations by enterprises and individuals.
The firm PwC is expecting Godongwana to evaluate the performance of the National Treasury’s 2023 solar incentives programme which was presented in last year’s budget speech.
In its 2024/25 Budget predictions report, titled For Our Humanity: Now’s the time to work together, the firm said it hoped Treasury would continue to extend the incentives for solar energy installations for both individuals and businesses, but it predicted this would be cut owing to fiscal constraints facing the South African economy.
“For businesses, we would like to see an extension beyond the 2024/2025 financial year, and that the threshold for households will be increased beyond the 25% limit in order to be more effective and improve uptake,” said the organisation in the report.
However, they predict this will be cut, despite companies making major investments in alternative energy throughout 2023.
“We expect the minister will reflect on the success/uptake by businesses of the incentive scheme and what this has meant for the country’s energy security. We do not expect extensions given the fiscal constraints,” the report said.
In PwC’s recently released 26th Global CEO Survey, just one out of three South African chief executives polled said they expect local economic growth to increase this year.
PwC said they hoped for a pro-business Budget 2024, which would lift business sentiment by providing an update on progress made in key economic and structural reforms, as well as solutions towards the country’s energy and logistics challenges.
Solar is considered among the clean energies that can curb the use of fossil fuel which exacerbate climate change.
The PwC report said the National Assembly passed the Climate Change Bill in 2023 after the appropriate portfolio provided recommendations and revisions.
“Our wish is that the minister will give some indications on funding the Just Energy Transition and spending on climate-resilient infrastructure. It is important that Treasury encourages responsible investing by placing requirements that all spending on infrastructure takes into account the climate resilient nature of the infrastructure being procured.”
On their outlook, PwC said predicted that Godongwana was likely to announce incentives for the automotive industry and climate transition programmes.
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