Is commercial solar still viable for property owners since the suspension of loadshedding?
Category Commercial and Industrial News
At the time of writing, it has been over half a year since South Africans saw the telltale Eskom Se Push icon popping up on their phones to alert them to the return of loadshedding. In light of the seemingly stable power supply, 3Cube Property Solutions tackles the question of whether or not it is still in South African companies' best interests to invest in solar power.
The rising cost of Eskom power - and the concurrent falling price of solar infrastructure
Eskom has proposed a 66% electricity price increase over the next three years, from 2025 to 2027. As Estienne Ruthnum, senior project manager for The Organisation Undoing Tax Abuse (OUTA) points out, South Africans simply cannot afford this. "OUTA's core argument is that Eskom's application is excessive and will have adverse impacts on South Africa's economy, customers and society," said Ruthnum in a blog posted on OUTA's website.
One of OUTA's recommendations is that Eskom shift rapidly towards affordable, sustainable energy sources to lessen their reliance on fossil fuels. While South African businesses may be powerless to influence Eskom policy, they can take matters into their own hands by shifting to such sources in their own capacity.
As early as 2023, various South African news sources have been reporting significant drops in the cost of solar power installations - and this was before South Africa grew tentatively accustomed to the new lack of loadshedding. According to an article written by Sibahle Malinga for ITWeb, a global oversupply of solar systems led to the price of solar PV panels dropping by as much as 50% in 2023. The article also highlights the falling prices of lithium iron phosphate batteries.
In short, the price of Eskom power is rising exponentially while the cost of solar system components is dropping in leaps and bounds.
Increasing demand for environmentally conscious businesses
There can be little argument that using South Africa's abundant sunshine to power your business is more environmentally friendly than relying on fossil fuels. One of the six key imperatives that emerged in the South African findings of PWC's Global Voice of the Consumer 2024 was that businesses can "forge bonds with eco-conscious consumers by connecting their intentions to positive environmental impacts".
Globally speaking, as long ago as 2017, Forbes reported that millennials (people born between 1981 and 1996) prefer to do business with corporations and brands that use sustainable manufacturing methods. Solar panels boast a low carbon footprint, low environmental impact and low water use. Using solar power thus becomes a talking point for your business and an incentive for your potential customers.
In many ways, loadshedding did not create the business case for solar power but merely accelerated the decision-making process by adding urgency to the equation.
Overcoming the biggest challenge of solar: upfront costs
There's no denying that installing solar power for your business comes with a significant initial capital outlay. The good news is that various financial institutions have established solar loan products to help both households and businesses who want to harness the power of the sun.
On the subject of costs, the time to install solar is now, while section 12BA is still in play. This allowance, announced by Enoch Godongwana in the 2023 budget speech, makes provision for taxpayers to claim a 125% first-year deduction on assets that generate power from renewable energy resources. This has been in effect since March 2023 and comes to an end in February 2025.
Over and above all these factors, it's worth remembering that no South African politician or energy expert has been able to provide any guarantee that loadshedding is behind us. That much-dreaded icon could pop up on our phones at any moment, heralding many hours of lost productivity for those who have not harnessed solar power.
Before you can reap the reward of installing solar power, your business needs to have the right premises. If you're based in Gauteng or the Western Cape, 3Cube Property Solutions is here to help. Get in touch and let us find you a commercial, industrial or retail space that meets your needs.
Author: 3Cube Property Solutions
