FNB customers are increasingly taking out “solar loans” to install their own energy solutions at their homes or businesses.

FNB customers are increasingly taking out “solar loans” to install private energy systems at their homes or businesses.

This is according to the bank’s CEO, Jacques Celliers, who told the Business Times that these customers are clearly desperate to escape load-shedding.

“A big chunk of our client base is installing solar panels at their homes and investing in equipment to get their businesses able to cope with the energy disruptions,” said Celliers.

“Obviously, they don’t have that cash lying around, so they need to finance those infrastructural adjustments.”

Standard Bank’s head of banking products, Steven Barker, said that the bank was experiencing a similar trend — particularly involving customers funding solar-powered systems to around R150,000 to R170,000.

“When I look at specific loans for solar, we are seeing early days, and I think there is a lot more growth to come,” said Barker.

Please install solar — Eskom

This trend follows finance minister Enoch Godongwana announcing a tax rebate scheme for solar panels in South Africa.

“Individuals who install rooftop solar panels from 1 March 2023 will be able to claim a rebate of 25% of the cost of the panels, up to a maximum [rebate] of R15,000,” said finance minister Enoch Godongwana in his 2023 Budget Speech.

Further documentation noted that this incentive would only be available for one year to encourage households to invest in clean electricity generation capacity as soon as possible.

Eskom board chair Mpho Makwana also asked homes and businesses to invest in alternative energy technologies.

“Those that can afford it must ask themselves … if I can delay buying that luxury car and rather put rooftop solar  … perhaps let’s do so,” said Makwana in a Business Day TV interview.

“As businesses, as we review our capex, let’s look for opportunities to put rooftop solar at our corporate offices.”

President Cyril Ramaphosa, accompanied by Mineral Resources Minister Gwede Mantashe and Mining Indaba Advisory Board Chairperson Mpho Makwana, arrives at the Cape Town International Convention Centre to deliver the keynote at the 25th annual Investing in Africa Mining Indaba. February 2019.

Criticism from experts

While the immediate reaction to these tax rebates was largely positive, experts soon pointed out that the rebate system could have been better implemented.

Speaking on Radio 702, financial planner Paul Roelofse said that the government should have completely scrapped VAT on solar installations if it wanted to bring true load-shedding relief to South African homes.

Roelofse explained that those who take advantage of the incentive would only get their money back in a year — when they file their taxes.

“The end of the tax year is February 2024, and then filing season opens up in June or July,” he explained.

“Who is getting the benefit? I’m putting down my money now to help [relieve] Eskom’s pressure points. It suggests that someone is getting a soft loan out of this.”

He was also critical that the rebate only applies to solar panels, even though many other costs are involved in installing a solar energy system.

Energy expert Chris Yelland has also been critical of the incentive for not doing enough.

“Anything in the pocket is better than nothing,” Yelland said.

“But the question is whether the incentive is sufficient to make a significant difference in the direction of the desired outcome of reducing load-shedding?”

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