Energy poverty and security should take top spot at Budget Speech

by Head of ESG and Impact, Teboho Makhabane. 

In view of the upcoming Budget Speech, I believe that government policy can play a major role in assisting with energy poverty and security in South Africa. Goal 7 of the United Nations goals is about ensuring access to clean and affordable energy for all. Load shedding affects the most vulnerable members of society as well as small business enterprises.

In his state of the nation address, President Ramaphosa said, “With a view to addressing the load shedding crisis, we are going to proceed with the roll-out of rooftop solar panels. In his Budget Speech, the Minister of Finance will outline how households will be assisted and how businesses will be able to benefit from a tax incentive.”

While the initiative to incentive the solar panels is a step in the right direction, the cost benefit will most likely be felt by the middle to high income earners depending on the implementation. There should be further consideration on how to reach the lower bracket income earners.

Currently low-income earners are not well incentivised to adopt solar panels.  Households face roadblocks to rooftop solar adoption which are more onerous on low-income homes. The cost to consumer to install Eskom regulator approved home solar system before the purchase of any of the equipment is very expensive for households with strained budgets.  For the lower earning households, the tax incentives maybe beneficial if the Government could reduce the regulatory barriers and costs associated with using home solar panels.

For example, the government can look to wave or subsidise fees for lower capacity generation solar systems. (i.e. 3kva and below which will allow low income households to install generating capacity to be able at the very minimum power their lights and fridges.)

The long-term utopia remains finding innovative ways to connect the poorest and hardest to reach households with sustainable alternative energy solutions.