Incentives for SA companies to save electricity

Posted On Wednesday, 04 December 2013 18:54 Published by
Rate this item
(0 votes)

The Department of Energy has introduced more measures that will incentivise companies to watch their electricity consumption.

Nelisiwe MagubaneThe DoE today announced the promulgation of Regulations on the Allowance for Energy Efficiency Savings, which will provide tax incentives for energy efficiency improvements made by companies.

Briefing reporters, DoE Director-General Nelisiwe Magubane said that the regulations are in terms of section 12L of the Income Tax Act, 1962, which has been amended and came into operation last month.

The legislation makes provision for the Minister of Finance, in consultation with the Ministers of DoE and Trade and Industry, to develop and publish energy saving regulations.

“The allowance for energy efficiency savings will provide tax incentives for energy savings improvements, as outlined in regulations for businesses based on measured and verified energy savings through registrations with the South African National Energy Development Institute (Sanedi),” said Magubane.

Chief Director at National Treasury, Cecil Marden, said: “We introduced a section in the Income Tax Act, which is section 12L. The incentive works on the basis of quantifiable energy that you have saved expressed as kwh and for each kwh that you have saved, you will get a 45 cent tax relief.”

Sanedi will lead the administration of the technical component of the tax incentive.

Given South Africa’s high greenhouse gas emissions intensity of the electricity sector, the incentive will contribute both to energy efficiency and the reduction of emissions, said Magubane.

The regulations will be published soon, with businesses encouraged to take the opportunity to scale up their energy efficiency improvement measures so as to take advantage of the incentive.

To help businesses understand the registration process and overall implementation of the incentive, workshops will be held by the DoE together with National Treasury, Sanedi and the South African Revenue Service (SARS).

“… We’re not just saying [to companies] ‘reduce your energy use by simply switching off machines’. We are saying that run your machines in an energy saving way,” said Magubane.

On the projected cost of the incentive on the fiscus, Marden said: “That is difficult to do right now. SA is a fairly energy intensive country and over the years, some effort has been made and energy efficiency is improving. We’ve made a commitment as Treasury to support DoE to deal with energy efficiency.  

“Attempts have been made in the past [to encourage energy efficiency] - some not so successful. We don’t have a hard figure; we will rely on Sanedi, which will collate data upfront. Once we have data from Sanedi, we will be able to quantify that.”

Private Sector Energy Efficiency Project (PSEE)

The DoE, together with the National Business Initiative (NBI), also launched the Private Sector Energy Efficiency Project (PSEEP), which will support companies (both commercial and industrial, irrespective of size) to identify energy savings measures.

The initiative has received financial support from the United Kingdom government. This, said Magubane, augured well for the implantation of the regulations that were announced today.

“This support falls under the SA-UK bilateral cooperation signed a few years ago that focused on contributing to both governments’ strategies to address climate change impacts,” said the Magubane, who also expressed thanks to the UK government for its support.

The PSEE is built on an existing platform of engagement between government and business through the Energy Efficiency Leadership Network launched in December 2011 at the Conference of Parties (COP 17) in Durban.

Government has recently reviewed the National Energy Efficiency Strategy (NEES), which is now ready for submission to Cabinet. The strategy sets a national target of energy intensity reduction of 12% by 2015.

Chief executive officer of the NBI, Joanne Yawitch, said the main aim of the PSEE was to improve levels of energy efficiency among companies.

“The PSEE is targeted to work with about 60 large companies and just over 1 000 medium sized companies to support the awareness and uptake of best practice in energy management and energy efficiency by South African industry.”

The PSEE will have three levels of service: remote advice for small businesses, technical face-to-face support for medium-sized companies, and longer term support of energy management and strategy for large companies.

The PSEE will be governed by a multi-stakeholder steering committee led by the DoE and with support from the UK’s Carbon Trust. 

Last modified on Wednesday, 04 December 2013 22:11

Most Popular

Thavhani City set for more growth in 2021 as its Motor City and medical developments accelerate

Feb 15, 2021
Thavhani_City_Locality_Layout
Thavhani City mixed-use urban precinct in Thohoyandou, designed to be the future economic…

It’s cheaper to buy than to rent a home in 2021

Feb 08, 2021
Carl_Coetzee_BetterBond_CEO
If the past year has taught us anything, it is how important our homes have become to us.

Brand new residential development in La Lucia 60% sold through Pam Golding Properties

Feb 15, 2021
Kent_Exterior
Such is the consistent high demand for centrally located, well-priced residential…

Optimistic budget masks a number of key risks

Feb 25, 2021
Maarten_Ackerman_Chief_Economist_and_Advisory_Citadel
Finance Minister Tito Mboweni’s budget has been received very positively, as demonstrated…

Relief at no increase in personal tax, says Dr Andrew Golding

Feb 25, 2021
Andrew_Golding_Golding_PropertyGroup
Relief at no increase in personal tax, says Dr Andrew Golding, chief executive of the Pam…

Please publish modules in offcanvas position.