Budget Speech, and its implications for private producers of renewable energy solutions

The Budget Speech provides the financial framework for the private sector to get involved in investing in renewable energy projects in South Africa. The contents of the speech will therefore be carefully analysed and interrogated by players in the renewable energy space, says specialist solar and energy storage company IMPOWER.

“There is an enormous pressure on government to double the capacity of our national grid by the year 2035. Private companies and overseas investors will study the Budget documents to see if there are adequate allocations that show a commitment to creating an attractive investment environment,” says IMPOWER spokesperson and energy expert, Matthew Cruse.

Comments made by President Cyril Ramaphosa earlier this year in his State of the Nation Address pointed to plans to help enable green manufacturing and municipalities transition to renewable energy in South Africa. This, says Cruise, further emphasises the importance of government efforts to support investment in renewable energy.

“Europe has implemented their carbon border adjustment mechanism (CBAM) which can have severe consequences for locally produced products destined for export. These measures financially penalise any producers who are deemed to be reliant on ‘dirty’ energy sources. There is a real risk for South African producers that have not embraced renewable energy and are still reliant on Eskom, as they will be severely affected by such tariffs,” says Cruise.

Consumers have seen an effective doubling in the price of electricity over the last five years, which has put an incredible burden on poor and middle-class households who have to make a choice between food or electricity.

“We are encouraged that government seems to be serious about getting involved with the better and more effective management of electricity infrastructure on municipal level.

“As announced in the Budget Speech, municipalities will be assisted to ring-fence the revenues from distributing electricity, enabling them to run with operating surpluses. Efforts such as these support efficiency and better financial management and encourages companies such as ours to build solar farms inside municipalities.

“This has the benefit of the municipality receiving electricity at half the price and removes their demand from the national grid, which helps to reduce the strain that causes loadshedding,” says Cruise.