Shocking 40% Eskom Tariff Increase, can solar help?

Eskom Tariff Increases: How Solar Can Save Your Bottom Line

Table of Contents

1. The Looming Eskom Tariff Increase
2. Parliament Debates: A Glimmer of Hope
3. The Solar Solution: Locking in Electricity Costs
4. Financing Your Solar System: No Upfront Costs
5. The Double Whammy: SARS Removes 12B Depreciation Incentive

Article Summary
South Africa braces for potential Eskom tariff increases of up to 40% in the coming years, sparking outrage and concern. As Parliament debates the legality of these hikes, businesses are urged to consider grid-tied solar systems as a hedge against rising costs. This article explores the proposed increases, their impact, and how solar energy can offer a lifeline to struggling enterprises.

The Looming Eskom Tariff Increase
In a move that has sent shockwaves through South Africa’s already fragile economy, Eskom, the state-owned energy utility, is proposing electricity tariff increases that could see prices skyrocket by as much as 40% next year. This staggering hike is just the beginning, with leaked documents suggesting further increases of 36.15% in 2025/2026, 11.81% in 2026/2027, and 9.1% in 2027/2028.

As if this weren’t enough, these eye-watering increases don’t even account for the additional amounts that the National Energy Regulator of South Africa (Nersa) will allow Eskom to ‘claw back’ through the Regulatory Clearing Account (RCA). Nersa has already greenlit an R8 billion recovery for Eskom, which translates to an additional 4% tariff hike on top of whatever increase is granted for 2025.

The potential for a 40% Eskom tariff increase has left many South Africans reeling, with Democratic Alliance MP Kevin Mileham stating, “The potential impact of a 40% electricity tariff increase is horrendous for South Africans already struggling under a cost of living crisis.” He grimly adds, “If the regulator grants Eskom’s request, the population will be forced to choose between buying food and making electricity payments.”

 Parliament Debates: A Glimmer of Hope?
In response to the public outcry, South Africa’s parliament is set to debate the legality of Nersa’s decision to allow Eskom’s “make-up tariff.” While this offers a glimmer of hope, the reality remains stark: electricity prices have tripled over the past 14 years, even as the country grapples with sustained power cuts that have stagnated economic growth.

The Solar Solution: Locking in Electricity Costs
As the specter of ever-increasing Eskom tariffs looms large, businesses are frantically searching for alternatives. Enter the grid-tied business solar system – a beacon of hope in these dark times. By investing in solar, companies can effectively lock in their electricity costs, shielding themselves from the volatility of Eskom’s pricing whims.

A grid-tied solar system allows businesses to generate their own electricity during the day, significantly reducing reliance on the national grid. Any excess power produced can be fed back into the grid, potentially earning credits or reducing overall energy costs. This not only provides a hedge against future Eskom tariff increases but also offers a degree of energy independence that is increasingly valuable in South Africa’s uncertain power landscape.

Financing Your Solar System: No Upfront Costs
One of the most compelling aspects of transitioning to solar is the availability of financing options that align with existing expenses. We offer multiple financing options from Asset Finance, to Lease or Rental arrangements that require no upfront capital. These financing structures allow businesses to pay for their solar systems over time, often at a rate that matches or beats their current electricity expenses.

By financing a solar installation, companies can immediately start benefiting from reduced energy costs without the burden of a large initial investment. As Eskom tariffs continue to rise, the savings from a fixed-rate finance becomes better, leading to massive long-term cost reductions.

Call me personally to have a chat about your options on 0849293710

The Double Whammy: SARS Removes 12B Depreciation Incentive
Adding insult to injury, the South African Revenue Service (SARS) is removing the Section 12B Depreciation Incentive in Febuary 2025, which previously allowed businesses to write off the full cost of their solar installations in the first year. This change makes it more crucial than ever for companies to act quickly and secure their solar systems before this valuable tax benefit disappears.

The removal of this incentive, coupled with the looming Eskom tariff increases, creates a perfect storm that threatens to erode business profitability. However, it also presents a clear call to action: invest in solar now to lock in lower electricity costs and take advantage of the remaining tax benefits while they last.

 TLDR
Eskom’s proposed tariff hikes of up to 40% threaten to cripple South African businesses and households. As Parliament debates these increases, companies are urged to consider grid-tied solar systems as a hedge against rising costs. Solar offers the ability to lock in electricity prices, can be financed to match current expenses, and provides a buffer against the double blow of escalating Eskom tariffs and the removal of SARS’ 12B Depreciation Incentive. Act now to secure your energy future and protect your bottom line from the relentless onslaught of Eskom tariff increases.

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