Tax considerations:
There are various factors, not considered here, that could further improve the cash flow outlook of a PV installation investment:
The 125% depreciation is to be written off in year one, as announced in the National Budget Speech in February and Value Added Tax that can be claimed back.
A large reliance on diesel generators:
Given the high cost of diesel, the extensive use of generators would significantly increase electricity costs which would expedite a positive cash flow position.
Talk to Absa about your renewable investment needs
In a time when cash flow and margins of agricultural producers are under extreme pressure, intensified and more frequent load-shedding is further contributing to these pressures. There is also a consensus amongst electricity experts around South Africa that constrained electricity supply is likely to be a feature of the South African economy over the next 5 to 10 years. To ensure the long-term sustainability of your business, investment in your own generation capacity has become vital. Under an evermore likely scenario of increasing electricity costs and the recently announced tax concessions for renewable outlays, investment into renewables is becoming increasingly attractive.
Solar PV installations can be financed on a 7 or 10-year term loan where interest rates are risk profile dependent. Although collateral is not a base requirement, it could also aid in better pricing.
Talk to Absa at RenewableEnergy@absa.africa for names of installers in your region that would be able to advise on your technical needs.
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