Warning about new solar power taxes

The Association for Renewable Energy Practitioners (Arep) has criticised a proposal to increase import tariffs on components used in the assembly and manufacturing of solar and wind power equipment.

Business Times has seen Arep’s submission on the proposal by the International Trade Administration Commission (Itac), in which it highlighted several negative impacts from the increases.

Itac gazetted its plans to review 82 tariff codes for inputs and materials used in the renewable energy value chain in April 2025, with proposals to increase their tariffs by up to 30%.

Arep is especially concerned about how the increases could affect small-scale solar power users, including homes and small businesses.

“By increasing system prices, the tariffs risk placing solar energy further out of reach for lower- and middle-income consumers,” Arep said.

According to one of the world’s largest manufacturers — Trina Solar — residential demand for solar power has already diminished in South Africa in the past year.

The association argued this would contradict national objectives around energy access, affordability, and a just energy transition.

Furthermore, it cautioned that some of the harmonised system codes Itac referred to in its gazette were outdated, applied incorrectly, or not relevant to the renewable energy industry.

“This increases the risk of misclassification at ports of entry, resulting in arbitrary detentions, protracted customs disputes, and financial losses for legitimate importers,” Arep said.

“Numerous listed products are either not applicable to the renewable energy sector or are generic components used across a wide range of industries.”

Arep said that imposing duties on items like screws, buts and bolts, and machinery for rope or cable-making could have unintended consequences for other industries that also use them.

Arep recommended that the proposal be withdrawn and Itac’s tariff strategy realigned with South Africa’s Renewable Energy Masterplan.

It also called for the establishment of a dedicated working group consisting of the industry, Itac, South African Revenue Service, and key government entities to ensure transparency in future tariff changes.

“We welcome the opportunity to collaborate with Itac and all relevant government entities to co-develop a more strategic, phased, and evidence-based approach to import tariff reform,” Arep said.

Joining a chorus of criticism

The South African Photovoltaic Industry Association (Sapvia) and South African Wind Energy Association (Sawea) have also criticised the review.

In addition to taking issue with the four-week submission timeframe being too short for comprehensive feedback, Sapvia argued that the review’s rationale did not align with other government strategies.

Sapvia CEO Rethabile Melamu pointed out that the stated purpose of supporting the creation of manufacturing-related jobs could be misguided.

Melamu explained that most job opportunities in the sector came from the deployment and installation of renewable power systems.

Sapvia said that a solar plant with the ability to produce 500MW capacity annually would generally only employ 60 to 100 people.

“The manufacturing of mounting structures can create ten times more jobs, with hundreds employed in the deployment of the technology,” Sapvia said.

Sawea CEO Niveshen Govender criticised another element of the proposal — removing existing import rebates on renewable energy equipment — before continuous demand was assured.

Govender said that the Renewable Energy Masterplan should be localised at a pace and scale the country could afford and also called for more extensive consultation on tariffs.

The South African government already added a 10% general import duty on solar modules and panels in July 2024.

That came after a 2017 request from local solar panel maker Artsolar. Artsolar said the duty was a good way to boost the local solar panel manufacturing industry.

“We are expecting new entrants and expanding the locally available value chain due to this protection,” Artsolar said.

“As companies adapt to meet local demands, they drive improvements in production processes, leading to more efficient and cost-effective solar technologies.”

Artsolar has been the subject of controversy this year and faces an IDC probe into how much of its stock gets made in South Africa.