Battery Storage and Section 12B: What Qualifies?

Batteries qualify for Section 12B when they are installed as an integral part of a solar photovoltaic system. The battery must be connected to and charged by the solar installation.\n\nStandalone battery systems charged primarily from the grid do not qualify. The key requirement is that the battery forms part of the renewable energy generation system rather than being an independent storage device.

When batteries qualify, their full cost is included in the Section 12B calculation. A R2 million solar system with R800,000 in batteries would yield a total deduction of R3.5 million (125% of R2.8 million).\n\nThis makes battery storage significantly more affordable. The tax saving on the battery component alone would be R270,000 at 27% tax, reducing the effective battery cost from R800,000 to R530,000.

Battery capacity should be sized to match your solar system's output and your consumption patterns. Oversized batteries that primarily store grid power may jeopardise the Section 12B claim.\n\nA common approach is sizing batteries to store 2-4 hours of solar output for use during evening peaks or load-shedding. This ensures the batteries are primarily solar-charged while providing meaningful backup.\n\nYour solar installer and tax advisor should collaborate on system design to ensure the battery configuration meets Section 12B requirements.

SARS may require evidence that batteries form part of the solar system. Keep the combined system invoice, installation diagram, and commissioning certificate showing the battery as integrated with the solar array.\n\nSeparate invoices for batteries purchased later and added to an existing system may complicate the claim. Where possible, procure and install solar and battery components as a single project.