12L Tax Incentives

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HomeEnergy Efficiency12L Tax Incentives

12L Tax Incentives


Energy Efficiency Tax Incentives



Title of Presentation

Body Presenting

SANEDI 12L Case Study

Golden Arrow Bus Services (Pty) Ltd (GABS)

SANEDI 12L Case Study

Harmony Tshepong Gold Mine

SANAS accredited M & V bodies


Case Study - 12 L Tax Rebate for RVSBKs

SwissContact & Grey Green Sustainable Energy Engineering

SANAS accredited M & V bodies


Measurement and Verification Case Study

COVA Advisory

The Carbon Tax and Energy Efficiency Tax

National Treasury

M&V Lite


12L Tax Incentive Case Study


12L Energy Efficiency Tax Incentive


Section 12L of EE Tax


Sanas Accreditation

South African National Accreditation System (SANAS)

M&V Case Study


M&V Case Study: Example project with principles


M&V Case Study




The 12L Tax incentive, according to Income Tax Act, 1962 (Act No. 58 of 1962) provides an allowance for businesses to implement energy efficiency savings. The savings allow for tax deduction of 95c/kwh saved on energy consumption.

The incentive allows tax deduction for all energy carriers (not just electricity) with the exception of renewable energy sources. For the eligibility to claim the deductions, measurements must be kWh equivalent. The verified and measured energy efficiency saving must be over a period of 12 months known as implementation/assessment period which is compared in contrast with the 12 months of baseline measurement. The baseline measurement and savings are verified and measured by a SANAS accredited Measurement and Verification (M&V) Body which assigns an M&V professional.

Institutions involved

For the efficient and successful implementation of the incentive, the government has put in place a number of institutions to ensure transparency, cohesion and efficiency. Amongst these institutions are South African National Energy Development Institute (SANEDI), South African National Accreditation Systems (SANAS), South African Revenue Services (SARS), The Department of Energy (DOE) and National Treasury. Of these Four Institutions SANEDI plays the role of implementing and overseeing the application process of the incentive claimant to the issuing of the 12L Tax Incentive certificate at the application approval.

12L to-date

The incentive was promulgated 1st of November 2013 and is claimable until the 1st of January 2020. On the 25th of February 2015 the Minister of Finance, He Honorable Mr. NM Nene at his annual budget speech vote announced the increase from 45c/kWh to 95c/kWh increase of the incentive. However the increase will only become effective once it has been amended in the Income Tax Act which normally happens at the end of the year.

Further to the changes is the inclusion of co-generation. Where previously only waste heat recovery was claimable as savings in co-generation, the Minister has announced that co-generation in terms of combined heat and power are now claimable with the addition of captive power plant at energy conversion efficiency of the plant greater than 35%.

The second example relates to the remarkable achievements of the SANEDI Energy Efficiency and Demand Side Management Hub at the University of Pretoria. The activities of the Hub are jointly funded by the DST and DoE and they have produced over 100 Master and Doctoral students who have specialised and graduated in Energy Management and who are now playing a pivotal role in filling the skills gap for this sought-after expertise in the country.

Going forward, SANEDI will play an even more important role in the co-ordination, integration and reporting on the consolidated performance of the various fragmented energy efficiency initiatives in the country.

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