Incentives and benefits

The Australian market for corporate PPAs is poised to continue its significant growth. 

Solar and wind prices continue to fall, whilst wholesale electricity and gas prices continue to trend higher, so there is a base financial incentive for business to take up PPAs, however there is also a broader reputational element with companies wanting to 'go green'.

The key Federal Government policy in respect of renewable energy, the Renewable Energy Target (RET), has contributed to demand. The policy was originally designed to ensure that at least 33,000 GWh of Australia’s electricity came from renewable energy sources by 2020. The RET is comprised two separate schemes relating to large-scale and small-scale generation.

The large-scale RET (LRET) requires major electricity users to acquire a fixed proportion of their electricity requirements from renewable sources. This is achieved through a certificate trading scheme, where renewable energy generators receive certificates which are then sold to major energy purchasers (mainly electricity retailers). These certificates must then be surrendered annually as evidence that the liable parties’ LRET obligations have been met. Failure to do so can lead to financial penalties and shortfall fees. The second part of the scheme is concerned with small scale generation by individuals and businesses.

The Small-scale Renewable Energy Scheme (SRES) offers financial incentives for individuals and businesses to encourage the installation of rooftop solar and solar water heating systems. It operates using a certificate system similar to that administered under the LRET.

In September 2019, the Clean Energy Regulator announced that Australia had reached its RET target more than a year ahead of schedule. Notwithstanding this, both components of the RET are slated to continue to operate until 2030, with users still required to meet their obligations under the policy. It is expected that after 2030, compliance demand for renewable energy certificates will be replaced by voluntary demand.

The Clean Energy Finance Corporate¹ (CEFC) and the Australian Renewable Energy Agency² (ARENA) are two Federal-led support agencies encouraging renewable energy investment in Australia by providing information and finance. Their programs enable and provide various incentives in the renewables space which may encourage corporates to adopt green energy.

The Australian Government has continued to develop its support through these agencies by expanding their respective mandates and funding pools. Through the Australian Renewable Energy Agency (Implementing the Technology Investment Roadmap) Regulations 2021 (Cth), ARENA’s mandate has been expanded to encompass new ‘Priority low emissions technologies’ objectives, including the provision of financial assistance and development of ‘technologies relating to energy storage’.³ As part of the 2021-22 Budget, the establishment of a new $1 billion ‘Low Emissions Technology Commercialised Fund’ (LETCF) to be administered by the CEFC. The LETCF is to receive $500 million in funding, to be matched by a further $500 million from private sector investors.⁴

Footnotes 

[1] CEFC is a specialist clean energy financier, investing to increase the flow of finance into renewable energy, energy efficiency and low emissions technologies.
[2] ARENA is an independent authority that aims to improve the competitiveness of renewable energy technologies and increase the supply of renewable energy in Australia.
[3] Australian Renewable Energy Agency (Implementing the Technology Investment Roadmap) Regulations 2021 (Cth) reg 7.
[4] The Commonwealth of Australia, ‘Budget 2021-22 | Mid-Year Economic and Fiscal Outlook 2021-22’ (Report, 2021) 264

For residential, commercial and industrial electricity customers, the NREAP’s objective of enabling its consumers to generate on-site, grid-connected, renewable energy power is incentivised by reducing the electricity bill through on-site power generation and the ability to credit the excess electricity fed back to the grid.

The Building Energy Labeling initiative was introduced to enable prospective tenants and buyers to consider energy performance into in their rental or purchase decision. By doing so, buildings are able to command a premium when being rented or sold, and therefore encourages building owners to implement energy efficiency measures to improve their rating. [1]

For new building and real estate developers, the NREAP’s objective of requiring integration of renewable energy technologies in the building design is also incentivised by reducing the electricity bill.

In regards to renewable energy developers and large electricity customers, NREAP’s objective to attract private investors to develop renewable energy projects through a competitive procurement process is incentivised by long-term power purchase agreements. [2]

[1] No. (4).
[2] No. (5).

There is a growing interest in concluding corporate PPAs for electricity produced from renewable energy sources. This trend is not entirely surprising, considering the growing importance of sustainability and responsible governance withing corporations. More in general, electricity from renewable energy sources is becoming more and more competitive, not only because of the subsidies available but also because of the general decrease in production costs.

There is certainly corporate appetite. There are currently no political or financial incentives available, although the Botswana Government is focussing on the utilization of green energy.

Considering the increase of the supply of power generated from renewable sources, the prices have become more competitive over time. The advance of technology related to renewable power generation also contributed to the competitiveness of the energy prices, since such power generation became cheaper in the long-term. This trend has generated an interest in the consumers to replace their power supply agreements, which use sources that cause more environmental impact, for renewable power.

Also, corporate PPAs offer the possibility of associating offtakers’ brands to the financing and acquisition of renewable energy, which has shown to be very beneficial since, more than ever, both consumers and investors claim for companies that show their concern with the environment and sustainability and that have consistent ESG policies.

Appetite for green energy has significantly increased in recent years, which is reflected, among other things, in the renewable energy consumption in Chile, which increased from 10% in 2017 to nearly 20% in 2021.

The last 15 years the government has implemented several policies encouraging companies to satisfy their energy demand through NCRE, having set a goal so that by 2030, 80% of energy comes from renewable sources and by 2050, 100% of energy generated is zero emissions. These policies also include a reduction in the payment of transmission tolls, the obligation for electricity companies to have a percentage of withdrawals from NCRE sources, the possibility to sell the NCRE Attributes and carbon offsets, the creation of investment support funds and the establishment of measures to facilitate the interconnection of generating plants, among others.

In 2014 the Colombian Congress enacted Law 1715 to promote unconventional renewable energies. This law sets forth tax, regulatory and practical benefits for renewable energy investors in Colombia. See Subsidies for more information.

In 2019 the Congress enacted Law 1955/19 (so-called The National Development Plan 2018-2022), which commands retailing companies to purchase 8-10% of the energy provided to final users from renewable energy.

In line with this goal, in October 2019 the Ministry of Mines and Energy conducted an auction to award long-term power purchase agreements to renewable energy generators and to retailing companies as power purchasers. However, it is not yet foreseeable if the Colombian Government will organize a new renewable energy auction in the short term.

Finally, both legislation and government have identified that renewable energies could also be implemented in non-interconnected zones, in order to provide electricity by replacing diesel electricity generation. The National Development Plan also states that the FENOGE and public-private partnership initiatives will attract private investment for energy efficiency.

The importance of green energy has recently been growing significantly, mainly due to the negative consequences of traditional non-renewable sources, especially fossil fuels.

The topic of green energy is very topical in the Czech Republic. By signing the Paris Agreement, countries have committed themselves to moving away from fossil fuels and to ensuring carbon-free energy by 2050. It will therefore be necessary to switch to energy sources other than fossil fuels.

Green energy is also an issue for electricity suppliers. Many of them offer tariffs in which they guarantee that the electricity consumed has been entirely generated from renewable sources.

Different types of subsidies are available for families, mostly for the installation of a photovoltaic power plant for self-consumption or for the installation of a small solar power plant. The subsidies are mainly aimed at reducing energy consumption and saving money.

The electricity sector is deemed as an investment activity as per Law No.72 of 2017 (Investment Law). So it is subject to the general incentives and the special incentives in accordance with the territory of the activity.

As general incentives, the projects are exempted from stamp tax, documentation and registration of the incorporation contract, real estate, finance contracts and mortgage related fees for five years from the date of establishment. Additionally, the registration contracts of the land required for the project are exempted from any fees. Any imports of machinery, equipment, or devices will be subject to a unified 2% of the value custom.

Special Incentives are in the form of a deduction from the net taxable profits in accordance with the territory. A 50% discount from the taxable profit is applied for Zone A, which covers the geographical locations that are in the most need of development (underdeveloped locations). A 30% discount is applied for Zone B, which covers all geographical areas other than those of Zone A, for projects working in specific activities, including projects relating to the generation and distribution of electricity. Renewable Energy secondary industries such as PV plants and electrolysers were also included in 2022. Similarly, the Value Added Tax Law No.67 of 2016 exempts the generation, transmission, distribution of electricity from VAT. 

Other financial incentives include the new CBE 11% subsidized interest rates for industrial and renewable projects.

Project developers can now benefit from the Egyptian Pollution Abatement Programme (EPAP), which grants developers up to 10% of the loan amount for renewable projects.

Besides the general objectives of the government to promote green energy, as stated in the Growth and Transformation Plan II[1] there are no specific political or financial incentives for adopting green energy. 

[1] Federal Democratic Republic of Ethiopia: Growth and Transformation Plan II (GTP II)
(2015/16-2019/20)

The corporate interest towards green energy has been increasing during recent years. The increase of wind power in Finland as well as other renewable energy forms together with the corporate sustainability objectives have created a growing market for corporate green energy solutions.

The corporate appetite for green energy is growing among French largest companies.

Smaller generators will have to go through aggregators, responsible for grouping the production of small producers, to be able to sell electricity directly to large customers.

When companies sign a corporate PPA, the company that generates the green power provides a guarantee of origin, testifying to their financial contribution to the development of renewable power. 

There are no general political or financial incentives for corporations to adopt green energy. Corporate appetite for green energy is mainly driven by the desire of companies to be, or appear to be, sustainable (for example, in circumstances where a company has made various environmental commitments in furtherance of its level of sustainability). In light of climate change concerns and the growing public debate on sustainability of commercial activities, we expect that the corporate appetite for green energy will increase further in the near future.

The corporate appetite for green energy has increased as more and more long-established market players wish to enter into green PPAs. There are no specific facilitations yet under Greek law, since the relevant legislation is to be adopted upon approval of the Green Pool scheme by the European Commission’s Directorate-General for Competition. 

There are two key drivers for cPPAs in Ireland. Firstly, corporates have a growing interest in green PPAs, as investing in clean energy will help to improve green credentials and to further their ESG ambitions. Secondly, cPPAs are usually long term and provide fixed power prices and this hedge against rising energy costs is a key driver for many corporates to enter into these arrangements. In the context of the current significant pressure on energy costs, the ability to control or even cut energy costs can contribute significantly to future-proofing organisations in competitive markets.

Corporates in Ireland, particularly large technology companies are also increasingly joining voluntary renewable certification schemes, such as RE100, an initiative of companies committed to consuming 100% renewable energy.

In Ireland, despite the government’s stated ambition for 15% of electricity demand to be delivered by renewable energy cPPAs, there are currently no political incentives for corporates to enter into cPPAs, which are generally being concluded on a voluntary basis in Ireland.

There are no specific facilitations are provided yet under Italian law. Some facilitations are under discussion but the process is at an early stage.

Various corporates in Kenya are adopting green energy. These include:

1. Mumias Sugar Company: generates 34MW of electricity from its bagasse-based co-generation plant;
2. Kenya Breweries Limited: plans to generate at least 9.3MW at its Ruaraka plant and 2.4MW from solar power in Kisumu; and
3. Kenya Tea Development Agency: has set up various hydropower plants throughout the country to reduce the significant energy costs associated with processing and manufacturing tea.

The primary reasons for this growing corporate appetite for green energy solutions include the need to:

• reduce rising operation costs which are largely attributed to rising energy costs;
• improve reliability of power supply;
• obtain new sources of revenue; and
• meet sustainability goals imposed by foreign-owned parent companies.

Beyond the incentives that are generally available in the market (e.g. tax exemptions for the importation of solar products) there are presently no specific incentives being made available to corporates as a means of encouraging the use of green energy.

Mexico has adopted aggressive international commitments to develop the use of green energy. The regulations provide that all consumers have to obtain a certain percentage of their electricity through renewable sources. This percentage is currently 7.4%, but in 2021, it will be increased to 10.9%, and in 2022 such percentage will be 13.9%. Increments for the following years will be announced by the Energy Ministry. The main responsible parties are the suppliers, who need to purchase the electricity from a portfolio of renewable generators in such a way, that their customers consume electricity from renewable sources to comply with these percentages. If such consumption minimum requirements are not met, the responsible party would need to purchase green energy certificates (by its Spanish acronym “CELs”)  in the Mexican market.

The Moroccan Government has set up its National Energy Strategy, which aims to reach 53% of electricity generation from renewable sources by 2030. This political incentive pushes the authorities to grant customs and tax incentives to corporates investment conventions.

There are, however, no specific financial incentives available to corporates that wish to adopt green energy.

The corporate appetite for green energy and incentives are still limited in Mozambique. Nevertheless, there are a few financial incentives provided for in Resolution No. 62/2009, of 14 October, which approves the Policy on Development of New and Renewable Energy. These include:

• incentives based on prices and tariffs of new and renewable energies supply systems;
• provision of special funding (subsidies) for projects and programs of new and renewable energy supply, utilizing funds, non-interest-bearing public loans or Government loan guarantees; and
• promotion of carbon credits opportunity.

In addition, Law n.º 3/2012, of 23 January, which amends Articles from the Value-Added Tax (VAT) Code, provides for a deduction of 60% of the taxable amount, for construction services of rural electrification.

The appetite for green cPPAs is growing, especially because this will help achieve sustainability goals and also because the available subsidies for green energy cover the difference between the cost price of generation and the market value of the electricity. The growing appetite for electricity due to, eg expanding data centre networks combined with aggressive clean energy commitments, clearly outlines the increasing demand for renewable energy deals.

We would describe the appetite for green energy as being high and likely to increase as the mandatory climate related disclosure regime comes into force for larger mandated entities.

New Zealand Green Investment Finance Limited (a state-owned green investment bank) was established as part of the government's commitment to address climate change and to support New Zealand's transition towards a net-zero-emissions economy by 2050.

There is strong corporate appetite for green energy. The Norwegian government offers several renewable energy incentives (and subsidies), most notably in recent years provided by way of the discontinued electricity certificate system. The certificate system required certain producers and large consumers of electricity to buy electricity certificates on the open market.

Many Norwegian corporations also view this as an important Corporate Social Responsibility issue.

Notably, a number of large volume end-user corporate PPAs have been entered into with counterparties such as Norsk Hydro and Alcoa, to provide power for production of "Green Aluminium."

Currently there are not incentives for the green energies use.

In Poland, there are currently no direct sources of incentives for companies to enter into cPPAs. The main motivation for companies to enter into a PPA is securing the required volumes of electric energy and hedging against market price fluctuations.

A further impetus for the development of large-scale RES and the cPPAs that serve them is the reporting requirements for ESG-related activities. Measures related to the procurement of green energy – largely or even exclusively – will have to be included in companies' strategies. This is defined in the Sustainability Reporting Directive (CSRD).

Corporate PPAs are a growing trend in Portugal, with rising numbers over the last years. Companies are increasingly focused on sustainability, so cPPAs present robust options for ESG strategies.

Through the strategy of universal access to electricity by 2025, as well as the reduction of emissions of greenhouse gases and the promotion of renewable energies, the government of Senegal grants tax incentives to companies that use renewable energy. Thus, the government of Senegal has exempted from value added tax (VAT) a list of 22 items of equipment used in the production of renewable energy from solar, wind and biogas sources.

The government also offers incentives to private organizations in the field of rural electrification in the form of direct and indirect tax benefits to reduce costs and increase their competitiveness. These tax incentives for private investments in rural electrification can amount to an income tax exemption of up to 30%.

The appetite for clean and sustainable energy amongst corporates in South Africa is growing rapidly, particularly given the recent increased focus on sustainability and environmental, social and governance (SESG) considerations globally and in South Africa. Notable cost reductions due to improvements and efficiencies in renewable energy technologies have also made it less expensive to generate electricity from these sources. We expect this trend to continue.

The Income Tax Act No. 58 of 1962 permits a taxpayer to claim a deduction on the costs incurred in respect of plant, machinery and articles owned by it, that are first brought into use by that taxpayer in the course of its trade in the generation of electricity from various renewable energy resources. For example, in respect of photovoltaic solar energy of more than 1MW, a taxpayer is allowed a deduction of the costs to the taxpayer of the asset producing the electricity on a 50/30/20 basis, being that a taxpayer is allowed a 50% deduction of costs in the first year of use, 30% in the second year and the balance in the third year of use. Where a photovoltaic solar energy system produces less than 1 MW of power, then the taxpayer is allowed a 100% deduction in the first year of use.

South Africa also introduced a carbon emissions tax under the Carbon Tax Act No. 15 of 2019 on 1 June 2019, which is to be implemented in three phases. The first phase is currently in implementation (the South African government has indicated that the impact of the carbon tax will be reviewed before the next phase is implemented in 2023). The carbon tax is levied on entities that operate emissions generation facilities at a combined installed capacity equal to or above certain carbon tax thresholds (which apply in respect of various activities). Certain allowances or offsets are available linked to (for example), emissions levels, trade exposure, participation in carbon budgets and investments in emission reducing projects.

There has been a significant increase in the appetite for PPAs in the past few years. In fact, Spain has become the largest PPA market in Europe with more than 4 GW of deals. Motivation for these contracts is varied:

• Firstly, and most importantly, it protects consumers from volatility in energy prices and provides certainty in energy costs, similar to how large corporations protect themselves from other volatile economic aspects (exchange rate and interest rate).
• Secondly, depending on the behavior of future prices, the possibility to offer any excess electricity generated by the company from its exchanges to the wholesale market when market dynamics cause prices to surge could be of interest.
• Thirdly, PPAs have become an important instrument for corporates to comply with their ESG objectives. In this regard, the negotiations in respect of ownership of Guarantees of Origin (GoOs) have gained great importance.
• Finally, in terms of project finance structures, the existence of a PPA with a robust corporate offtaker is regarded as very positive element by lenders.

Corporates in the Nordics are serious about their sustainability objectives, and cPPAs can help to achieve this aim, as well as having the added benefit of hedging power price risk. A number of large corporates (with huge appetites for power) are based in Sweden, such as Tetra Pak (packaging), Preem (petroleum), Volvo Cars (automobiles), Volvo (trucks), Asko and Electrolux AB (household appliances), Telia Company AB (telecoms), Ericsson (telecoms), IKEA (furniture), Scania AB (trucks), Atlas Copco (industrial tools and equipment), SCA (pulp and paper), Sandvik AB (technology and engineering) and Kubal (aluminum), as well as new ventures such as Northvolt (batteries), H2 Green Steel (green steel production) and the SSAB, LKAB and Vattenfall joint venture HYBRIT (green steel production). Furthermore, banks in the Nordic market are familiar with the importance of PPAs as part of their project financing structures for renewable projects, as a longer term contract for a fixed price is helpful for a borrower's debt service. Finally, the Sweden government has been a prominent supporter of wind farm developers by cutting energy taxes and making sure that the regulatory system remain clear cut for those in the industry.

Corporate PPAs have gained favor in Sweden for a number of years. First, until recently there has a been a trend where Sweden has been experiencing increasingly lower power prices, and February 2020 saw power prices fall below zero for the first time. Due to these falling prices, a surplus of power production has been evident, so developers/generators have looked to obtain financial certainty that cPPAs bring although the main driver for price certainty has been financing banks' requirements. Recently, power prices have increased substantially and the effects of this on the cPPA market paint a mixed picture. It is probably fair to say that the appetite, at least on the developer side, is somewhat subdued due to the uptick in wholesale market prices. So we have seen a trend recently where construction financing is put in place to avoid locking in power prices in the long term.

Secondly, due to the favorable cold climate, a trend has been set in Scandinavia for large tech companies to establish data centers in the Northern part of Scandinavia and Finland and in that connection sign up to cPPAs for their power consumption needs. In 2013 Google signed a its first wind PPA in Europe for a ten-year agreement with developer OX2 to power its data center. This was followed in quick succession in the next few years where Google entered into a number of PPAs with almost all main developers (Eolus, Arise and Rabbalshede, all with sites based in Sweden). Other tech giants such as Meta and Microsoft have followed the lead and have shown a huge appetite to sign up to cPPAs in the last couple of years.

Third, as the PPA market has developed, despite in the intermittent nature of renewable technologies, offtakers have increasingly been able to secure baseload PPA arrangements from green generation facilities. The opportunity to participate in green energy while retaining guaranteed levels of supply to meet demand have ensured that corporate demand in the PPA market has continued to burgeon in Sweden.

The general context of electricity production has encouraged the state and companies to favor renewable energy as a source of energy production. Until the end of 2019, 97% of electrical energy was produced from natural gas; the part of renewable energy had not exceeded 3%.

Given the evolution of natural gas prices, electricity sales tariffs have been subject to several increases. Compared to the 2010 tariffs, the increases have been significant and have affected all electricity consumers (with the exception of social tariffs).

To remedy these drawbacks, Tunisia has set a Tunisian Solar Plan (TSP), which aims to bring the share of renewable energy (wind, solar PV and solar CSP) to 30% of total electricity production in 2030.

Also, Tunisia, having already signed the Paris Agreement of 2015 on climate, has committed to the level of the Nationally Determined Contribution (NDC) to reduce its greenhouse gas emissions in all sectors, including energy, aiming at a reduction of 46% in 2030 compared to 2010.

To implement these objectives, Tunisia had put a whole legislative and regulatory framework including:

• Law 2004-72 of August 2, 2004, on energy management, completed by Law 2009-7.
• The law 2005-82 of August 15, 2005, creating a system of energy management.
• The law 2015-12 of May 11, 2015, on the production of electricity from renewable energy. It encourages the initiatives of independent producers (local authorities, public enterprises and private companies) and liberates the production and export of electricity through three regimes (1) self-consumption, (2) independent production of electricity to meet the needs of national consumption and by selling exclusively and in full to STEG, and (3) export.
• The Government Decree No. 2016-1123 of August 24, 2016, setting the conditions and modalities for the realization of projects for the production and sale of electricity from renewable energy.
• Order of the Minister of Energy, Mines and Renewable Energy of February 9, 2017, approving the standard contract for the transmission of electrical energy produced from renewable energy for own consumption, connected to high and medium voltage networks and purchase of the surplus by STEG.
• Order of the Minister of Energy, Mines and Renewable Energy of February 9, 2017, approving the standard contract of sale to the Tunisian Electricity and Gas Company of electrical energy produced from renewable energy subject to authorization.
• Order of the Minister of Energy, Mines and Renewable Energy of August 30, 2018, approving the revision of the standard contract of sale to the Tunisian Electricity and Gas Company of electrical energy produced from renewable energy subject to authorization.

Not applicable.

We are seeing a range of drivers for green energy. 

For global companies, commitments made under programmes such as RE100 are pushing change.

For other companies, the long term economic benefit of hedging a substantial aspect of their cost base by adopting self-generation is substantial.   

Corporates in GB are developing a growing appetite for green PPAs, in recognition that investing in clean energy will help to improve green credentials, cut operational costs and contribute significantly to future-proofing their organizations in competitive markets. Rapid cost reductions in wind and solar power have made it less expensive to generate electricity from these technologies than from new coal or gas plants. As a result, there has been a great increase in wind and solar projects and this trend is expected to continue to grow.

Corporates in GB are increasingly joining voluntary renewable certification schemes, such as the RE100, an initiative of companies committed to consuming 100% renewable energy. Notable UK members of the RE100 include Burberry, Gatwick Airport, Heathrow Airport, H&M, and Tesco.

According to "Energy Trends March 2019" published by BEIS [1], renewable electricity generation in 2018 was 111.1 TWh, a record high and increase of 11.8% compared to the previous year. The share of renewables in electricity generation increased by 3.9% from 2017 to 33.3% and renewable electricity capacity was 44.4 GW at the end of 2018, a 9.7% increase compared to the previous year. According to energy market analysts EnAppSys, based on recent trends, renewables are expected to be the most dominant source of power in GB in 2020. With UK offshore wind farms now providing a relatively low-cost source of power compared to historic levels, wind is set to continue to be the primary source of renewable energy generation. These statistics suggest the significant potential of cPPAs in the near future.

In GB, there are no political incentives for corporates to enter into cPPAs, which are generally being concluded on a voluntary basis in GB. Whilst not a financial incentive per se, the ability for corporates to hedge against market price fluctuations over the long term is a key driver for many corporates to enter into cPPAs. Furthermore, subject to negotiation, corporates may secure long-term electricity prices at below-market levels.

[1] Energy Trends March 2019

The voluntary undertaking by private companies to purchase a certain minimum amount of renewable power to satisfy its energy requirements has become widespread. Public pressure continues to mount on commercial and industrial companies to develop a strategy to limit their contribution to carbon emissions via energy usage and industrial processes.   

Incentives currently available in the energy sector for corporates in renewable energy are as follows:

• National Project Status (NPS), which is envisaged in term of section 141 of the Customs and Excise (General) Regulations, 2001 (SI 154 of 2001) and is obtainable for projects that have national impact, bring benefit to the economy and create employment. Incentives available under this regime include:̶
  • duty rebates on importation of raw materials;̶
  • a tax holiday and an exemption from non-residents tax on fees payable in respect of any services relating to the project;̶
  • leeway to motivate for and negotiate additional fiscal incentives with the Commissioner of Domestic Taxes at the Zimbabwe Revenue Authority (ZIMRA) as well as non-fiscal incentives with the various line ministries.
• Duty Free imports on solar panels, solar equipment, electric motors, energy savers and lithium-ion batteries; and net-metering.
• The recently enacted Zimbabwe Investment Development Act (ZIDA) further provides wholesale incentives available to investors licensed under Special Economic Zones (SEZ). Licensed foreign investors can obtain SEZ status for their investment project, including the following incentives:̶
  • zero-rated Corporate Income Tax for the first five years of operation of the SEZ with a corporate tax rate of 15% applying thereafter;̶
  • duty free importation of capital equipment;̶
  • special Initial allowance of 50% of cost from year one and 25% in the subsequent two years;̶
  • exemption from non-residents withholding tax on fees for services that are not locally available;̶
  • an exemption from non-resident’s tax on royalties; zero-rated Capital Gains Tax; and̶
  • inputs which include raw materials imported for use by companies set up in the SEZs, are imported duty free.
• An industrial, commercial or residential customer who generates electricity from renewable energy sources and supplies that to the distribution network (the Participant) can obtain a reduction in their electricity bill in terms of the Electricity (Net Metering) Regulations Statutory Instrument 86/ 2018. The Participant’s reduction is in the form of a credit of 0.9 kWh in each billing period for every kWh that the Participant exported to the grid. A Participant is not entitled to claim monetary compensation from the distribution licensee for energy (kWh) that has been exported to the Licensee.
• Furthermore, the reconciliation procedures and conditions for perpetual roll-over of excess generation or net exports are to be done on a monthly basis, allowing the licensee to roll over net exports from previous monthly billing periods and use these to offset any future consumption bills of the Participant.