Solar and efficient renewable energy is becoming increasingly popular amongst commercial and residential users. Users are looking for alternatives to carbon-based electricity supplied by South African utilities.
Electricity in South Africa is becoming more expensive each year with regular double-digit tariff increases. In comparison, the technology improvements and reduction in cost of alternatives, particularly in the solar photovoltaic (PV), solar thermal, energy storage and atmospheric water generation space, has resulted in alternative energy solutions becoming more cost efficient space, has resulted in alternative energy solutions becoming more cost efficient to the end user. More and more end users are now turning to the alternative space to reduce costs and cut emissions.
The solar and efficient renewable energy industry continues to experience unprecedented growth. This is due to the movement away from carbon-based electricity supply. Bright Light Solar VCC plans to benefit from the increased demand and has already secured a significant pipeline of clients interested in signing long-term electricity supply and services agreements.
S12J of the Income Tax Act allows investors to deduct the full cost of their investment against their taxable income (subject to certain limits set out below), thereby obtaining a full tax write-off of their investment capital. As long as the investment is held for a period of 5 years or longer, there is no recoupment of this tax deduction.
Benefits of the Bright Light Solar VCC structure to investors:
The tax deduction of the entire amount invested against taxable income, limited to R2.5m for individuals and trusts, R5m for companies;
The provision of IT3(b)s to assist in tax-deductibility of investment as well as annual returns;
A fully managed process with no involvement required from the investor;
Semi-annual dividend paid from year 1;
Ongoing semi-annual dividend for up to 25 years;
Targeted year 1 dividend of 4.6%, growing annually (based on full deployment of capital after 12 months);
Targeted IRR of 17.5% after tax return on risk capital over 25 years;
Targeted IRR of 19% after tax return on risk capital assuming the investor exits in year 6;
Credit enhancement minimises credit risk (gated estate clients); and
The ability to exit the investment after 5 years.
Any individual, corporate entity or Trust, as a registered taxpayer in South Africa, automatically qualifies to invest in an approved S12J Venture Capital Company.
Bright Light Solar VCC Ltd is a registered S12J Venture Capital Company in terms of the Income Tax Act (SARS VCC reference number VCC-0060) and is an authorised Financial Services Provider, FSCA License number 47804.