Good news for businesses investing in energy efficiency: the Section 12L energy-efficiency tax incentive has been extended by five years, to 31 December 2030.
What is Section 12L?
Section 12L of the Income Tax Act lets businesses claim a tax deduction for verified energy savings, currently 95 cents for every kilowatt-hour (or kilowatt-hour equivalent) saved. Savings can come from projects such as efficient lighting, HVAC upgrades, variable speed drives, compressed-air improvements, heat recovery or better process control.
What it takes to claim
- A robust baseline: your energy use before the intervention must be measured and documented.
- Measurement and verification (M&V): savings must be measured and verified against the baseline by an accredited M&V body.
- Certification: the verified savings are registered with SANEDI, which issues the certificate used to support the tax claim.
In our experience reviewing 12L submissions, the most common reason projects struggle is a weak baseline: missing data, unclear measurement boundaries or failure to account for changes in production, occupancy or weather. Getting the baseline right at the start saves time and money later.
Is your project 12L-ready?
If you are planning an energy-efficiency project, or have recently completed one, it is worth checking now whether it can qualify. We help clients develop baselines, prepare for M&V and assess the likely value of the deduction under best-case and worst-case scenarios.
Planning an efficiency project? Ask us about a 12L readiness check →
