We offer a wide variety of funding options

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Solar Financing South Africa Solar Financing South Africa
Solar Panel Prices

Cash Purchase / Client Bank Loan

Solar Financing South Africa

Purchase with a loan

Buy Solar Panels

Solar Energy Rental Agreement (SERA)

Solar Panel Prices

Financial Lease on Asset and Solar Energy Rental of Energy Only

Solar Financing South Africa

Power purchasing agreement (PPA)

Buy Solar Panels

Sharia Compliant Structure

Cash Purchase or Bank Loan

Pros

  • Your business will receive the wear & Tear allowance, which reduces your gross solar energy system cost by 28% being the top corporate rate of tax assuming profits in the business
  • Your business will benefit from the Accelerated Cost Recovery, which accelerates the wear & tear allowance of your solar energy installation over a 3-year period which improves the cash flow of any business assuming taxable profits
  • Your business will receive any available state or utility solar rebates or tax credits.
  • Your business will collect the proceeds from the sale of any excess energy generated by the system in line with the municipal agreed tariff

Cons

  • Upfront capital cost (cash, not loan)
  • You are responsible for operations and maintenance (O&M). Energy Capital can offer an Service Level Agreement (SLA)
  • Cash or a bank loan can be used in the core business and not just on supplemented energy

With a cash purchase of a commercial solar energy system, it is not uncommon to achieve payback in 5 to 18 years and this depends entirely on your existing tariff and energy profile. After that, your business will enjoy decreased operating costs with free solar power for the remaining life of your solar energy installation. The useful life of the system is warranted and guaranteed at more than 25 years and suppliers say the panels will still be operating at over 80% effectiveness even after 20 years. These same advantages apply for a business loan, although the payback will be slower due to interest charges. However, with today’s interest rates, your ROI and IRR on a commercial solar investment should still be substantial. Commercial solar panel maintenance costs are minimal, requiring occasional cleaning of the solar panels and replacing the system’s inverter every 12 to 15 years. These services can be contracted to a third party such as Energy Capital. It must be noted that the overall return o your solar system over its lifespan will still be significant.

SOLAR Energy Rental Agreement (SERA)

Pros

  • Model very client centric
  • No or very little upfront capital cost
  • No need for a tax appetite
  • Off balance sheet accounting treatment – as with a PPA
  • Rental payments can be deducted as an operating expense
  • Option to acquire full ownership of the system any time after 5 years. Typical rental term is 15 years in length
  • Rental payment generally fits within the existing cost of electricity and will escalate during the term
  • Option to include a rooftop rebate
  • Options to remain in fund after costs have been settled and benefit from a savings rebate

Cons

  • Since your business doesn’t own the solar energy system, the Special Purpose Company (SPV) will receive all of the tax incentives. Applicable excess solar energy generated and resulting revenues generated may still flow to your business, depending on the terms of your rental. (Applicable rebates and revenues generated from the sale of excess may still flow to your business depending on your purchase terms)
  • The rental will escalate during the term
  • Rental subject to a minimum monthly payment
  • The savings from the solar system will only be determined over time and by whatever the future increase in the cost of energy is as determined by NERSA
  • Reduced borrowing capacity

At Energy Capital, it is our mission to provide a renewable energy system provided and funded within a structure that makes the best sense for the business while ensuring long term warranties and guarantees on the performance of the systems provided.

Solar Power Purchasing Agreement (PPA)

Pros

  • No or very little upfront capital cost
  • PPA monthly payment
  • Energy expense is deductible as an operating expense
  • Performance Guarantees (with sufficient reserve to be manageable by the third party owner) and O&M Contracts included in the price

Cons

  • Since you don’t own the commercial solar power system, the third party owner of the system will receive all of the tax incentives
  • What happens to the commercial solar system when the PPA contract expires is typically at the discretion of the third party owner
  • Your business will be locked in to 10-20 year contract

As with solar leases, commercial solar PPA structures can vary widely and are negotiable. Some will have an option to the client to buy themselves out of the PPA prior to the end of the term while most will run the full term. The cost of the energy generated by the PPA provider will be linked to the increases determined by NERSA or other determined metrics.