solar-finance-in-south-africa

What solar finance solutions are there in South Africa?

Last Updated: January 18, 2024By

Solar finance is a growing necessity in South Africa. Most people can’t afford to go off-grid and are reliant on a small back-up battery and inverter system if they have anything at all.

What solar finance options are there in South Africa? Should you buy or rent a solar installation for your home or business?

Solar financing by extending your bond

This is an option if your bank will extend your bond. This results in you owning the solar installation (as opposed to a rental agreement) and the long-term cost of ownership depends on the loan terms and interest rate of your bond agreement. This is the route we went when we did our solar installation.

FNB Solar Finance

FNB offers a range of solar finance options. Check out our in-depth article about FNB solar finance.

Nedbank Solar Finance

Nedbank has a specific solar finance product powered by MFC.

This is how it works currently:

  1. Find a Nedbank-approved solar installer
  2. Initial assessment and quote from the installer
  3. Finance application: you have the option to go through MFC’s Asset Finance or through your Nedbank Home Loan
  4. Solar installation

The requirements to apply for Nedbank Solar Finance are currently as follows:

  • Only South African citizens with a proof of ID are eligible
  • The solar solution you get must be new and worth more than R50,000
  • Approved consent waiver document signed by the property owner
  • 50% deposit is required if you are renting the property
  • Credit checks will be run by Nedbank

The entire process could take up to six week.

Nedbank estimates that the cost of the solar installation will be between R100,000 for starter package and R800,000 for an average home to go fully off-grid. You can adjust this requirement based on your budget.

Nedbank partners with Hohm Energy to connect you with accredited solar installers.

Alumo Energy Solar Finance Options

Alumo.co.za offers a rent to own solar system option through a solar lease or power purchase agreement (PPA).

How does this work?

Renting a solar solution requires little up-front investment from you. You get immediate access to solar power (which reduces or eliminates the negative effects of load shedding) and you also receive constant support on the solar installation.

Alumo owns the solar system you rent, similar to how a bank owns your car or other assets when it is fully financed by the bank through a loan. Alumo gives continuous support and maintenance of your system throughout the rental agreement.

You pay monthly rental fees and Alumo takes care of your solar installation.

Step by step process:

  1. Credit approval: Alumo’s in-house credit team will request documents from you and check your credit status. Approval usually takes a day or two
  2. Rental contract: once your credit is approved you electronically sign a rental contract with Alumo (paper-free) and pay a deposit
  3. Solar installation: once the contract is signed and administration is completed, Alumo installs a solar system at your residential or commercial property (you can also opt for a battery back-up only solution without solar panels)
  4. Monthly debit order: you pay for your solar or battery back-up solution through a monthly debit order
  5. Buy, upgrade or return: you have the option to buy, upgrade or return the solar or battery back-up system after the rental contract period has passed

You can upgrade your solar installation at any time (and increase your monthly rental payments as your finances allow).

A rental contract with Alumo lasts for a minimum of 7 years.

Alumo conducts annual on-site maintenance as part of the rental agreement, and has constant technical support available.

You will need an on-site assessment before you start a rental agreement with Alumo. This will ensure you get the right size installation for your needs based on how much you can afford to pay each month.

Alumo also offers the option to buy a solar system outright which you can either pay for fully with your own cash or finance through a solar loan from Alumo.

Versofy Solar Financing

Versofy package their solar financing products as Solar Subscriptions.

This is similar to a solar loan but with a solar subscription you are renting the solar system (like the Alumo rental option above).

Versofy also offers a rent to own option and the subscription period is typically 5 years.

Currently you need the following to apply for a Versofy Solar Subscription:

  • Initial assessment and quote to determine your solar needs and to size the system for the rental agreement
  • Completion of a subscription application
  • 3 month bank statements
  • Proof of ID
  • Proof of Residence
  • Your monthly salary must be at least R40,000

You can also transfer your rental agreement to a different property if you move house but you will be liable for the costs to remove and reinstall the solar system.

If you sell your property during the solar subscription agreement period you can either transfer the rental agreement to the new owner or request an early settlement fee. If you take the early settlement fee option it is advised to include this in the purchase price of your house. The new owner effectively takes ownership of the solar system.

The interest rate of your subscription agreement is linked to the Prime lending rate and your monthly repayments will fluctuate as the interest rate changes.

GreenSun Solar Finance

GreenSun offers both residential solar finance and commercial solar finance options.

These options are scaleable depending on your needs.

Residential solar rental options range from a back-up battery and inverter system only (for R1,680 per month currently) to a system that includes 4.4 kW of solar panels (for R4,390 per month currently).

On the commercial side GreenSun offers custom leasing and power purchase agreement (PPA) options with rent to buy options ranging from 5 to 15 year contracts or PPA contracts ranging between 5 to 20 years.

Is it better to own or rent a solar solution?

This depends on the terms of the loan agreement. Each agreement is different and your long-term costs will be dependent on the interest rate of the loan agreement, what deposit you put down up front and the duration of the loan.

Whether you buy or rent, solar will reduce your monthly electricity bill and reduce the impact of load shedding.

What are the tax benefits of a solar installation?

SARS currently allows 100% of the cost of your solar installation as a tax deduction if this is necessary to produce taxable income for a business. This means currently only businesses derive a tax benefit from a solar installation.

Like this? Share it!

About the Author: Tony Lopes

Tony is the founder and editor of CleanVolts.co.za. He has completed solar certifications and courses through Green Solar Academy. Tony's goal is to see solar panels on every roof-top in South Africa and the adoption of EVs and renewable technology across the African continent.