Finance solutions for photovoltaic systems



Demand and technological advances have attributed to the significant decrease in Solar Photovoltaic (PV) systems’ costs over the years. Factors such as increased property value, municipal incentives, tax benefits and reduced exposure to energy price hikes have boosted demand for PV systems. However, one of the major barriers homeowners and businesses encounter in the acquisition of PV systems is the high up-front cost of procurement and installation.

Costs to be considered include the design of the solar PV system, installation, location, roof type, technology procured and professional engineering sign-off.

Self-funding where the client purchases 100% of the system using available funds is a good option. However, it is not conceivable for some looking to procure solar PV systems, and that is where solar power finance options come in.

Solar power finance entails using financial mechanisms and incentives with the potential to unlock substantial demand for energy services in South Africa. SAPVIA member and energy analyst Reshmi Muringathuparambil of Green Cape says “it’s essentially an opportunity, in and of itself, but it is also a driver of opportunities in the energy sector.”

Debt financing from commercial banks, online impact investing platforms and the Power Purchase Agreement (PPA) are other available options.

 

Commercial bank-funded

Commercial banks and SAPVIA members such as Absa and Nedbank provide term loans covering 70 – 100% of the capital costs within five-to-ten year loan terms. Security is individual, project-specific and interest-rate risk dependent. All tax benefits and incentives apply.

Power purchase agreements

The Power Purchase Agreement is an innovative model which developers offer to enable South Africans to diversify their energy sources without the upfront costs generally associated with switching to solar. The PPA provider owns the system and therefore lays out the capital to install the solar PV system.

“These are long-term contracts between developers and PV system buyers for the buyer to purchase electricity at a predetermined rate, with zero upfront costs,” says Muringathuparambil. They are long-term agreements, usually of 15 years, and have ‘buy-out’ clauses within the PPA. They are a hedge against future electricity costs and protect customers against uncertain electricity hikes.”

Online impact investing platforms

Local crowdfunding platforms such as The Sun Exchange and FedGroup Ventures allow for individuals to buy solar PV panels or cells, which are then rented to businesses at no upfront cost. The owners of the panels receive a rental or income for the lifetime of the panels and businesses saves on their energy bill. Some platforms offer free insurance and maintenance.

On average, a residential or small business property may require a 3 – 5 kWp solar PV system. A price tag of approximately R90 000 can be expected for these systems. Users will need solar PV engineering, procurement and construction (EPC) companies to do due diligence on the facilities to ensure the financial viability of solar PV. SAPVIA has an accredited list of financiers and solar PV installers with PV GreenCards. The installers can be contacted for assessments and quotes. A list of financiers and installers is available at https://www.sapvia.co.za/members-service-directory/.

Contact Stephen Motseki, SAPVIA, Tel 021 200-5856, communications@sapvia.co.za

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Source: EE plublishers

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