Financing Rooftop Small Scale Embedded Generation

This 2021 GreenCape briefing details the financing landscape for rooftop solar PV in South Africa's commercial and industrial sectors. Driven by rising Eskom tariffs and load shedding, the market has seen significant growth, supported by traditional bank loans, innovative models like PPAs and crowdfunding, and tax incentives such as accelerated depreciation.

• The business case for rooftop solar PV in South Africa is driven by Eskom tariffs increasing by nearly 300% since 2007 and the ongoing risk of load shedding. Solar PV is the dominant SSEG technology due to its technical maturity, price, and ease of implementation. In the 2020/21 period, installed solar PV capacity reached approximately 1.35 GW, with 250 MWp to 400 MWp installed in the preceding 12 months. Most systems have a payback period of 3-8 years and a lifespan exceeding 20 years.
• Major South African commercial banks—ABSA, FNB, Nedbank, and Standard Bank—offer various financing instruments for solar PV projects under 1 MW, including term loans, asset and property finance, and installment sales agreements. While security is often taken against the underlying asset or property, some unsecured funding may be available. There is growing traction for Power Purchase Agreements (PPAs), particularly in the C&I environment for the below 1MWp market.
• Several innovative and alternative financing models are available or being tested to reduce upfront capital barriers. These include Power Purchase Agreements (PPAs), where developers absorb costs and the buyer pays a predetermined rate for electricity; online impact investing and crowdfunding platforms like FedGroup Ventures and The Sun Exchange; and emerging models such as Property Assessed Clean Energy (PACE) and Pay As You Save (PAYS), though PAYS is the least developed in South Africa.
• Various financial incentives exist to improve the economics of solar PV for businesses. These include a 100% accelerated depreciation tax benefit (12b), which acts as a 28% discount on the system price, and VAT deductibility for registered entities. Additionally, solar PV helps reduce carbon tax liabilities, which were set at R120 per tonne CO2eq. Small and micro tourism businesses may also access grants of up to R1,000,000 through the Green Tourism Incentive Programme.

APA

Poorun, A., & Radmore, J. (2021). Financing Rooftop Small Scale Embedded Generation. GreenCape. https://greencape.co.za/wp-content/uploads/2022/10/ENERGY_FINANCE_INDUSTRY_BRIEF_8_3_21-3.pdf

Chicago

Poorun, Argon, and Jack Radmore. Financing Rooftop Small Scale Embedded Generation. GreenCape, 2021. https://greencape.co.za/wp-content/uploads/2022/10/ENERGY_FINANCE_INDUSTRY_BRIEF_8_3_21-3.pdf.

Wikipedia

{{cite report |last1=Poorun |first1=Argon |last2=Radmore |first2=Jack |title=Financing Rooftop Small Scale Embedded Generation |publisher=GreenCape |date=2021 |url=https://greencape.co.za/wp-content/uploads/2022/10/ENERGY_FINANCE_INDUSTRY_BRIEF_8_3_21-3.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{poorun2021financing, author = {Poorun, Argon and Radmore, Jack}, title = {{Financing Rooftop Small Scale Embedded Generation}}, institution = {GreenCape}, year = {2021}, url = {https://greencape.co.za/wp-content/uploads/2022/10/ENERGY_FINANCE_INDUSTRY_BRIEF_8_3_21-3.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }