Financing Rooftop Solar PV

This 2019 industry brief by GreenCape outlines various financial mechanisms available to commercial and industrial (C&I) businesses in South Africa to implement rooftop solar PV systems of under 1 MW, aiming to overcome the barrier of high upfront capital costs.

• Rooftop solar PV is increasingly adopted by businesses due to its affordability and technical maturity. In 2018, nearly 200MW of solar PV modules were installed or sold in South Africa, and the continued load shedding in 2019 created the potential for installed rooftop PV to exceed 1 GWp. Most systems have a payback period of 3-8 years and a lifespan of 20 years.
• Commercial banks provide various tailored debt solutions for solar PV projects under 1 MW, including instalment sale loans, medium term loans, asset finance, and property finance. Absa focuses on projects up to 1 MW (with some as small as 30 kWp), while Standard Bank typically finances projects up to 999 kWp. Loan-to-cost ratios can reach 100% depending on the borrower's financial position, with tenures generally ranging from 5 to 10 years.
• Power Purchase Agreements (PPAs) allow businesses to install solar PV with zero upfront costs, as the developer handles design, construction, and maintenance. These long-term contracts protect buyers from Eskom electricity price hikes by providing electricity at a predetermined rate, though the building roof must be leased for the system's lifespan. Legal PPAs are permitted under Schedule 2 of the Electricity Regulations Act, 2006.
• Innovative funding models include Property Assessed Clean Energy (PACE), where costs are repaid via a voluntary assessment on the property's tax bill, and Pay As You Save (PAYS), where the municipality funds the system and recoups costs through a fixed charge on the monthly bill that is lower than the generated savings. Additionally, online impact investing platforms like FedGroup Ventures (Impact Farming) and The Sun Exchange allow individuals to buy panels that are then rented to businesses.
• Several financial incentives make solar PV attractive for South African businesses, including a 100% accelerated depreciation tax benefit (12b) which acts as a 28% discount, and a tax allowance (12i) for greenfield and brownfield investments. Other benefits include VAT deductibility, reduced carbon tax impact, and grants of up to R1m for small and micro tourism businesses via the Green Tourism Incentive Programme.

APA

Muringathuparambil, R., & Radmore, J. (2019). Financing Rooftop Solar PV. GreenCape. https://greencape.co.za/wp-content/uploads/2022/10/GC-Finance-Brief-v7-WEB-3.pdf

Chicago

Muringathuparambil, Reshmi, and Jack Radmore. Financing Rooftop Solar PV. GreenCape, 2019. https://greencape.co.za/wp-content/uploads/2022/10/GC-Finance-Brief-v7-WEB-3.pdf.

Wikipedia

{{cite report |last1=Muringathuparambil |first1=Reshmi |last2=Radmore |first2=Jack |title=Financing Rooftop Solar PV |publisher=GreenCape |date=2019 |url=https://greencape.co.za/wp-content/uploads/2022/10/GC-Finance-Brief-v7-WEB-3.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{muringathuparambil2019financing, author = {Muringathuparambil, Reshmi and Radmore, Jack}, title = {{Financing Rooftop Solar PV}}, institution = {GreenCape}, year = {2019}, url = {https://greencape.co.za/wp-content/uploads/2022/10/GC-Finance-Brief-v7-WEB-3.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }