Finance
Paying for it is the first question. Carrying it for twenty-five years is the harder one.
Three ways to fund a commercial solar system: fund it yourself, buy the power under a PPA, or build it with us under a partnership. They are not three prices for the same thing. Each one puts the capital, the return, the risk and the operating work in a different place.
The questions to ask yourself
Capital is only part of the decision. Risk and responsibility drive the outcome.
Most funding conversations are decided on paper, on capital and returns. In practice, managing the outcome requires answers to four broader questions.
Capital
How much of our capital do we want tied up in this?
What leaves the account, and when. The most visible part of the decision and the easiest to frame. The other three questions have long-term practical consequences.
Return
What do we want to trade for a better return?
Cashflow and return metrics carry different weights for each business. Understand what is most important to your business, and what you are willing to trade for it.
Risk
Who is worse off when things do not go to plan?
The decision is made on paper; the outcome is not. How is your business case defended when things do not go to plan? Each structure answers that differently, and each one incentivises a better outcome in a different way.
Operations
Am I a part-time energy expert?
Managing an energy asset takes time and expertise. Are you prepared to monitor and manage the system, or the team that does? Do you have the expertise to know when it could be doing better, or should your funding structure ensure the experts act in your best interest?
The funding decision is not only whether you can afford a solar plant. It is about the risk and the resources to defend your business case.
The options
Understanding the structures is most of the decision. Know where your risk, responsibility and capital sit.
Start here to frame each structure. Read on to build towards the right decision for your business.
Own it
What you are really choosing
Full capital up front. The largest total return. You are responsible for the outcome.
You pay the full capital cost and own the plant outright. Every rand it saves is yours and you share none of it, which across the life of the asset is the biggest number of the three. It is also the slowest capital to come back and the highest running cost to carry, but you are not tied to anyone. When you own it, your interests and your service provider's are not the same, so you need the expertise to defend your own business case.
PPA
What you are really choosing
No capital. No solar operational responsibility. The smallest total return.
We fund, own, insure and run the plant, and you buy the energy it produces. There is no capital of yours to earn a return on; what arrives is free cash flow. What you take on instead is a ten-to-twenty-year contract at a set, predictable price. No capital does not mean no risk: you are still tied to a long-term agreement to buy the energy. Poor performance still saves you less, but it hurts us more.
Partnership
What you are really choosing
Less capital up front, and the fastest return. You own it, and we are aligned the same way you are.
You fund and own the asset, but you pay cost price: open book, transparent costing, with no charge on our engineering, management or margin. You keep every rand of the saving until your capital is back, and we earn nothing until then. After payback we take an agreed share of what the system saves after running costs, which means we share those costs with you. We earn more this way, but only in the long run, and only if the plant performs. You get lower risk and less responsibility, because we run the plant, and the peace of mind that the people running it are paid on the result. You are still bound by a contract, but a less punitive one, and easier to exit than a PPA.
A worked example
The same 200 kWp rooftop system, saving R783,000 in its first year, three ways.
The flow of each structure first, then the financial results, then every input behind them.
Self-funded
- R1.875m of capital buys the system.
- It saves R783,000 in year one.
- You carry the running costs: cleaning, insurance, monitoring, repairs.
- Your capital is back inside three years.
- After that, every rand of saving is yours for the life of the asset.
PPA
- No capital leaves your account.
- We fund, build, insure and run the system.
- You buy the solar energy it makes, at the rate in the agreement.
- Your saving is the gap against your energy charge, from month one.
- There is no payback to wait for, because you committed nothing.
Partnership
- The same system as self-funded, built at cost: R1.5m, about 20% less capital.
- The same R783,000 saved in year one.
- Running costs roughly half, because our labour is not charged.
- Every rand of saving is yours until payback, around two years.
- Then an agreed share of net savings comes to us for the twenty-year term. The larger part stays with you.
| Self-funded | PPA | Partnership | |
|---|---|---|---|
| Capital | R1,875,000 | None | R1,500,000 |
| Year-one saving | R783,000 | R420,500 | R783,000 |
| Year-one yieldthe year-one saving as a share of the capital committed | 42% | Not applicable | 52% |
| Rate of returnIRR, pre-tax, over twenty years | 45% | Not applicable | 51% |
| Total value keptNPV after tax over twenty years, discounted at 10% | R5,427,720 | R4,153,061 | R4,486,181 |
| Paybackafter tax, with the year-one 12B allowance | 2.7 years | Not applicable | 1.96 years |
The inputs this example assumes, every one of which moves site by site: a 200 kWp system yielding 1,450 kilowatt-hours per kilowatt-peak a year; energy valued at a blended tariff of R2.70 per kilowatt-hour, rising at 7% a year; a PPA rate of R1.25 per kilowatt-hour, escalating at 6%; running costs of 3.75% of capital a year self-funded and 1.95% under the partnership, rising at 6%; a partner share of 25% of net savings after payback; tax at 28% with the section 12B allowance claimed in year one; and cashflows discounted at 10%.
The example values energy at a blended rate to keep it simple. A real proposal values savings against your actual tariff structure, with energy and demand charges separated.
A design-stage model, not a quote. It assumes one site’s tariff, yield and load. Yours will move every number here, which is why we model all three on your data.
Two kinds of return
The biggest total and the fastest payback are not the same option.
Most comparisons only measure the first. If your capital has other work to do, the second one decides it.
The largest total
Owning it outright
You keep every rand of the saving and share none of it, so across the life of the asset it is the biggest number. Nothing else comes close on that measure and we are not going to pretend otherwise.
The fastest capital back
The partnership
Less capital in, roughly half the running cost, and the whole saving stays with you until you are back to even. Payback is shorter and the return on what you actually committed is higher.
Neither, by design
The PPA
There is no return on capital to calculate, because you commit none. The only comparison that means anything is our rate against the energy charge it displaces.
The partnership keeps a smaller total for one reason: after payback you share what the system saves. Across a full term that share costs more than the margin and the operating fee you avoided. What it buys is your capital back sooner, and a provider whose income depends on the plant still working in year twelve.
Side by side
The whole decision on one page.
Everything above, compressed. No structure wins every row, and anything that looks like it does has a cost nobody has written down yet.
| Self-funded | PPA | Partnership | |
|---|---|---|---|
| Who it suits | For businesses with capital to deploy that want the largest total return, and are content to own the risk and run the asset. | For businesses that want the saving without spending capital or taking on the work, and are comfortable with a ten-to-twenty-year energy contract. | For businesses that want to own the asset and get their capital back fastest, with a provider whose own income depends on how it performs. |
| Capital you commit | The full cost, upfront, before a single unit is produced. | None. | The full cost, at cost. Around 20% less than the same system with a margin in it. |
| Who runs itmonitoring, faults, warranties, reporting, every month for twenty-five years | You, or a service provider you appoint and manage. | We do, entirely. | We do, at cost. |
| Annual running cost | Yours in full. Cleaning, insurance, monitoring, metering, repairs. | None. Priced into the rate. | Roughly half of self-funded. Our own labour is not charged to the project. |
| Total value you keepacross the life of the asset | The largest of the three. You share none of it. | The smallest. Our capital, margin and running costs all sit inside the rate. | Between the two. All of it until payback, then most of what is left after running costs. |
| Return on the capital you commitpayback and rate of return | Real, and slower to arrive than the partnership. You commit the most and wait the longest to be whole. | Not applicable. You commit no capital, so there is nothing to divide by. | The highest return on the capital you commit, and the shortest payback. |
| Where our income comes from | The build. Paid once, at handover. | The energy your site uses, monthly, across the term. | A share of savings agreed in the model, and not a rand of it until your capital is back. |
| Tax allowance | Follows ownership, so it is yours. | Ours. We own the plant. | Follows ownership, so it is yours. |
Roughly half is what our own modelling gives for running cost, and it follows from our labour not being charged to the project. Your figure depends on how quickly your site soils and what your insurer charges.
Compare any rate against the energy portion of your bill, not the blended figure. A commercial account splits into energy charges and demand charges, and rooftop solar barely touches your notified maximum demand. Measuring a solar rate against a blended rate overstates the saving on every structure in this table, ours included.
All three structures assume a commercial system. Around 50 kWp is roughly where they start to work properly: the fixed costs of design, engineering sign-offs, registration and mobilisation barely shrink as a system gets smaller, so below that they start to dominate whatever it saves.
The fastest way to settle it is to see all three run against your own numbers. We model them on your half-hourly load and your own tariff, at no charge. Get the three-way comparison →
Where the risk sits
The same five things to look after. Three different people looking after them.
Every commercial solar plant has these five, whoever owns it, and all three structures cover all five. What changes is who does the work and who is out of pocket when it goes wrong, which is not the same as the risk going away.
| Self-funded | PPA | Partnership | |
|---|---|---|---|
| PerformanceThe plant makes less than it was designed to make | You. A smaller saving and a longer payback, with nowhere else for it to go. | Us. We are paid on the units your site uses, so lost generation is lost revenue in the same month it appears. | Both. Your payback moves out, and so does the day we start earning anything. |
| EquipmentAn inverter fails in year nine | You. A capital cost, on your account, at a time you did not choose. | Us. It sits inside the rate and does not change what you pay. | You own it, so you fund it. Our share falls with the operating cost. |
| OperationsMonitoring, cleaning, faults, warranties, reporting | You, or a contractor you appoint and manage. | Us, entirely. Every cost of running the plant is ours. | Us, at cost. Our own labour carries no charge to the project. |
| ConsumptionThe site uses less energy than the model assumed | You. The saving falls with your load. | Us, down to a limit set out in the agreement. Below that limit a formula applies. | You. Fewer units used is a smaller saving for both of us to share. |
| ContractualThe agreement itself, and the other party still being there | None. Once the plant is built you have no counterparty and no contract to exit. | Yours, and it is the biggest risk in any PPA. A long term, a consumption floor, a buyout price, and us still having to be here and performing in year eighteen. | Smaller. You own the asset outright and there is no minimum you have to buy, because we are not selling you energy. |
None of it is free, and none of it should be a surprise. Everything sitting in our column is priced: under a PPA it is inside the rate, and under a partnership it is inside the share. Read the table as a picture of how much of this you want inside your own business, because that is the part the structure actually decides.
In detail: option one
Self-funded. You own it, and you own everything that comes with it.
The largest total return of the three, and the only structure where a bad month has nowhere else to go.
There is no financing margin inside the price of the energy, which is why nothing beats it on lifetime cost per kilowatt-hour. What a return figure does not show is the work of defending it: your business case rests on the twelve jobs listed below, every month, for twenty-five years.
Self-funding does not have to mean self-operating.
An owner can buy the operations back, and we sell exactly that. A service agreement with an availability commitment and penalties attached closes part of the gap. What it cannot move is who is out of pocket. If the plant makes less than it should, the shortfall lands on the owner.
What you pay
The full capital cost, once, before the system has produced a single unit.
What you own
The system, outright, from commissioning. South Africa's accelerated capital allowance on renewable generation plant follows ownership, so it stays with you. What it is worth turns on your own tax position, so that part belongs with your tax adviser.
What you keep
All of the saving, for the life of the asset. Nobody takes a share of it.
Who operates it
You do. We can be contracted to run it under a separate service agreement, and most owners want exactly that. Warranty claims are not automatic either: they need the evidence trail showing the plant was properly operated and maintained.
How it ends
It does not. You hold the asset until you sell the building or the plant reaches the end of its useful life.
Budget for cleaning at the rate your site soils, inverter servicing, monitoring, insurance and at least one inverter replacement inside a twenty-five year life. Modest against the energy saved, but not zero, and a payback figure calculated without them is optimistic by construction.
What an owner takes on
- Performance monitoring
- Fault detection
- Judging whether output is actually below par
- Maintenance and cleaning
- Warranty claims and evidence
- Inverter replacement decisions
- Insurance
- Compliance and certification
- Appointing and managing contractors
- Verifying savings against the meter
- Tracking degradation
- Monthly reporting to whoever asks
None of it is difficult. All of it is somebody’s job, every month, for twenty-five years, alongside whatever that person was hired to do. Read the list again as the question from the top of this page: am I a part-time energy expert?
In detail: option two
A Power Purchase Agreement. You buy the electricity. We buy the system.
The asset leaves your business entirely. No capital, no operating work, the smallest total of the three, and a price you agree today for energy you will still be buying in ten to twenty years.
What a PPA solves
- No capital outlay
- No asset to own, insure or replace
- No solar operations inside your business
- Performance risk largely transferred
- An energy price set independently of your municipal tariff
What a PPA costs you
- A commitment of ten to twenty years
- An escalation fixed in the agreement, compounding every year of the term
- A minimum purchase obligation below an agreed consumption level
- A provider paid to sell you energy, which is not the same as a provider paid to make the system work harder for you
- An agreement that becomes a live item the day you sell the building
The rate is derived from what the system costs to build, not discounted off your municipal tariff, so it does not move when your tariff moves.
Our cost of capital, our margin and every cost of running the plant live inside that rate. Operations under a PPA are not free. They are priced. A PPA buys risk transfer and an operating obligation you never take on.
What you get at the end
At the end of a twenty-year term, the plant that becomes yours is a twenty-year-old plant: modules well down their degradation curve, inverters past their service life, and a roof that is probably due. It is worth something. It is not a windfall.
One other difference. Under a partnership you see the costing the system was priced from. Under a PPA you see the rate, and the build cost behind it is ours.
What you pay
A rate per kilowatt-hour on the solar energy your site uses. Nothing upfront, and no separate charge for anything else.
What you own
Nothing during the term. We own the plant and we insure it, so the capital allowance that follows ownership is not yours to claim. How the agreement is treated in your accounts is your auditors' call and turns on the specific terms.
What you keep
The difference between our rate and the energy charge you would otherwise have paid, from the first month.
Who operates it
We do, entirely. Monitoring, maintenance, insurance and every cost of running the system are ours.
How it ends
Ten to twenty years, then the system is yours or we remove it. A buyout is available during the term at a price set in the agreement, and if you sell the building the agreement can pass to the incoming owner.
In detail: option three
A partnership. You own it, we run it, and we earn nothing until your capital is back.
We take no margin on the build and no charge for our own labour running it. Our whole return is a share of savings that have to exist first.
This is not a shared-ownership deal. The capital is yours and so is the asset. What we put in is our margin and our labour, and we recover neither until you are whole.
We are not paid for installing the system. We are paid when the system creates value.
Built at cost, open book
You fund the capital. We design, engineer and project manage it at cost, with no margin on our work, typically around 20% below the price of the same system bought with a margin in it. The costing is shared with you for approval before anything is committed. There is no version of this where specifying more earns us more.
You recover your capital, in full
Every rand of saving is yours until the system has paid for itself. We earn nothing in that period. Savings are measured by an independent metering service in line with your council account, and you get a monthly statement of expenses and savings.
Then we share what is left
After full payback we take an agreed share of net savings for the twenty-year term of the agreement. Net means after the cost of running the plant: insurance, maintenance, metering, monitoring and equipment replacement. If operating costs run high, our share falls with them.
The trade
A share of net savings for the twenty-year term, once you are past payback, on an asset you paid for and own outright. The share is not a fixed number: it is set in the model, site by site, so that your total lands above a PPA and below owning it outright. Run across a full term, it costs more than the contractor margin you did not pay and the operating fee you are not paying. Our own modelling says so and we would rather you had it from us. The margin has not gone away. It has moved off the invoice and onto the result, where it only exists if the plant performs.
What you pay
The capital cost, at cost. Then an agreed share of net savings, once your capital is repaid.
What you own
The system, outright, from day one, exactly as if you had bought it on your own. The capital allowance follows ownership and stays with you.
What you keep
All of the saving until payback, and the larger share of net savings after it.
Who operates it
We do, at cost. Monitoring, troubleshooting, repair, reporting, warranty processing and quality inspections carry no charge from us. External work such as cleaning is billed to the project.
How it ends
Ownership never leaves you. The share runs for the twenty-year term of the agreement, and what happens to it if you sell the building is set out there too. Settle both before anything is drafted.
So why not just take the PPA?
A PPA
You are buying energy as a service. You give up the capital outlay and the operating work, and you give up the ownership economics with them. The asset leaves your business entirely.
A partnership
You are buying operational alignment. You keep the ownership and the capital economics, and our own income depends on the plant performing. The asset stays yours, with somebody else’s money behind how well it runs.
They solve different problems. One takes the asset out of your business. The other keeps it in and puts our return behind it.
The concrete difference you saw in the risk table: a PPA has a consumption floor, and a partnership has no minimum, because we are not selling you energy. We share what the system saves, so a quieter year means we both earn less.
Where our money is
Alignment is not a promise. It is when we get paid.
Every funder in this market says its interests are aligned with yours. The claim costs nothing to make. The payment terms cannot be reworded.
A conventional sale, ours included: paid once, at handover
After commissioning our income from the project is complete. A contractor paid at handover has every reason to specify, sell, install and move on. That is not dishonesty. It is where the money is. Operating it afterwards is a separate agreement with its own fee, and the shortfall in a bad month is still yours.
PPA: paid monthly, for ten to twenty years, out of the solar energy your site uses
A fault that costs generation costs us revenue in the same month it shows up in your data, and we are repaying the capital either way.
Partnership: paid nothing until your capital is back, then a share of what is left after running costs
your payback
Underperformance pushes out the day we start earning anything at all. Overspending on operations reduces what we earn after it, which is why our own labour is not charged to the project.
Do not weigh what a provider says about being aligned with you. Look at when they get paid.
You can check every line of that against a contract. It is not a statement about our character.
The oversizing question, answered from the money
Under a cash purchase a bigger system is a bigger invoice, and every installer in the country knows it. We size systems on your consumption instead, and the design page sets out how. Under a PPA the arithmetic argues for us twice: a unit your site cannot use earns us nothing on capital already spent, and because the rate derives from what the system costs, oversizing arrives as a higher rate in front of you.
The limit, and it is worth naming
Under a PPA we are aligned with you on whether the plant performs, because lost generation is lost revenue. We are not aligned with you on how much energy you buy. Only the first of those is alignment. The gap shows up most where storage is involved: a provider paid per unit sold is not automatically the one who will size a battery to cut your demand charge. Under a partnership the same boundary sits on the share. Read both agreements the way you would read any other supplier’s.
Six questions worth asking before you sign anything
These are the ones that decide what you are actually carrying. Put them to us, and put them to anyone else quoting you.
- What is this rate derived from: what the system costs to build, or what I currently pay?
- How long does the rate or the share run, and what ends it?
- What is the consumption floor, and exactly what happens in a month below it?
- Who pays for an inverter in year nine, and out of whose account?
- What happens to this agreement the day I sell the building?
- If the plant makes less than the model said, whose money is short?
If an answer is not written into the agreement, it is not an answer. That applies to ours.
Alignment
Why alignment matters. Most of its value never fits on paper.
A proposal can model the savings. It cannot model who notices when something goes quietly wrong in year nine, or what it is worth to never find out the hard way. Those are real risks, and alignment is how they get carried.
Performance
A plant that somebody is paid to improve.
When our income depends on the result, improving the output is embedded by default. Problems get found and fixed before you would have noticed them, not because we are diligent by nature, but because a fault that costs you a saving costs us income in the same month.
Operating costs
Costs kept down by the person who shares them.
Under a partnership the running costs come off the savings before our share, so every rand of unnecessary cost is partly ours. Under a PPA they are entirely ours. Nobody in this arrangement earns anything by overservicing your plant.
Peace of mind
You do not need to become the expert.
Equipment choices, system sizing, compliance, workmanship, best practice: navigating the options and the quotes takes industry expertise you should not have to build in-house. When your provider is aligned, what goes on your roof is what we would put on our own.
The long term
Built properly, because we stay.
A system we will run for twenty years is a system we build to be run for twenty years. Corners cut at installation only start showing up later, when a provider paid at handover is long gone and the problems are yours. Ours are not built that way, because we would be the ones living with them.
The page opened by asking whether you are a part-time energy expert. Alignment is what lets the answer be no.
What the other two structures sell is not a better return. It is a smaller obligation, and this section is what the obligation being smaller is actually worth.
Alignment is also, plainly, our sales pitch: a cash sale pays us once, and the other two pay us over years out of a plant that has to keep working. That commercial interest is real, so do not take our word for any of this. The payment terms above are the proof you can check, and where the model says you should self-fund, we will say so, and then we will build it.
Nothing on this page is financial, tax or accounting advice, and we are not licensed to give any of it. How a capital allowance or a power purchase agreement is treated depends on the rules in your tax year, the specific terms of an agreement and your own advisers’ view. Every figure on this page, including the worked example above, is a design-stage model and we label it as one. Commitments are made in a formal proposal and a signed agreement, not on a web page.
Common questions
Funding FAQs
Which structure gives the best return?
It depends which return you mean, and the two have different winners. On the total value kept across the life of the asset, owning it outright wins: you keep every rand of the saving and the capital allowance follows ownership. On the return earned per rand of capital committed, the partnership wins: less capital in, roughly half the running cost, and the whole saving stays with you until payback. A PPA commits none of your capital, so a return on capital cannot be calculated for it at all.
Why is the partnership's total lower if its return is higher?
Because after payback you share what the system saves. Both routes build the same plant and save the same energy, so the difference is not that you spent less. The partnership costs less to buy and about half as much to run, and then it costs you a share of the result, and across a full term that share is worth more than the margin and the operating fee you avoided. What you get in exchange is your capital back sooner and a provider whose income depends on the plant still working years later. Which of those two you want is a question about your capital rather than about solar.
What happens if you are not there in year fifteen?
It is a different size of question under each structure, and it is a fair one to ask. Self-funded, there is no counterparty at all: once the plant is built there is no contract to exit. Under a partnership you own the asset outright inside a twenty-year agreement and there is no minimum you have to buy, so if the arrangement ended you would be an owner who needs an operator, and that is a service you can buy from anyone. Under a PPA it is the biggest risk in the agreement, and we are the counterparty: we own the plant, the term runs ten to twenty years, there is a consumption floor, and we have to still be here and performing in year eighteen. Read the buyout, the transfer-on-sale and the end-of-term provisions before you sign, the same way you would read any other long agreement.
Does a PPA sit on our balance sheet?
That is your auditors' call and it turns on the specific terms. The fact underneath it is simple: we own the asset, you do not, and you are contracting to buy energy. Lease accounting standards can still bring an arrangement like that onto a balance sheet depending on how it is written. Put the agreement in front of your finance team before you plan around either outcome.
What about the tax allowance?
South Africa allows accelerated depreciation on plant used to generate electricity from renewables, and the allowance follows ownership. Whoever owns the asset and brings it into use in their own trade claims it. Under a cash purchase or a partnership that is you. Under a PPA it is us, because we own the plant. The rules change with the national budget and the value turns on your own tax position, so it belongs with your tax adviser.
How is the PPA rate set?
From what the system costs to build, not as a discount off your municipal tariff. The rate and its escalation are set out in the agreement before you sign. The difference matters: a rate anchored to your tariff moves when your tariff moves, and ours does not.
What happens if our consumption drops?
We are paid on the solar energy your site uses, so a quieter month is a smaller bill. We carry that risk down to a limit set out in the agreement. Below it a formula applies and you pay for energy you did not use, because no funder can carry a site whose consumption collapses. The limit is agreed before you sign.
Can we start on a PPA and own the system later?
A buyout is available during the term at a price set in the agreement, and at the end of the term the system becomes yours or we remove it. If owning the asset sooner than the term allows matters to you, raise it before the agreement is drafted.
Will the system keep us running during load shedding?
Not on its own. A grid-tied plant disconnects the moment the grid goes down. Anti-islanding under NRS 097-2-1 exists so that nobody is working on a line your inverter is feeding, which means the array produces nothing during an outage under any of the three structures. How that interacts with a PPA's consumption terms is set out in the agreement, and it is a fair thing to ask before you sign. Riding through an outage takes storage and a different system architecture, which is a scoping question, not a funding one.
Is there a minimum system size?
No hard minimum, and we work on commercial systems only. Around 50 kWp and up is where these structures work properly. Below that, the fixed costs of design, engineering sign-offs, registration and mobilisation barely move as a system shrinks, so they start to dominate whatever it saves.
How real are the numbers in a comparison?
Every figure we publish is a design-stage model and we label it as one. What goes with it is the working: the tariff structure and the tariff year the savings were valued at, the specific yield, the self-consumption share and whether a load-shedding loss was allowed for. A projection presented as a measurement is the most common way performance claims mislead, so we mark ours.
See which structure fits your business.
We model self-funded, partnership and PPA against your actual consumption, your tariff and your site. No charge, and the assumptions are published beside the outputs.