Most people who want to go off-grid or install even a few alternative energy solutions cannot afford to.
Even though the financial benefits will be great, there are upfront costs that are just impossible for most people to pay.
Those that can afford these interventions pay for them in cash, but the majority would require financing.
Residential financing is available to homeowners from various banks and financing institutions. One of the most recent companies to offer finance options and installations is the ooba Group which has just introduced ooba Solar. It is available to existing customers and the market at large to help South Africans unlock energy independence, says Dominique dHotman, chief strategy officer and head of ooba Solar.
While many South Africans are enthusiastic about the benefits that solar installation can bring, barriers to entry include the hefty upfront costs, complex installation process, significant delays due to a surge in demand and the risk of unreliable suppliers and equipment, and poor workmanship.
Solar power financing options
For this reason, ooba Solar offers a start-to-finish service that includes helping homeowners understand their specific needs, obtaining comparative quotes from vetted solar suppliers, helping customers secure financing, and overseeing the installation process until complete.
The installations range from entry-level inverter and battery options to full solar panels, which can be financed as part of an existing home loan, by setting up a new home loan, by means of a ‘rent-to-own’ option, or purchased outright.
“We currently have several of South Africa’s leading solar suppliers within our network and have used our long-standing relationship with the country’s biggest financial institutions to provide several financing options. Many homeowners are unaware that you can get financing as part of your home loan application, and we are on hand to decipher the banks’ differing financing and lending criteria,” he says.
Customers are also able to select a solar financing add-on when applying for a home loan.
Praven Subbramoney of FNB home and structured lending solutions, says the cheapest form of financing alternate energy solutions would be to utilise available savings instead of credit. However, with the growing needs of customers in the context of working from home, the hefty annual price increases being levied by the power utility, and the recent escalation in load shedding, customers may not always have immediate access to the large initial capital outlay required.
Therefore, they can utilise their home loans as vehicles to fund these energy solutions.
“Customers must bear in mind that their property would have typically grown in market value if you are a few years into your bond payments, which allows for access to further equity.”
Subbramoney says FNB has partnered with trusted, accredited suppliers to provide customers with residential solar systems at discounted rates of up to 20%.
“An Alternative Energy Solutions category has been created on the eBucks Shop where we have curated a few solar hybrid packages – entry, small, medium, and high. A combination of cash, eBucks, and finance can be utilised to fund these solutions.”
Customers can also apply for solar energy loan finance through a new or existing home loan. This enables them to apply for a loan starting at R50,000 and going up to 15% of their home’s value to finance the installation of a solar energy system from a pre-screened list of reputable renewable energy providers.
As a result of the future installation, a customer’s property valuation will also increase.
The bank also provides energy finance via securities-based lending or unsecured personal loans.
“It’s important to note that customers wishing to use their home loan or secured credit facility to finance a solution of this nature, do so smartly and weigh up the financing costs versus the savings in monthly electricity costs over the lifetime of both the loan and the solution,’ Subbramoney says.
Similarly, Absa home loan customers also have financing options to fund alternative power upgrades to their properties, says managing executive Nondumiso Ncapai.
“If the market value of your property has increased and you have equity in the property, you can apply for a Further Advance which is an additional bond against the property. This will incur bond registration costs and the funds will be paid directly to you.
“Alternatively, if you have paid down your original loan amount and have equity in your property, you can apply for a Re-advance. In this case, an additional bond registration will not be applicable, and the funds will still be paid directly to you.
The Bank can also offer customers credit options like personal loans or credit cards.
Ncapai adds: “We understand our customers have unique needs and we encourage them to engage us when considering large home improvement projects, including the installation of alternative energy systems, to explore the various options available to them. Regardless of which alternative energy solution you opt for, it’s important that you work with a credible installer who has a wireman’s license, is experienced with the relevant installation type, and can provide the necessary after-sales service and guarantees.”
* Learn more about the three stages of going off the grid here.
*There is a downside to going completely off-grid.