Zero-CAPEX Solar: How a Power Purchase Agreement Works for South African Businesses

The Biggest Objection to Solar — Solved

"We'd love to go solar, but we can't tie up capital right now." It's the most common conversation in commercial energy. And until recently, it was a legitimate barrier. A commercial solar installation can easily run into millions of rands, making it a significant CAPEX commitment that competes with core business investment.

A Power Purchase Agreement — PPA — removes that barrier entirely. Under a PPA, SolarHub's funding partners own, install, and maintain the solar system on your premises. You pay nothing upfront. Instead, you simply buy the electricity the system produces at a pre-agreed tariff that is guaranteed to be lower than the Eskom rate.

How a PPA Works in Practice

The mechanics are straightforward. SolarHub structures the deal, selects an accredited private equity-backed funder, and manages the full project development — from feasibility study through to commissioning and SSEG registration. Once live:

• You pay only for the units of electricity the solar system generates and you consume

• Your tariff is fixed (with agreed, capped escalations) — immune to Eskom price hikes

• The funder handles all maintenance, insurance, and 24/7 monitoring

• You reduce your energy costs from the first invoice

Typical PPA terms run from 10 to 20 years, with options to purchase the system from year five. Various exit clauses cover scenarios like building sales or business restructuring, ensuring flexibility throughout the agreement.

What Makes a Good PPA?

Not all PPAs are structured equally. The critical elements to scrutinise are the tariff level relative to your current Eskom rate, the annual escalation clause (ideally below CPI), guaranteed production targets with penalty clauses, maintenance response time commitments, and clarity around system ownership and exit options.

SolarHub works exclusively with funders who offer transparent, commercially sound agreements. We bring deal-structuring expertise that ensures the terms work for your balance sheet — not just for the funder's return.

Is a PPA Right for Your Business?

A PPA suits businesses that want to reduce energy costs without deployment of capital, preserve credit facilities for core operations, avoid asset ownership complexity, and achieve immediate savings from day one. It is particularly powerful for commercial and industrial operations with high daytime energy demand — manufacturing, cold storage, logistics, retail, and agriculture.

South Africa's PPA market has matured significantly. Regulatory changes have made it easier for independent power producers to operate, and private equity funders are actively seeking quality projects across Gauteng, the Western Cape, KwaZulu-Natal, and the Northern Cape.

➜  SolarHub can structure a zero-CAPEX PPA for your operation within weeks. Get your free feasibility study.