A powerful choice
The installation of home solar systems carries both cost and feel-good factors.
There are many reasons why households install solar energy systems. While the major benefit may be that households have power during load shedding, there are cost-savings in the long-term, and much-needed job creation opportunities in South Africa as this form of alternative energy gains in popularity.
Solar’s versatility lies in its inexhaustible source, the sun, and its silence of operation. The rooftop photovoltaic panels require minimal maintenance, and the technology used in their production has matured to such an extent over the past 10 years, that we can now say not only is it accessible and readily available, but it is very competitive when compared to other renewables.
Most importantly, solar is a green product, meaning that all materials used in the panels can be reclaimed, recycled and reused, reducing any environmental impacts. This is a valuable side benefit to the objective of the government’s Just Energy Transition ambitions, which is to reduce the reliance on coal-powered power stations, and thus lower the country’s carbon emissions.
Absa, which is already a pioneer in the green space after launching South Africa’s first Eco Home Loan in 2020, is fully in support of the Just Energy Transition plan, says Dion Naidoo, Product Portfolio Manager: Investor Segment, from Absa Home Loans .“We recognise that this is not purely about the need for economic recovery, be that within a household, community or nationally, but also about doing what’s right for the planet and generations to come. Solar is, currently, the most cost-effective and affordable way for households to be holistically powered, whether that be during load shedding or not. It also means they individually contribute to the Just Transition plan.”
Finance solutions and home values
Absa has, as a result, designed energy efficient finance solutions and information tool packages, based on the unique financial circumstances and requirements of business customers and homeowners. “An Absa grant campaign has also been launched whereby qualifying SME’s can access R50 000 towards the financing of a solar installation,” says Naidoo. “When structuring this financing solution, we take into consideration Eskom bills and ensure the client can be in a cash flow neutral or cash flow positive position.”
This piggybacks on the government’s subsidies of solar installations, which for businesses come from VAT-back, SARS rebates, and commercial asset financing. For homeowners the government financial incentive is in the form of a 25% tax rebate, to a maximum of R15 000 per individual but can only be used to reduce their tax liability in the 2023/2024 tax year. The rebate is also restricted to solar PV panels, not inverters or batteries.
Even if solar installation is a consideration, do those systems increase a home value? Ooba suggests through studies that this is the case, with property values increasing by three to four percent, but there are dependencies such as the size of the installation, the quality and warranty of the panels, and the location of the property in terms of sunlight exposure.
“Not only do solar installations promise energy savings and reduced environmental impacts, but they also position a property as a modern sustainable home, which meets the demands of today’s conscious homebuyers. Solar also ensures the quicker selling potential of a property,” says Naidoo.
Like other banks, it may be that Absa’s home loan customers have a number of financing options for their solar purchases, but unlike its competitors, it is the only bank in South Africa that allows its account holders to structure those financing options into a secondary account using a feature called MultiPlan.
“MultiPlan allows homeowners to structure their solar loan with its own loan term and rate, so they save on interest by paying the additional loan amount over a shorter period,” explains Naidoo.
“All the energy elements to thrive and sustain in the future exist within solar systems. Analysts, including our own at Absa, are in complete agreement: all households and organisations will benefit from this cheap and abundant supply of power, be that in the short- mid- or long-term.”
Absa Home Loan customers, and switch-over account holders can avail of the following options for the purchase of alternative energy supplies:
- If the market value of the property has increased and there is equity in the property, the Absa customer can apply for a Further Advance which is an additional bond against the property. This option requires registering a further bond at the Deeds Office.
- Alternatively, if the customer has paid down the original loan amount, the customer may apply for the difference between the outstanding balance and the full loan amount through the Absa ReAdvance option. In this case, an additional bond registration will not be applicable.
- Homeowners can also switch their home loan to Absa and apply for a higher loan amount if they have equity in the property. Any funds exceeding the loan amount will be paid to the customer directly. Absa provides assistance for switching to customers by providing a 50% discount on bond registration fees (incl. VAT). In addition to the above benefit, Absa will pay up to R20 000 towards any remaining bond registration fees.
- Customers also have an option to obtain financing through an Absa personal loan or credit card should this provide a more suitable solution considering their unique financing needs.
In addition to providing financing, Absa advises homeowners to take their insurance options into account when considering a solar investment. Absa’s comprehensive Homeowners Insurance Cover makes provision for solar solutions, as these are permanent building fixtures. In order to ensure that a solar installation is adequately covered under such a policy, customers will need to ensure that the total replacement value of their home takes this additional fitting into account.