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Commercial Solar Financing in South Africa (2026) | Allsolar

How Can My Business Finance Solar in South Africa? (2026 Options Guide)

You don’t need to pay cash to go solar. South African businesses have four main financing routes in 2026:

  1. cash purchase, asset finance (a solar loan),
  2. an operating lease or rental, and
  3. a Power Purchase Agreement (PPA) with zero money down.
 

Each one trades off upfront cost against long-term value and, importantly, against who gets the Section 12B tax benefit.

The short version: if you can buy outright or qualify for asset finance, ownership almost always delivers the best long-term value because you keep the tax deduction and own the asset.

Zero-upfront options like PPAs and rentals make the most sense when preserving cash, outsourcing maintenance, or avoiding a capital outlay matters more than lowest total cost.

This guide walks through each option so you can pick the right one for your business.

This article is general information, not financial advice. The right structure depends on your cash position, tax situation and balance sheet — discuss it with your accountant or financial advisor before committing.

Do I have to pay cash for commercial solar?

No. While paying cash gives the best long-term return, most South African businesses today finance solar in a way that requires little or no upfront capital. The four main routes are:

  1. Cash / outright purchase — you own it, and get the full tax benefit.
  2. Asset finance (solar loan) — you borrow, own the asset, and repay monthly.
  3. Operating lease / rental — you rent the system for a fixed monthly fee.
  4. Power Purchase Agreement (PPA) — a provider owns the system; you just buy the power.

Let’s look at each.

Option 1: Cash or outright purchase

You fund the system from your own capital and own it from day one.

The upside:

This delivers the strongest long-term return of any option. You claim the full Section 12B deduction (100% of the cost in year one for a qualifying system up to 1 MW), you can reclaim the input VAT if you’re VAT-registered, and every rand of electricity saving flows straight to your bottom line.

There’s no interest, no lease fee, and the lowest total cost of ownership over the system’s 20-plus-year life.

The trade-off:

It ties up working capital.

For a system costing anywhere from R400,000 to several million rand, that’s a meaningful outlay, though the Section 12B deduction softens the blow considerably in year one.

Best for: Businesses with available reserves that want the maximum return and the full tax benefit.

Option 2: Asset finance (a solar loan)

Here a bank or lender advances the cost, and you repay it monthly over a fixed term, while owning the asset (or owning it outright at the end of the term).

Most major South African banks (FNB, Absa, Nedbank, Standard Bank and asset-finance arms like WesBank/MFC) offer solar or green-energy finance.

In early 2026, with prime sitting around 11.5%, commercial solar asset finance has typically been priced in the region of 13% to 16%, depending on your credit profile.

Development finance institutions such as the IDC offer concessional rates for larger qualifying projects.

The key advantage:

Because you own the asset (under an instalment-sale or hire-purchase structure), you still claim the Section 12B deduction, unlike a lease or PPA.

And here’s the clincher for cash flow: a well-sized system’s monthly electricity saving can often exceed the monthly finance repayment, meaning many businesses are cash-flow positive from month one, even while paying the loan off.

The trade-off:

You pay interest, so the total cost is higher than cash. Watch for initiation and monthly service fees on top of the repayment.

Best for: Businesses that want ownership and the tax benefit without the full upfront outlay. (Whether it works comes down to one question — see “the question that decides it” below.)

Option 3: Operating lease or rental

Under an operating lease, a finance company owns the system and you pay a fixed monthly fee to use it, typically over a set term.

The upside:

It preserves your working capital, gives predictable monthly costs, and the fixed fee doesn’t fluctuate with how much power the system produces.

The trade-off, and it’s an important one:

Because the finance company owns the asset, they claim the Section 12B allowance, not you. The total cost over the term is usually higher than buying or financing to own, and you’ll want to read the end-of-lease and residual-value terms carefully.

Best for: Businesses that prioritise preserving capital and predictable costs over owning the asset or claiming the tax benefit.

Option 4: Power Purchase Agreement (PPA)

A PPA is the only option that requires absolutely no upfront capital and no balance-sheet commitment.

A solar developer installs, owns, operates, maintains and insures a system on your premises at their cost and you simply buy the electricity it generates, usually at a rate 10% to 30% below your current grid tariff.

You save from day one without spending a cent on hardware.

A few things to understand about PPAs:

  • Term: typically 10 to 20 years.
  • Who gets the tax benefit: the provider owns the system, so they claim Section 12B — not you.
  • Escalation: most PPAs include an annual tariff escalation, often around 5% to 8% — usually lower than Eskom’s historical increases, but you’re still on a rising rate.
  • Structures: “take or pay” (you pay a fixed amount for all power the system produces) versus “no take, no pay” (you pay only for the power you actually use — effectively pay-as-you-go).
  • Buyout: many PPAs let you buy the system at a residual value after a few years or at the end of the term.
  • Requirements: because the provider needs long-term access to your roof, PPAs require security of tenure, they suit owner-occupied premises or long leases.

Best for: Businesses wanting zero upfront cost, immediate savings and fully outsourced maintenance and that expect to stay put for the long term.

What about rent-to-own?

Rent-to-own sits between renting and buying: you pay a fixed monthly amount, and ownership transfers to you after the final payment.

It’s usually the easiest option to qualify for… providers often run a lighter affordability check because they keep the equipment as security until it’s paid off.

The trade-off is that it typically carries the highest total cost of all the routes. It’s a practical entry point for businesses that can’t access bank finance or capital but still want to end up owning the system.

Which option is cheapest overall?

An honest answer matters here, because solar isn’t the right fit for every site. It may not pay off well if:

  • Your business uses very little power during daylight hours. If you only operate at night, you’ll lean heavily on batteries, which lengthens the payback.
  • You’re on a short lease with no buy-in from the landlord. Solar is a long-term asset best suited to premises you’ll occupy for years.
  • Your roof is unsuitable heavily shaded, structurally weak, or too small — with no ground-mount alternative.
  • Your electricity bill is already very low. If you’re spending a few thousand rand a month, the savings may not justify the capital outlay.

A proper energy audit will tell you honestly which camp you fall into — and a reputable installer will tell you if solar *isn’t* your best move.

How do I know if solar is right for my specific business?

Here’s how the routes compare at a glance:

Option

Upfront cost

Who owns the system

Who claims Section 12B

Relative total cost

Best for

Cash purchase

High

 You (day one)

You

Lowest

 Best return, full tax benefit

Asset finance (loan)

Low / none

You

You

Low–moderate

Ownership without the big outlay

Operating lease / rental

None

Financier

Financier

Higher

Preserving capital, fixed costs

PPA

None

Provider

Provider

Higher

Zero upfront, outsourced maintenance

Rent-to-own

Low / none

You (at end)

Varies

Highest

Easiest to qualify for

The pattern is clear: the less you pay upfront, the more you tend to pay overall — and the ownership routes (cash and asset finance) are the only ones where you keep the Section 12B tax benefit for yourself.

As a rule of thumb, if you can afford to buy or qualify for a solar loan, ownership is almost always the better long-term value.

Zero-upfront models earn their place when capital or credit is the barrier, or when you’d rather hand off all the maintenance and risk.

The tax angle: who actually gets Section 12B?

This is the detail that quietly changes the maths.

Section 12B goes to whoever owns the system.

  • Cash purchase or asset finance (instalment sale/hire purchase): you own it, so you claim the 100% first-year deduction.
  • Operating lease, rental or PPA: the financier or provider owns it, so they claim the deduction and typically factor that benefit into the rate they offer you.

That’s a big reason ownership tends to win on total value: the tax benefit stays with you. (For the full detail on how the deduction works, see our guide to the Section 12B solar tax deduction and always confirm your position with a registered tax practitioner.)

The question that decides it: does my saving beat my payment?

Whichever financed route you’re weighing, the single most useful test is simple:

Is my monthly electricity saving larger than my monthly finance payment (or PPA/lease fee)?

If yes, the system effectively pays for itself out of the money you’re already spending on electricity — and you’re better off from month one.

For a well-designed, correctly sized system on a business with solid daytime usage, the answer is often yes. But it isn’t guaranteed, so run the actual numbers for your site before signing anything.

(Our guide on solar payback and ROI shows how to work this out.)

What to watch out for

A few things worth scrutinising before you commit:

  • PPA and lease fine print: the escalation rate, any minimum consumption commitment, termination/lock-in clauses, and the buyout formula. Have a lawyer review a PPA before signing — these are long, complex contracts.
  • Total cost of ownership, not just the monthly figure: a low monthly fee can still add up to far more than owning over 20 years.
  • Who’s responsible for maintenance and insurance, and what counts as fair wear-and-tear.
  • What happens if you move or sell — leases and PPAs can complicate a property sale, so understand the transfer process.

How Allsolar helps you find the right fit

The best financing route only works with a system that’s correctly sized for your business… an oversized system inflates whatever you’re paying, and an undersized one leaves savings on the table. 

That’s why we start with an energy audit to design around your actual usage.

Allsolar provides turnkey design, supply, installation and compliance, with the itemised documentation and Certificate of Compliance that asset finance and a Section 12B claim both depend on.

Our modular, expandable approach is also one of the most practical ways to manage upfront cost without borrowing at all, you can start with the system that covers your priority loads and scale up in stages as your budget allows.

With more than 30 branches across Southern Africa and roots in the industry since 2012, we’ll help you weigh the options and structure something that fits your cash flow.

Allsolar is not a financial advisor. For finance and tax decisions, please consult your accountant, financial advisor or a registered tax practitioner.

Frequently asked questions

Can I get commercial solar with no money down in South Africa? Yes. A Power Purchase Agreement (PPA) requires no upfront capital — a provider installs and owns the system, and you buy the power it generates at a rate usually 10% to 30% below your grid tariff. Rentals and some rent-to-own products also offer zero or low upfront cost.

What are the financing options for commercial solar? The four main routes are cash purchase, asset finance (a solar loan), an operating lease or rental, and a PPA. Cash and asset finance mean you own the system and keep the Section 12B tax benefit; leases and PPAs mean the provider owns it and claims the tax benefit.

Which solar financing option is cheapest? Buying outright has the lowest total cost of ownership and the full tax benefit, followed by asset finance. Leases, PPAs and rent-to-own require little or no upfront cash but cost more over the full term. Generally, the less you pay upfront, the more you pay overall.

Do I still get the Section 12B tax deduction if I finance the system? It depends on ownership. With a cash purchase or asset finance (instalment sale/hire purchase) you own the system and claim the deduction. With an operating lease or PPA, the financier or provider owns it and claims the deduction instead.

Will my solar savings cover the monthly finance payment? Often, yes. For a well-sized system on a business with good daytime electricity use, the monthly saving can exceed the monthly repayment, making you cash-flow positive from the start. It isn’t guaranteed, so model the numbers for your specific site first.

What should I check before signing a solar PPA? Scrutinise the annual escalation rate (commonly 5% to 8%), any minimum consumption commitment, termination and lock-in clauses, the buyout formula, and what happens if you sell the property. Have a lawyer review the agreement before signing.

Want help choosing the right way to fund your solar?

There’s no single best financing option… only the one that fits your business’s cash flow, tax position and plans. The starting point is a correctly sized system and a clear view of the numbers.

Allsolar provides energy audits and turnkey commercial solar solutions, with the compliant documentation your finance and tax claims rely on, backed by a nationwide network of more than 30 branches.

To explore the options and get a solution structured around your budget, contact your nearest Allsolar branch or request a quotation.

The figures in this guide are realistic 2026 averages, but the only way to know what solar is worth for your business is to look at your actual energy use, roof and tariff.

Allsolar offers energy audits and turnkey commercial solar solutions, from professional system design and supply through to installation, integration and ongoing maintenance, backed by a nationwide network of more than 30 branches.

If you’d like an indication of costs and savings tailored to your premises, contact your nearest Allsolar branch and request a quotation.

There’s no obligation, just clear, honest information to help you make the right call.

This article is general information reflecting the South African solar finance market as of mid-2026. Rates, products and tax rules change over time, and the right choice depends on your circumstances. Allsolar is not a financial advisor or tax practitioner, please consult the appropriate professional before making financing decisions.

July 9, 2026 Nico Smit

Can My Business Claim Solar Tax Back? Section 12B | Allsolar

What Are the Tax Benefits of Solar for My Business in South Africa? (Section 12B, 2026)

Short Answer: Your business can claim a significant tax deduction on solar. Under Section 12B of the Income Tax Act, a business can deduct 100% of the cost of a qualifying solar PV system (up to 1 MW) in the first year.

If your business is VAT-registered, you can usually also reclaim the input VAT on the purchase and installation. Combined, these two mechanisms can cut the effective cost of a commercial solar system by roughly 30% to 50% in year one.

One important correction up front, because there’s a lot of outdated information online: the enhanced 125% deduction (Section 12BA) expired on 28 February 2025 and was not renewed.

New installations now fall under the still-very-worthwhile 100% Section 12B deduction.

This guide is general information, not tax advice. Tax rules are detailed and change often… always confirm your position with a registered tax practitioner before you commit.

Can my business still claim the 125% solar tax deduction?

This is the most common point of confusion in 2026, so let’s clear it up directly: no, the 125% deduction is no longer available for new systems.

Here’s what happened.

Between 1 March 2023 and 28 February 2025, the government ran a temporary enhanced incentive called Section 12BA, which allowed businesses to deduct 125% of a renewable energy system’s cost, with no capacity cap.

It was designed to accelerate private investment during the energy crisis… and it worked.

That window has closed.

The 2025 Budget confirmed Section 12BA was not extended, so any system brought into use after 28 February 2025 does not qualify for the 125% allowance.

If an article or a salesperson tells you to claim 125% today, that information is out of date.

The good news: the permanent incentive — Section 12B — is still in place, and it’s still generous.

What is Section 12B and how much can I deduct?

Section 12B has been part of the Income Tax Act since 2015 and has no expiry date.

For solar PV systems up to 1 MW, it allows a business to deduct 100% of the qualifying cost in the first year the system is brought into use.

That’s the key benefit: instead of writing the asset off slowly over many years, you deduct the entire cost in year one, which can substantially reduce your taxable income for that year.

A few specifics worth knowing:

– Systems up to 1 MW: 100% deduction in year one. (For solar PV, the old 50/30/20 three-year schedule no longer applies.)
– Systems above 1 MW: these don’t get the 100% year-one deduction, but still qualify for an accelerated 50% / 30% / 20% write-off over three years.
– The 1 MW threshold was confirmed in the 2025 Budget and is not being revised.

For the vast majority of commercial installations, which sit well under 1 MW, that means the full cost is deductible in the first year.

How much could this actually save my business?

Let’s put real numbers to it.

South Africa’s corporate income tax rate is currently 27%.

Imagine your company installs a qualifying solar system costing R1,000,000:

– Section 12B lets you deduct the full R1,000,000 from your taxable income in year one.
– At the 27% corporate rate, that reduces your tax bill by R270,000.
– Your effective cost drops from R1,000,000 to R730,000… before you’ve saved a single rand on electricity.

For a smaller business, the effect is just as meaningful. A R400,000 system generates a R400,000 deduction, saving a company about R108,000 in tax and bringing the effective cost down to roughly R292,000.

A couple of caveats: the saving is only realised if your business has enough taxable income to absorb the deduction, and sole proprietors are deducted at their personal marginal rate (which can be higher than 27%). Your tax practitioner will confirm exactly how it applies to your entity.

Can I also claim back the VAT?

Yes… and this is a separate benefit on top of Section 12B.

If your business is a registered VAT vendor, you can generally reclaim the input VAT on the purchase and installation of your solar system, provided the system is used to make taxable supplies.

Crucially, these two benefits don’t cancel each other out. The input VAT is reclaimed on your VAT201 return (usually within a month or two of installation), while the Section 12B deduction goes on your annual income tax return. You claim both, for the same install, in the same tax year.

Stacking them is what produces the headline saving. On a system priced around R460,000 including VAT, a VAT-registered business can recover roughly R60,000 in VAT and save tax through Section 12B — bringing the true net cost down to around R232,000.

That’s close to a 50% effective reduction, assembled from two legitimate tax mechanisms.

Who qualifies, and what are the conditions?

Section 12B is available to any taxpayer carrying on a trade: private companies (Pty Ltd), close corporations, sole proprietors, partnerships and trusts all qualify.

There are three main conditions:

1. You must own the asset. Systems bought outright or financed through an instalment credit agreement (hire-purchase) qualify. If you’re on a pure operating lease, the owner of the equipment claims the allowance, not you. (This is an important detail when choosing how to finance your system.)
2. The system must be brought into use during the tax year… meaning commissioned and actually generating electricity. SARS looks closely at the commissioning date on your Certificate of Compliance, so a system installed in December but commissioned in January is claimed in the new tax year.
3. The electricity must be used in producing income. In practice, powering the premises where you run your business (shop, workshop, warehouse, office, guesthouse, factory). SARS interprets this broadly for commercial premises.

One more point: if part of your system was funded by a government grant, you can only claim the deduction on the portion you paid for yourself.

Do batteries qualify for Section 12B?

Generally, YES, provided the battery forms part of the system that generates electricity.

SARS confirmed this in a binding class ruling in 2024: batteries integrated into a renewable energy installation qualify under Section 12B because they’re part of the generating system.

The distinction that matters: a battery installed as part of your solar PV system qualifies, but a standalone storage unit used purely to store grid power, with no generation component, does not.

If storage is part of your solar design, it’s typically covered.

Does Section 12B apply to my home?

No, and this trips a lot of people up.

Section 12B is a business incentive only. Residential homeowners do not qualify for it.

There was a separate, temporary individual rebate (a 25% credit on solar panels, capped at R15,000) for the 2024 tax year, but that expired and has not been replaced.

So if you’re a homeowner, the tax angle no longer applies. If you run a business from commercial premises, Section 12B is the provision that benefits you.

What documentation does SARS expect?

Because these deductions reduce your tax bill, SARS scrutinises them, so good documentation is essential.

You’ll generally want:

– An itemised invoice that breaks down panels, inverter, mounting, battery, labour and compliance separately. Vague “solar installation: R200,000” invoices raise audit flags; detailed ones pass scrutiny.

– A Certificate of Compliance (CoC) confirming the date the system was brought into use.

– All supporting records (invoices, the CoC, proof of payment) kept for several years, since SARS can review claims well after the fact.

This is one more reason to use an installer who provides proper, itemised turnkey documentation rather than a single lump-sum quote.

How Allsolar helps you claim with confidence

Claiming Section 12B correctly starts with a compliant, properly documented installation.

At Allsolar, every system is installed to the relevant South African standards (SANS 10142-1 and the applicable grid codes), commissioned with a Certificate of Compliance, and supported by itemised documentation, exactly the paper trail SARS expects.

We begin with an energy audit to size the system correctly for your business, and our modular, expandable designs let you invest in stages while still capturing the year-one deduction on each qualifying phase.

With more than 30 branches across Southern Africa and roots in the industry since 2012, we handle the design, supply, installation and compliance — so your accountant has clean records to work from.

Important: Allsolar designs and documents compliant systems, but we are not tax practitioners.

The exact deduction your business can claim depends on your entity, income and circumstances. Always confirm your position with a registered tax practitioner — the South African Institute of Tax Professionals (SAIT) maintains a directory of accredited advisors.

Frequently asked questions

Can my business still claim the 125% solar tax deduction in 2026?
No. The 125% deduction under Section 12BA expired on 28 February 2025 and was not renewed. Systems brought into use after that date qualify for the permanent Section 12B deduction instead, which allows a 100% write-off in year one for solar PV up to 1 MW.

How much can a business deduct for solar under Section 12B?
A business can deduct 100% of the cost of a qualifying solar PV system (up to 1 MW) in the first year it is brought into use. At the 27% corporate tax rate, a R1,000,000 system produces a tax saving of around R270,000, lowering the effective cost to about R730,000.

Can I claim Section 12B and the VAT back at the same time?
Yes. The two benefits are separate. VAT-registered businesses reclaim input VAT on the VAT201 return, while the Section 12B deduction is claimed on the annual income tax return. Both can apply to the same installation in the same tax year.

Who qualifies for the Section 12B solar deduction?
Any taxpayer carrying on a trade; companies, close corporations, sole proprietors, partnerships and trusts. The system must be owned (or financed via instalment credit), commissioned and generating during the tax year, and used to produce income.

Do batteries qualify for the Section 12B deduction?
Yes, when the battery forms part of the solar PV system that generates electricity. SARS confirmed this in a 2024 binding class ruling. Standalone storage units with no generation component do not qualify.

Does Section 12B apply to homeowners?
No. Section 12B is a business incentive only. The temporary individual solar rebate applied to the 2024 tax year and has expired with no replacement.

Want to understand your solar tax benefit?

Section 12B can meaningfully reduce the cost of going solar, but the exact figure depends on your business, and the system has to be correctly designed, commissioned and documented to qualify.

Allsolar provides energy audits and fully compliant, itemised turnkey commercial solar installations… backed by a nationwide network of more than 30 branches, giving you and your accountant a clean foundation for your claim.

To explore what solar (and its tax benefits) could mean for your business, contact your nearest Allsolar branch or request a quotation.

*This article is general information reflecting the South African tax position as of mid-2026. Tax legislation changes and individual circumstances differ. Allsolar is not a registered tax practitioner — please consult one before making decisions based on tax relief.*

June 29, 2026 Nico Smit

A brighter, greener future with ALLSOLAR

Electricity costs in South Africa have been climbing year after year, and households and businesses are feeling the pressure. At ALLSOLAR, we believe the smartest way to take back control is to invest in solar power. This solution not only gives you energy independence but also delivers long-term financial savings.

THE NEVER-ENDING RISING COSTS OF ESKOM POWER

Eskom tariffs have increased substantially over recent years. For example, the National Energy Regulator of South Africa (NERSA) approved a 12.74% increase for the 2024/25 year. In 2023/24, Eskom customers faced a jump of 18.65%. Over the past decade, the average Eskom standard‐tariff rate has more than doubled (from ~110.93c/kWh in 2020 to ~220.92c/kWh in 2025).

For many households, these hikes translate into hundreds of rand extra per month. As one analysis showed, an average household could see an increase of about R480/month (≈ R5,760/year) from the latest tariff rise.

HOW SOLAR CUTS COSTS

Installing a solar system means you generate your own power from the sun—a free, renewable resource. Once the system is paid off, the electricity you produce is essentially cost-free, and you’re shielded from Eskom’s dreaded price increases.

POTENTIAL SAVINGS FOR HOMEOWNERS

  • Average monthly electricity bill: R2,500 – R4,000 for a mid-sized home.

  • Solar system size: A 5kW solar system can cover most of a household’s energy needs.

  • Monthly savings: Up to 70% on electricity bills. (100% if you go fully off-grid!)

  • Annual savings: R25,000 – R40,000 depending on usage and system size.

Over 10 years, that could amount to R250,000 – R400,000 saved, not to mention the added value solar brings to your property.

For businesses, savings scale even higher. A small-to-medium enterprise can easily spend R50,000+ per month on electricity. Switching to solar can slash this dramatically saving hundreds of thousands of rands each year.

THINK BEYOND THE RAND...

Solar isn’t just about money, it’s about energy independence. With load-shedding or unplanned outages being constant threat, solar combined with battery storage ensures you have reliable power when you need it most. It’s lower bills, peace of mind, and a greener footprint all in one.

READY TO START SAVING?

Every household and business is different, which is why ALLSOLAR offers tailored solutions that fit your exact energy needs. Whether you want to reduce your bills, beat load shedding, or invest in a long-term energy solution, we’re here to help.

👉 Contact ALLSOLAR today for a free consultation and find out how much you can save with solar power.

October 6, 2025 Kristin van Schalkwyk

Welcome to ALLSOLAR

Welcome to ALLSOLAR - Renewable Energy Solutions

Welcome to ALLSOLAR, your trusted partner in renewable energy solutions! As the world shifts toward sustainability, we are here to provide reliable, cost-effective, and high-quality solar power systems for homes and businesses.

At ALLSOLAR, we believe in harnessing the sun’s power to create a greener and more energy-independent future. Whether you’re looking to reduce your electricity bills, minimize your carbon footprint, or gain energy security, our expert team is ready to guide you every step of the way.

Stay tuned for insights on solar technology, energy-saving tips, and the latest industry updates. We’re excited to embark on this journey with you toward a cleaner, brighter tomorrow!

Let’s power the future—together.

March 13, 2025 Kristin van Schalkwyk

2025 ALLSOLAR.ALL RIGHTS RESERVED

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