---
title: "Solar PPA vs buying: which suits your business?"
description: "Zero-capex solar PPAs, leases and outright purchase compared for South African businesses: cost per kWh, contract length, ownership and tax."
image: https://cleanvolts.co.za/hubfs/solar-ppa-vs-buying-featured.png
---

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# Solar PPA vs buying: which suits your business?

![Tony Lopes](https://cleanvolts.co.za/hs-fs/hubfs/clean%20volts%20launch%20post.png?width=48&height=48&name=clean%20volts%20launch%20post.png)

 Tony Lopes

November 6, 2026

**Short answer:** A solar power purchase agreement (PPA) needs no upfront capital: a provider owns the system on your roof and sells you the power per kWh, usually for 10 to 25 years. Buying costs more upfront, but usually saves far more over the system's life and can qualify for Section 12B. Compare the cost per kWh, the contract terms and who maintains the system before you choose.

*Last updated November 2026.*

"Zero capex solar" is one of the most common offers a business owner hears today, and it can be a very good deal. It can also lock a business into a contract that outlasts its lease, its premises or the savings it was sold on. This guide compares the four ways a business can pay for solar: a PPA, a lease or rental, asset finance, and cash. It compares the models, not providers. For the basics of how a business system works, start with [commercial solar for businesses](https://cleanvolts.co.za/solar-for-business).

## **Should a business sign a solar PPA or buy the system?**

|  | PPA | Lease or rental | Asset finance or loan | Cash |
| --- | --- | --- | --- | --- |
| **Upfront cost** | None | None or small | Deposit, sometimes none | Full price |
| **What you pay for** | Each kWh the system produces | A fixed monthly fee | Loan repayments | Nothing after purchase, except upkeep |
| **Who owns the system** | Provider | Provider | You | You |
| **Who maintains it** | Provider | Usually provider | You | You |
| **Section 12B deduction** | Provider claims it | Provider claims it | You can claim it | You can claim it |
| **Typical term** | 10 to 25 years, some shorter | 5 to 15 years | 3 to 7 years | None |
| **Lifetime savings** | Lowest, but immediate | Low to middle | High once paid off | Highest |

A business with cash or borrowing room and a long stay in its building usually comes out ahead by owning. A business that can't spare capital, rents short-term, or doesn't want to manage a system often prefers a PPA.

## **How does a solar PPA work?**

The provider designs, finances, installs and owns the system on your roof or land. A meter records every kWh it produces, and you pay an agreed rate for those units, usually below what you pay Eskom or the municipality. Anything the system can't supply still comes from the grid at the normal tariff. The provider maintains, insures and monitors the system, because its income depends on it producing.

The rate either stays fixed, rises by a set percentage each year, or rises with inflation (CPI). Because grid tariffs have been rising faster than inflation, a PPA rate that escalates with CPI tends to look better over time. Long-term contracts of 15 to 25 years are common, but shorter products, including five-year PPAs, have come onto the South African market since 2025.

## **How do the savings compare?**

Take the 100 kWp warehouse from our guide to [commercial solar payback](https://cleanvolts.co.za/guides/commercial-solar-payback), using about 148,000 kWh of solar a year on site, with grid power at R2.50 a unit. For illustration, we've assumed a PPA rate 20% below the grid. Your offer will differ.

|  | PPA at R2.00 a unit | Buy for R1.1 million cash |
| --- | --- | --- |
| Upfront | Nil | R1.1 million, less about R297,000 in tax through Section 12B |
| Year-one saving | About R74,000 (R0.50 × 148,000 units) | About R359,000 after maintenance |
| When you're ahead | From month one | After roughly two to three years |
| Who carries performance risk | Provider | You |

Over ten years, owning saves several times more in this example. But the PPA saves money from the first month with no capital at risk, which matters to a business that would rather put its cash into stock, staff or equipment. Neither answer is wrong. It depends on what the cash would otherwise do.

## **What about leases and asset finance?**

**A lease or rental** charges a fixed monthly fee instead of a rate per unit. That's simpler to budget, but you pay the same on a cloudy month as a sunny one, so the provider carries less performance risk than in a PPA. Check what's included: maintenance, insurance, monitoring and inverter replacement.

**Asset finance or a loan** lets you own the system from day one and claim Section 12B, while spreading the cost. On a well-sized system, the monthly saving often covers most or all of the repayment, and once the loan is paid off the savings are yours. Banks and specialist lenders offer solar-specific products.

## **What contract terms should you check in a PPA?**

1. **The rate and how it escalates.** Fixed, a set percentage or CPI-linked? Compare it with realistic grid increases, not just today's tariff.
2. **Minimum purchase.** Some contracts make you pay for a minimum number of units whether you use them or not.
3. **Performance guarantee.** What happens if the system produces less than promised?
4. **Moving, selling or closing.** Can the contract move with you, be taken over by a buyer, or be ended? What is the early buyout price in each year?
5. **Roof access and repairs.** Who pays to remove and refit panels if the roof needs work?
6. **Insurance and damage.** Who insures the system against theft, hail and lightning, and who pays the excess?
7. **End of term.** Does ownership transfer to you, can you buy it at a set price, or will it be removed? Get it in writing.
8. **Landlord consent**, if you rent your premises, ideally with the landlord signing an agreement with the provider.

Have a lawyer read a long-term PPA before you sign. It's a 15 to 25-year commitment tied to your building.

## **Which option suits which business?**

| Your situation | Often the best fit |
| --- | --- |
| Own the building, have cash or borrowing room, profitable and paying tax | Cash or asset finance, to use Section 12B |
| Need cash for operations, but plan to stay ten years or more | PPA or asset finance |
| Renting on a short lease | A short-term PPA or rental that can move or end with the lease |
| Not currently paying much tax | A PPA, since the provider can use the tax benefit that you can't |
| Don't want to manage a system at all | PPA |

**Before you sign**

- **This guide isn't tax, legal or financial advice.** Check the tax treatment with your accountant and the contract with a lawyer.
- **Whoever owns the system, it must be installed by a registered electrical contractor** and have a Certificate of Compliance and grid approval.
- **Tell your insurer** about any system on your building, including one you don't own.

## **Frequently Asked Questions**

### **How long are solar PPA contracts?**

Most commercial PPAs in South Africa run for 10 to 25 years, with 15 to 20 years common. Shorter contracts, including five-year terms, have appeared since 2025, usually at a smaller discount to the grid.

### **What happens if we move premises?**

It depends on the contract. Options include moving the system, transferring the contract to the next occupant or buyer, or paying an early termination or buyout amount. Agree this in writing before you sign.

### **Who maintains a PPA system?**

The provider does, because it owns the system and is paid only for what it produces. That usually covers cleaning, monitoring, repairs and replacing faulty parts. Check what's excluded, such as roof repairs.

## **Where We Fit In**

CleanVolts matches businesses with vetted, registered [CleanVolts Approved](https://cleanvolts.co.za/cleanvolts-approved) commercial installers, and can point you to finance partners where buying outright isn't the right fit. Send us your bills and we'll help you compare offers on the same basis. You contract the installer or provider directly. Using CleanVolts costs you nothing, and if a partner pays us a referral fee, we tell you up front.

[**Send your business electricity bills**](https://cleanvolts.co.za/business-solar-enquiry) · [Solar finance](https://cleanvolts.co.za/solar-finance)

*Sources: [Engineering News on a five-year commercial solar PPA, June 2025](https://newsletter.en.creamermedia.com/article/sosimple-energy-launches-south-africas-first-5-year-solar-ppa-to-help-businesses-under-operational-pressure-2025-06-05); [EnergyBee, solar rental and PPAs in 2026](https://energybee.co.za/guides/solar-rental-ppa-south-africa-2026); [Section 12B overview](https://grantza.org.za/energy/12b-tax).*

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