Solar price comparison: Rental vs. financing vs. rent-to-own

As load-shedding plagues South Africans, acquiring a backup power system is crucial, yet daunting. With the cost of solar panels, inverters, and batteries decreasing, options to fund these systems monthly emerge. Choose rental services for flexibility but face potential cancellation fees. Major banks offer loans specifically for alternative energy financing, allowing payments over six years. Opt for rent-to-own for ownership with full maintenance, albeit at a higher cost. Alumo Energy, among others, provides various configurations. Make an informed decision with our detailed comparison of pricing and terms.

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Hanno Labuschagne

South Africans seeking a backup power system to shield them from load-shedding can fund their purchase in one of three ways if they don’t have the cash to buy it outright.

The prices of solar panels, inverters, and batteries have decreased substantially in the past few months.

However, it will still cost the average South African household tens of thousands of rand to buy a system capable of providing sufficient backup power during load-shedding for their essential appliances.

Most people don’t have that type of money lying around, particularly when high inflation has forced many households to tighten their budgets.

Fortunately, there are ways to pay a monthly fee for such a system to make it more affordable.

Below, we have explained the three main ways to get a backup power system by paying for it monthly.

Rental or subscription service

The first option to consider is a rental or subscription service, which gives you the benefit of a backup power system without the responsibility of owning and maintaining it.

This is the best choice for those who don’t necessarily want to sign up for a long-term financial commitment or those who cannot get approval for a loan.

The effective cost of the system will also be lower than the actual premium because you can reduce your grid-consumed electricity bill substantially if you choose to include solar panels in your plan.

However, despite this being the most flexible option, there are some significant drawbacks to consider.

Firstly, all the money you spend will be purely for relief from power cuts and a potential reduction in your electricity bill.

There is no long-term benefit where the system will eventually have paid for itself through electricity savings.

Secondly, cancelling a rental plan can come with a substantial cancellation fee.

One popular provider — Goslr — charges de-installation fees starting at R22,770.

Its packages operate on an evergreen contract, so there appears to be no time at which this cancellation fee no longer applies.

The table below compares Goslr and Hohm Energy’s Glint solar subscription services.

Rental/subscription options compared
GoslrHohm Energy Glint
PricingR1,399—R4,400 per month
Annual escalation in line with Consumer Price Index
R1,350—R3,750 per month
Standard escalation of 7.5% per year
0% escalation with higher rental fee
Initiation feeR1,399—R4,400R1,350—R3,750
Customisable configurationNoYes
Contract lengthEvergreen, lasts until you cancelFive years (60 months)
Cancellation/removal feeR22,770—R35,400 fixed feeR15,500 after six months
Escalates on an annual basis at rate chosen in contract
Additional early termination fee
Support, insurance and replacementsCertificate of compliance covered
24/7 technical support
Remote monitoring
Maintenance and replacements included
Certificate of compliance covered
Remote monitoring
Maintenance and replacements included
Fully insured by provider, but must notify buildings insurer of installation
Downgrades/upgrades allowed during subscriptionsOnly upgrades
1 x extra battery for R690 per month
Yes, downgrades only where feasible
Option to buyYes, after three years
Price determined by contract
Yes, at any time during the contract
Price determined by quote on request
Price reduces each month
Sell power back to the gridYes, in supported municipalitiesYes, in supported municipalities

Standalone or home loan-linked financing

Responding to the intensified power cuts over the past few years, all of South Africa’s major banks now offer personal loans specifically for alternative energy financing, similar to vehicle finance.

This allows you to pay the system off in monthly premiums over up to six years (72 months), depending on the bank, at an interest rate that matches your credit profile.

You can buy your system from one of numerous accredited solar installers in South Africa and pay for it with financing.

This includes companies like Alumo Energy, AWPower, Hohm Energy, LookSee, and Solar Advice.

The typical approach to apply for a loan would be to submit a quote from your chosen installer for approval.

The bank will then pay the installer the full price of the system, which you will repay to the bank.

Those with a home loan can add a financed solar system to their existing bond at an additional monthly cost. The combined financing of the home and system will be treated as a single loan.

The advantage of this option is that you can get the best possible interest rate for your profile and pay the equipment off over the number of years left on your home loan.

The downside to financing is that you are at the mercy of warranties or insurance when it comes to repairs or replacements. You must take out appropriate insurance and keep your premiums up-to-date to avoid disaster should something go wrong.

Rent-to-own

For those who want to end up owning the system but also need the peace of mind of full maintenance and technical support, rent-to-own is the way to go.

With this approach, you will generally pay more than when renting or financing a system of the same size, but you may get benefits like insurance, regular maintenance, repairs, and replacements in the event of damage that did not occur by your hand.

Alumo Energy is among the well-known companies that offer this model.

It has a range of preconfigured systems for grid-tied and off-grid backup systems with capacities to suit households with widely varying electricity consumption habits.

Alumo Energy offers contracts over three, five, and seven years, after which you can either choose to have the system removed or pay a fixed fee to become its owner. The buy-out amounts for each system are shown on its website.

For an entry-level system with 3.6kW output, 3.6kWh backup, and no solar panels, this can be as low as R5,100 after a 7-year contract is over.

The same system’s buy-out will increase to over R20,000 over the shortest 3-year term.

The table below compares Alumo Energy’s rent-to-own pricing with financing the same system.

Rent-to-own vs financing
System configuration
InverterSunsynk 5kW
Battery capacitySynsynk 5.32kWh
Solar panels2.43kWp (6 x 405W Monocrystalline panels
Rent-to-own
Monthly priceR2,321, with 6.5% annual escalation
Payment term5 years (3 and 7 years also available)
Buy-out price at end of contractR26,061
Total paid over duration of contractR184,640
Financing
Financing monthly premium over 60 months
(11.75—14.25% interest rate)
R2,401—R2,536
Cash priceR104,245
Total credit on loanR144,086—R152,183

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This article was first published by MyBroadband and is republished with permission

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