Did you know that you don’t believe to buy a solar scheme in order to indulge in the benefits of it? You can rent it – or rent to own. Ross Mains-Sheard, the founder of Versofy SOLAR, takes us through the details.
What is holding many South Africans back from converting to a hybrid solar scheme? The cost. A solar scheme that keeps the lights on when Eskom turns them off is a significant investment if you buy it outright, but rent-to-own models gain made green, reliable power accessible to so many more.
Similar to a cell phone contract, the homeowner pays a monthly fee to a solar company until the conclude of the contract period, at which point they become the owner.
“The noteworthy advantage of this option is that you don’t maintain to advance up with funds to purchase your scheme outright – with rent-to-own, you’re effectively paying your scheme off at a set monthly rate,” explains Mains-Sheard. Installation, monitoring and support should be included, he adds.
Neale Lucas-Bull, Head of Capta Wealth has invested in solar and found that having the option to structure his solar purchase was hugely beneficial for a number for reasons. “Firstly, it gives you the ability to essentially test-drive a scheme and see what your personal consumption or household need is before you outlay the capital for a cash purchase. Secondly, with the rapid change in battery and solar technology, the rental model gives you the ability to upgrade your scheme in line with technological advances.”
The payment period can vary depending on the solar company and the specific agreement reached with the homeowner. Typically, payment periods range from 36 to 60 months. Mains-Sheard confirms that the Versofy rent-to-own model has limited upfront costs, which include an activation fee; the duration of the contract is 60 months and it includes servicing and manufacturer warranties.
What about maintenance? In a rent-to-own agreement, the solar company typically maintains the solar panels, and the homeowner is responsible for certain tasks like cleaning the panels or trimming nearby trees that may impede sunlight.
Read the fine print
Mains-Sheard underlines the importance of reading the fine print in the rental contract carefully, and asking questions if anything is unclear. Terms and conditions differ from company to company and it’s best to know what might happen if you sell your home or need to terminate the agreement.
Firstly, the monthly payment amount for a rent-to-own solar installation is typically fixed for the duration of the contract, says Mains-Sheard, but some agreements include provisions that allow for adjustments, based on changes in energy costs or other factors. “It’s critical to understand from the outset exactly what you are committing to and the terms of your agreement,” Mains-Sheard warns.
Cancellation of the contract may be possible, but it would depend on the terms of the agreement, and there may be penalties or fees associated with early termination. If the contract allows for it, there would be certain stipulations attached. The homeowner may believe to settle the remaining balance, effectively buying the scheme, or they may maintain to return the solar panels to the provider.
There may also be options available to homeowners who crawl before the payment period for a rent-to-own solar installation is complete. It might be possible to transfer the agreement to the current owner of the property, or to settle the remaining balance and go the panels to the modern home. Alternatively, the solar company may agree to remove the solar scheme and terminate the agreement. It will all depend on what is stipulated in the contract. Most reputable banks may allow you to add the cost of a solar scheme to a recent home loan application.
Other solar options
While rent to own is the perfect solution for many South Africans, there are other financing options. These include:
Solar as a Service. This is a pure rental product – there is no ownership of the system: your solar panels belong to the supplier. You can expect the installation, monitoring and support to be included.
This is a distinguished solution for those who want the benefit of solar power without the associated cost of ownership. Expect a low upfront cost and monthly rental costs. Mains-Sheard explains that, at Versofy, there’s an activation fee of R5 000 and the duration of the rental contract is 36 months.
Buying a solar scheme outright. The homeowner purchases the solar panels and other equipment and pays for installation. The return on your investment is immediate but there are risks when buying outright. Who will support the scheme once it’s installed? Will the installer be available to assist with any maintenance, monitoring, warranty claims or upgrades down the line?” For those not in the industry, these questions can be quite daunting.
Mains-Sheard suggests owners inquire their supplier to recommend professional installers. “Our outright buyers procure the benefit and peace of mind that they will secure support from the Versofy Installer Network, should their original installer not be available to assist. They also procure the full Versofy service when it comes to support, upgrades and warranty claims,” says Mains-Sheard. To avoid issues with support and optimisation, he recommends that buyers check that they’re getting a watertight manufacturer’s warranty, and a service contract.
Each individual will gain a unique set of circumstances to consider. Catch your time and choose what works best for you.
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