Shifting your business to solar energy? The critical success factor in finding the optimal finance option is covering all your risks for the long term. Solar experts suggest considering your in-house solar management expertise and ability to take risks if you opt for traditional financing. Otherwise, consider looking at game-changing, risk-free finance options.
Transitioning to solar energy requires more than just capital—it demands a long-term approach to risk and performance management. Traditional financing options, such as bank loans, often fall short for businesses without in-house solar expertise, leaving companies to shoulder operational risks, fixed payments, and unforeseen maintenance costs.
In many instances, projected returns might not align with the realities of managing the plant, as there are many hidden costs and risks associated with managing contractors and performance.
For companies without the in-house expertise to manage solar plant operations, and those preferring to avoid the risks associated with solar performance, it may be more prudent to work with a solar developer who can manage the entire process.
Traditional financing vs game-changing new finance models
Traditional bank loans offer businesses access to capital but often leave them to navigate the complexities of solar installations alone. Fixed repayment schedules, collateral requirements, and no operational support mean businesses take on all the risks of underperformance and maintenance.
A more innovative and flexible solar financing option is the Performance-Linked Instalment Sale (PLIS) model, empowering businesses to reap the benefits of solar energy, without the long-term risks associated with traditional financing.
The PLIS model eliminates upfront costs, alleviating financial strain on the business. It preserves liquidity and keeps credit lines free, ensuring the business remains financially flexible.
Most importantly, unlike fixed bank finance repayments, the PLIS pay-as-you-go model also ties flexible monthly repayments to the energy the system generates, so if the system underperforms, the instalments decrease, preventing cash flow problems or extra operational costs.
“Choosing the right financing model based on your business needs and risk tolerance is a crucial success factor for successful solar installations,” says Richard Flamand, Country Lead for Candi Solar South Africa, a Swiss Solar Power Developer, Financier, and Operator that recently introduced the first-to-market PLIS financing model in South Africa.
Candi Solar’s Performance-Linked Instalment Sale (PLIS), an on-balance sheet financing option, is game-changing with a fundamentally different approach. The PLIS model helps businesses own solar assets and benefit from SARS’s 12B tax incentive, which allows businesses to write off up to 125% of their solar investment in the first year.
“Candi Solar doesn’t just finance your solar solution—we take care of every aspect so you can focus on running your business,” said Richard Flamand, Country Lead for Candi Solar South Africa. “Why let traditional financing loan options leave you stranded? With Candi, you gain a partner who ensures your solar system delivers value from day one.”
- Expertise Beyond Financing
Banks stop at providing loans, but Candi handles the entire solar journey. From system design and installation to monitoring and maintenance, Candi ensures that your solar investment performs optimally. - Zero Financial & Performance Risk
With PLIS, businesses pay only for what works through a rate-per-kWh model. There are no upfront costs, fixed payments, or surprises. In contrast, bank loans lock businesses into rigid installment plans, even if the system underperforms, while leaving them with additional O&M costs. - Customised Flexibility
Candi tailors its solar solutions to each business’s unique energy needs, offering options for on- and off-balance sheet benefits, as well as longer tenor options. Banks, however, provide standardised terms with little room for customisation. - Security Without Asset Constraints
The PLIS Model secures only the solar system, keeping your balance sheet and credit lines free. Banks, by contrast, often require businesses to tie up significant collateral, including the underlying property. - Zero Operational Risk
From precise system sizing to timely installation and breakdown management, Candi takes on all operational responsibilities. Businesses relying on banks are left to deal with issues like delays, oversizing, and inefficiencies.
Performance-Linked Instalment Sale (PLIS) – The best of OPEX and CAPEX models
The PLIS model offers businesses ownership of the solar plant while benefiting from tax incentives and reducing operational and performance risks.
With no upfront costs, it preserves liquidity and avoids tying up credit lines while enabling savings as electricity tariffs rise. Unlike fixed bank loans, PLIS aligns repayments with energy generation, reducing instalments if the system underperforms ensuring predictable cash flow. By managing all aspects of system performance, from construction to asset management, PLIS eliminates operational risks and unexpected costs, providing a seamless solar experience without straining internal resources.
For businesses ready to switch to renewable energy the PLIS financing solution offers access to flexibility, support, and expertise required for a seamless solar journey.
