Home solar system cost is often cited as determining why people do not adopt solar power, even while knowing its well-researched benefits. Solar energy has recently been at the forefront of many environmental and economic discussions due to the state of Earth’s natural environment. However, these critical socio-economic discussions often forget that for many, solar options may seem financially impossible, especially in less developed countries. 

Yet, at the same time, although these crucial discussions may overlook the obstacle of cost, it is also true that in recent years, thanks to many technological innovations, home solar system costs have been dramatically reduced. Although this has made solar systems more accessible to a broader market, there is still a barrier to entry based on prices, especially in regions like South Africa or other developing countries where per capita people are less wealthy. 

At Alumo Energy, we believe that our accommodating financing solutions can help more people experience the many benefits of solar power. In this article, we want to highlight some of the most common financial options out there. 

The Home Solar System Cost: An Obstacle To Alternative Energy Adaption 

Many think that home solar systems costs are too much and therefore do not offer a viable solution to national grid electricity. This is even more true in places like South Africa, where home solar power systems are considered a luxury and not a necessity. Before we offer financial solutions to this common argument, it is essential first to investigate the actual state of the solar power market today. 

• Solar Power Prices:

Of course, when considering the prices of any solar system, it is essential to remember that the cost of your system will vary depending on a few different factors. Yet, for the purposes of this article, we will be working with the average price for hybrid and off-grid solar systems. 

• Hybrid Solar System: 

A hybrid system is somewhere between a grid-tied system and an off-grid system. One could conclude it offers the best of both worlds. It can store energy in backup batteries but is still somewhat reliant on the national grid when solar panels cannot draw enough energy from the sun. 

According to the Nedbank information page, a system like this will generally contain the following components and can cost anywhere from R160 000 to R170 000: 

• 1 Inverter 
• 2 batteries
• 8 solar panels 

The cost will vary depending on the size of your batteries and inverter, but for residential use, an inverter is between five to eight kilowatts, with a 10kWh battery.

• Off-Grid Solar System:

At Alumo Energy, we generally do not recommend off-grid solar systems for a number of reasons. Firstly, they are more expensive than a hybrid system, while offering less in the way of usability and long-term advantages like national grid back up, when the weather has been poor over a long period of time.  

The price of these systems is high, because you need a system that can completely provide for your energy needs independently. Not only does this mean the system has to be larger, but also means that in the long run maintenance will also be more expensive. 

• The Pricing Obstacle:

Maybe out of all the problems already discussed, the largest and most significant will still be the price of a system. Although solar systems are a long-term investment in any country, specifically in third world or developing countries like South Africa this is even more true. In the rest of this article, you will see how the different ways these systems have become more affordable in South Africa, but even so there is still a large portion of South Africans, for who this is not a financially available option. 

Government Subsidies

The South African government has thought of many ways to combat the national issue of load shedding. One way to both encourage using renewable energy while also lessening the strain on the national grid is to use economic policies to try help and entice consumers to invest in solar power. The main scheme the South African government developed for this task was the Energy Bounce-Back Guarantee Scheme or the EBB. In this section we will look at this subsidy in more detail. 

Who Is The Scheme For?

The EBB scheme is meant to reach many legal entities, including small and medium businesses and energy solution corporations. The different routes to access funds from this scheme are labelled in the breakdown as mechanisms. For homeowners, mechanism one is tailored to suit you. 

• Mechanism one – Loan guarantee for rooftop solar for household investments:  

This mechanism will help to facilitate loans for households to invest in solar energy. This investment for successful applicants must be for solar panels, inverters, batteries and solar installation costs. 

How To Access The Scheme 

You can gain access to this solar system-tailored loan through participating banks. First National Bank, ABSA and Standard Bank are interested in participating in the scheme.

The Scheme Structure 

The EBB scheme is structured as a twenty per cent first-loss basis loan. In layman’s terms, if you wanted to subsidise the home solar system home costs, you would visit a participating bank and apply for the loan for the components mentioned above as you would with any loan. 

However, this loan is more favourable for banks as the Government will ensure the first twenty per cent of the loss if the loan is defaulted on. This benefit allows banks to offer better loan rates to their customers, making the loan more accessible to a wider proportion of the South African population. 

Suppose you are interested in this solution for your home solar system costs. In that case, there is much more information regarding who qualifies and other valuable tips and in-depth information from the South African government provided online.  

Home Equity And Lines Of Credit 

Although the government subsidy route may seem like the perfect solution, the truth is that there may be a better fit for many South African residents than using a government program. The reasons for this vary, from a distrust of public institutions to people’s inability to access this loan structure based on specific demographic disqualifiers. Whatever the reason, some may want to finance the home solar system costs privately.

When the individual in question already owns their property, one typical course of action is to make the funds available through either a home equity loan or a home equity line of credit (HELOC).  In this section, let us discuss what these two options entail. 

What Is Home Equity?

Home equity refers to the value of your home or property. However, unlike when you put your home up for sale, the value of your home equity is not impacted by the demand for your house, which may lower or raise the value in the estate market. 

• Home Equity Loan: This borrowing method is based on a lump-sum structure. That means that you are given the full sum requested in one go. In this setup, the interest rate on the loan repayment is fixed.
• HELOC: Unlike a home equity loan, a HELOC is defined by the fact that you are given access to a revolving line of credit. This means you can access funds when needed and do not have to take out the total value of the funds in one go. Although this provides more flexibility, the interest rate is not fixed but is variable, meaning that you may need to pay more if the interest rate goes up.

Both options can be suitable for home solar system cost. However, which option you select will be based on the eventual cost of the system you would like to install and whether you would like to install the entire system in one go or slowly purchase all the components. 

Home Solar System Cost For Rental 

Both options above assume that you would want to purchase the entire solar system for yourself and own the system outright. However, although the options above make it easier to afford the home solar system cost, for many, this may still be an unobtainable route to using solar power.  Those who do not find the above solutions helpful can also consider renting solar systems. 

Luckily at Alumo Energy, we offer rental services, as we find it one of the best viable solutions for those who want to use solar power but can’t afford the entire home solar system costs. Let us look at how it works: 

• Get yourself credit approved. Alumo Energy can help you with approval within one working day. 
• After you’re approved for credit, you can sign a contract with us, agreeing to pay a nominal fee to rent one of our premium-level solar systems. 
• After you’ve signed the contract, we will come around to yours to help you install and set up. 
• Instead of paying the extensive home solar system costs upfront, we can work out a rate that would work for you to spend every month. 
• We even offer a buyout option for our systems if you have paid your rental consistently and have reached the actual value of one of our systems. By buying out, we can transfer the ownership of the system to you. 

Conclusion: Alumo Is Making Home Solar System Cost Less 

This article looked at various ways you can affordably combat the home solar system cost. Whether relying on the government, utilising your home equity or looking to rent solar systems, you can find an affordable way to go solar in South Africa. At Alumo Energy, we encourage using solar power as it is better for the environment and more cost-efficient for you in the long term. So don’t hesitate to call Alumo Energy and see how we can help you get your solar system today!