Cost of financing solar doubles in SA

From the newsletter

The annual cost of financing solar home systems for South Africa more than doubled in June, reaching 13.5%. On the other hand, interest rates in Egypt and Kenya dropped by 1% and 3%, respectively. Renewables Rising tracks this data for select products in local currencies in various countries and updates data on a monthly basis.

• Our data reflects the financing cost charged by companies providing loans, which includes but is not limited to banks operating in these markets.

• South Africa continues an upward trend in the cost of financing that started in April. At the same time, the average loan amount also dramatically increased from ZAR 169,325 to ZAR 243,530 in June.

More details

• The solar home system market is expected to expand at a 24.5%  compound annual growth rate between 2024 and 2029, primarily driven by accessible financing options across the globe.

• South Africa’s consecutive increase in financing costs is due to rising demand for solar following the 12% electricity tariff hike that took effect in April. This price pressure has been compounded by expected increases in import duties on solar equipment, which raise upfront costs for suppliers and consumers. Additionally, ongoing load shedding and grid instability have pushed more households and businesses to seek solar solutions. 

• Kenya’s average cash price remained stable at 12,900 KES between May and June, but the average total loan decreased modestly from 20,626 KES to 20,127 KES. This marks the second consecutive month of declining total financing after a significant 9% drop in May, largely driven by intensified competition among pay-as-you-go (PAYGo) solar providers, which has pushed down markups and improved affordability for consumers.

• The average total loan amount in Egypt decreased notably by 331 EGP. This drop suggests improved financing terms or lower fees, making solar home systems more affordable for consumers. Egypt’s aggressive renewable energy projects, including large-scale solar farms and hybrid plants, are likely driving down costs and increasing market competition, contributing to this unique price movement among the three countries.

• Overall, Africa’s home system market is expected to vary by 2026 as governments actively prepare and implement new policies and incentives such as tax rebates, net metering, streamlined regulations, and financing innovations that will improve solar home system financing accessibility and affordability.

Our take

• South Africa’s solar home system landscape will probably continue rising in the face of the recent tariff hike as well as policy uncertainty ahead of major regulatory changes expected in 2026. 

• Kenya’s competitive PAYGo market continues to drive down financing costs, demonstrating how market dynamics can improve affordability and expand access.

• Egypt’s price reductions highlight the positive impact of large-scale renewable projects and improved financing terms, and the importance of integrated policy and investment strategies to lower costs and boost solar uptake.