Extended Lifeline for Green Energy: SA Solar Loan Scheme Now Valid till 2025

South Africans eyeing solar power for their homes and businesses have a reason to celebrate as the National Treasury's Energy Bounce-Back (EBB) loan scheme's availability has been extended. What was initially set to expire in August 2024 will now serve the public until the end of February 2025.

This initiative, in collaboration with participating banks, encourages the uptake of solar technology by offering consumers affordable financing options for solar system installations. The scheme supports personal and small business customers through low-interest loans, with National Treasury underwriting a part of the potential loan default risk.

With the backing of the National Treasury, the South African Reserve Bank (SARB) offers 20% of the loan funding at a preferential rate – the repo rate plus a 0.5% once-off fee. The guarantee from the Treasury mandates that banks must provide solar loans at no more than the repo rate plus 6%. Based on the current repo rate of 8.25%, the maximum interest cap is set at 14.25%.

Originally, the scheme aimed to bolster 1,000 MW of generating capacity, set to cease come August 2024. However, a reshuffle in dates was disclosed by an inside source—revealing that the signed agreements between banks, Treasury, and SARB stipulate an 18-month tenure for loan availability, counting from the EBB's launch in August 2023. Thus, the extended timeframe allows for applications up till February 2025.

To date, Absa, FNB, Nedbank, and Standard Bank have onboarded the scheme, presenting specialized solar loans. Additionally, other creative financing options such as attaching solar installation costs to a home loan are available. Discovery Bank is also offering competitively low rates through its affiliation with Rubicon.

An anticipated cut in the repo rate by the SARB could further sweeten the deal for borrowers. A projected reduction by 50 basis points would bring the maximum rate down to 13.75%. It is important to note that rates on existing EBB-backed loans will remain unaffected after the scheme's expiry.

The extension of the EBB scheme is a positive affirmation of South Africa's commitment to sustainable energy practices. Interested parties should seize this opportunity before the new expiry date and invest in a greener future for themselves and the environment.