Solar PPA vs EPC Purchase: Which Is Right for Your South African Business?

One of the first questions most South African business owners ask when exploring solar is: should we buy the system outright, or use a Power Purchase Agreement (PPA) where we pay nothing upfront?

Both are legitimate structures — but they are suited to different business situations, and choosing the wrong one can cost you significantly.

This guide explains both models in plain language and helps you determine which is the better financial decision for your specific circumstances.

What Is a Solar EPC Purchase?

An EPC (Engineering, Procurement and Construction) solar purchase is the conventional model: you pay for the solar system outright — typically R1.5M to R12M depending on system size — and you own the equipment immediately. From Day 1, you receive all the electricity the system generates at zero marginal cost. The Section 12B tax deduction applies in full in Year 1. After the payback period (typically 3.5–5 years), the system generates pure financial return for the remaining 20+ years of its life.

What Is a Solar PPA?

A Power Purchase Agreement (PPA) is a long-term (typically 20-year) contract under which a solar company — in this case, Panyanru Solar — installs and owns a solar system on your premises at zero cost to you. You purchase the electricity the system generates at a fixed tariff, guaranteed to be below your current Eskom rate. Panyanru Solar maintains and insures the system for the full PPA term.

When EPC Purchase Makes More Sense

The EPC purchase model delivers the highest financial return over the life of the system because you capture 100% of the electricity savings rather than sharing them with the PPA provider. EPC is the right choice when: you have available capital or can access finance at competitive rates; you own the property; your credit profile enables you to access good loan terms; or you want to maximise the Section 12B tax deduction.

When a PPA Makes More Sense

The PPA model is the right choice when: your business prefers to allocate capital to core operations rather than infrastructure; you lease rather than own your premises (with sufficient lease remaining); or you want certainty — a guaranteed electricity price for 20 years with no maintenance risk, no equipment responsibility, and no capital outlay.

Both models produce meaningful electricity cost savings. The question is not whether to go solar — at current tariff levels, the answer is almost always yes. The question is which financial structure best matches your business's circumstances.

Panyanru Solar offers both EPC purchase and PPA structures. Our engineers will model both options for your specific situation as part of the free energy assessment, so you can make an informed decision with real numbers.