How you can make money from solar panels in South Africa

Financial services provider, FedGroup, says it aims to disrupt the traditional approaches to wealth creation with the launch of its direct ownership network which enables clients to own and generate an income from solar panels.

Unlike traditional wealth creation approaches, where money is invested, this model involves the ownership of a physical asset to generate income.

The first project under this banner was officially launched on 8 November 2016 and enables customers to own one or more solar panels that form part of a larger solar facility, located on the roofs of commercial and industrial buildings.

The panels can be purchased on FedGroup’s online platform and are then installed on suitable sites, with the owners receiving a monthly rental income based on the power generated by the panels.

FedGroup said it then collects and pays over the rental income to the panel owners.

The direct ownership network operates on the peer-to-peer model, where the landlords of sites, the providers and installers of the solar panels, and those wishing to own the panels are connected.

“FedGroup is always looking to implement the latest technology to drive down fees and maximise returns for our clients,” said Grant Field, CEO of FedGroup. “Through the use of technology, we are able to actively track the performance of the panels, which translates into money generated for the owner.

“Our pilot project indicates that panel owners can expect to receive an internal rate of return on the purchase price in excess of 11% per annum, over the 20-year lifespan of the project. Because it is a green project, they can also apply for tax benefits, to further boost their returns. At the end of the 20-year term, owners can take physical ownership of the panel, or sell it back at a guaranteed residual value of R1,000,” he said.

While the buyer owns the asset, FedGroup said it is tasked with the management, maintenance, insurance and optimisation of the panels.

“Because the rental income is calculated according to the performance of the panels, they would produce more on sunny days than on cloudy ones, but the sunny South African climate and our particularly high irradiance levels add to the profitability of this project,” said Field.

“The returns are secured through a contract with the building owner to pay a monthly fee, determined by the amount of electricity generated. The money collected from the building owner every month is then distributed to the owners.”

Owners are able to track the performance of their panels online at any time.

FedGroup said it is also in the process of bringing other direct ownership opportunities to market.