Good news for solar loans in South Africa

South African homes and small businesses can continue benefitting from low-interest bank loans on solar installations until early 2025.

MyBroadband recently reported that National Treasury’s Energy Bounce-Back (EBB) loan scheme was set to expire at the end of August 2024.

The EBB allows participating banks to offer personal and small business customers low interest rates on loans that go towards their solar power system purchases.

National Treasury has provided a guarantee to cover a portion of the loan debt to the South African Reserve Bank (SARB) in the event of default.

The guarantee puts SARB in a position to lend 20% of the loan funding at the repo rate plus a 0.5% once-off charge on the amount disbursed to South African banks.

The condition of the guarantee was that banks would have to offer specialised solar loans with interest rates no higher than the repo rate plus 6%.

The repo rate has been 8.25% since May 2023, so the maximum interest rate at its current level is 14.25%. That is also equal to Prime plus 4%.

National Treasury’s official document explaining how the scheme would function said that it would run for a limited duration until Friday, 30 August 2024, with the goal of reaching 1,000MW of generating capacity.

However, a source close to the matter subsequently explained to MyBroadband that this date was not accurate.

They explained the agreements that the banks signed with the SARB determined that they make the loans available for 18 months.

National Treasury has confirmed that the individual bilateral agreements between the commercial banks and the SARB contained an effective date and an availability period of 18 months from that date.

As the EBB scheme was only launched in August 2023 and banks were onboarded from September to December 2023, the expiry date for customers to take up the loans can be anywhere between February 2025 and May 2025, depending on the bank.

Participating banks and solar loan options

Absa, FNB, Nedbank, and Standard Bank are offering special low-interest loans under the scheme, in addition to other lower cost financing mechanisms like adding a solar installation to your home loan.

FNB and Standard Bank have confirmed their loans will continue to be offered until the end of February 2025.

Absa said it would also support the low-interest loans after August 2024 but did not provide a specific expiry date.

Other banks are also offering special terms for solar loans through alternative mechanisms — including Discovery Bank’s partnership with Rubicon, which provides loans with interest rates as low as 9.75%.

The table below summarises some of the solar loan offers available from major banks — including those that form part of the EBB scheme.

Bank	Interest rate	Payment periods	Maximum value of loan
Absa Bounce Back Solar Loan	Capped at 14.25% (Prime plus 2.5%)	Up to 60 months	R300,000
Discovery Bank with Rubicon	From 9.75% (Prime minus 2%)	Up to 72 months	R300,000
FNB Solar Benefit	Fixed at 12.75% (Prime + 1%)	Up to 66 months	R300,000
Nedbank Avo Solar	11.75% (Prime)	Up to 96 months	n/a
Standard Bank Solar Loan	Capped at 14.25% (Prime plus 2.5%)	Up to 60 months	R300,000

There could be further good news on the horizon for those paying off their solar power systems on credit.

The South African Reserve Bank is expected to cut the repo rate by at least 50 base points by the end of 2024.

That will reduce the repo rate to 7.75% and the maximum interest rate chargeable on EBB-backed loans to 13.75%.

It should be emphasised that the interest rate on a loan backed by the EBB mechanism will not change once the expiry date has passed.

The low-interest loans simply won’t be available to new applicants from March 2025.