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BT Industrial Group’s new 1MW solar plant highlights Innovative solar financing
Oct 31, 2024 by CathPate
Home » Projects » BT Industrial Group’s new 1MW solar plant highlights Innovative solar financing
South Africa’s ongoing energy crisis, characterised by soaring electricity prices and persistent load-shedding, has driven local businesses to explore sustainable and reliable alternatives. By partnering with the right solar developers, companies can transition seamlessly to solar energy in a financially viable way.
A notable example is the recent completion of BT Industrial Group’s new 1MW solar plant system in Benoni. This project demonstrates how innovative, tailored financing can eliminate the common barriers to solar adoption, ensuring reliable power, reduced electricity costs, and maximised tax benefits.
Energy Crisis Impact and Response
The energy crisis led to operational and financial disruptions at BT Industrial, reducing their productivity by 25%. “To protect our long-term viability, we needed to address the energy uncertainty and the increasing cost of Eskom electricity, which has risen by a compound annual growth rate of 19% over the last four years. This surge almost doubled BT Industrial’s electricity bill from R600,000 to R1,000,000, and with the slated future increases, it’s projected to reach R1.2 – R1.3 million. This is a significant cost increase, squeezing our profit margins, especially in export markets where we cannot pass on these costs to our customers.” says Kgomotso Lekola, Founder and Group Managing Director of BT Industrial Group.
To overcome this, BT Industrial needed a solution that secured energy supply certainty, delivered cost savings, and maximised tax benefits—all without putting undue pressure on its finances.
Finding an optimal financing model
An essential criterion for BT Industrial while choosing the right solar developer was owning the solar asset on their balance sheet without any upfront costs while accessing solar tax benefits. Traditional PPA (Power Purchase Agreement) financing, an off-balance sheet model, did not meet these needs. They also wanted to mitigate performance management risks once the solar plant was operational.
After evaluating several options, they selected a solar financing model from Candi Solar, a leading solar power developer, financier, and operator for the commercial and industrial sectors.
Also Read: Construction of South Africa’s Largest Solar Project Commences
On-balance sheet financing model with no upfront cost
Lekola explains, “We chose Candi Solar’s innovative model, which provided the best value without increasing our financial risk. Candi Solar offered a tailored solution that met all our criteria, including long-term energy cost certainty and full performance management.”
Candi Solar’s innovative PLIS (Performance Linked Instalment Sale) option, an on-balance sheet solar finance model, offered BT Industrial all the financial advantages of a PPA while directly benefiting from the solar tax incentive, making the transition to solar more cost-effective. “The tailored payment structures allowed us to avoid a large capital outlay, ensuring no added financial burden,” adds Richard Flamand, Co-Country Lead for Candi Solar South Africa.
The solar plant, constructed by Nuvo Energy with Changa Energy as project developer, consists of 1,604 solar panels and seven grid-tied inverters, ensuring independence from Eskom. With Eskom proposing further tariff hikes, BT Industrial’s investment in solar will yield significant utility cost reductions. The plant has received approval to export excess electricity back to the grid, which will lead to even greater savings in the future.
Zero-risk, end-to-end solar solutions
BT Industrial Group new solar plant also prioritised a low-risk, comprehensive solar solution. “Candi Solar provides full operational and performance management of the solar system, allowing our team to focus on core business activities,” says Lekola. Candi Solar’s end-to-end solution includes everything from construction to asset maintenance, ensuring ongoing performance and reliability.
“We specialise in highly customised, financially attractive and risk-free solar power solutions that are managed end-to-end, meeting all the criteria companies may require – from business continuity to cost savings and tax optimisation, and from no upfront costs to zero risk,” concludes Flamand. “With 145 successful installations across South Africa and India, we are confident we can provide the right solution to empower our commercial and industrial clients to transition to solar energy with confidence and peace of mind.” |
