Farmers & agribusiness

Solar funding for South African farms

Agriculture is the one sector with a live, open-ended government grant for on-farm energy. Here is what it pays, who it takes, and what to do if it will not take you.

Agro Energy Fund

Land Bank / DALRRD

A blended facility for commercial farmers: part of the project cost as a grant that is never repaid, the balance as a Land Bank term loan.

Grant 30% to 70% of project cost, capped at R500,000 to R1,500,000 by producer category

Market related, set by Land Bank on its cost of funds

Land Bank switchboard:: 012 686 0500
Land Bank toll free:: 0800 00 52 59
General enquiries:: info@landbank.co.za

Blended Finance Scheme

Funding constrained

Land Bank / DALRRD

Blended grant and loan funding for black agricultural producers, covering production and infrastructure including energy.

Land Bank switchboard:: 012 686 0500

Khula Credit Guarantee

SEDFA

A guarantee that stands in place of collateral with a partner lender. It rescues deals declined on SECURITY rather than affordability — which most borrowers never think to ask for.

Every route open to you.

The same questions answered for each one, including the ones that rule it out. Anything not listed here is missing because this kind of business structurally cannot use it.

Agro Energy Fund (grant + loan)

Part grant that is never repaid, part Land Bank term loan, as one facility.

Term: 3, 5, 7 or 10 years, repaid monthly, quarterly, six-monthly or annually in arrears
Rate: Market related, set by Land Bank against its own cost of funds
Deposit: None — the grant takes the place of one
Ownership: You, from day one
Time to funding: Two to six months
Water as well as energy: No. It funds the energy asset only and cannot pay for irrigation infrastructure
Tax: Section 12B applies because you own the plant. Whether the grant portion reduces the deductible base is unresolved — we show it conservatively and label it unconfirmed
Carbon / I-RECs: Yours
Who qualifies: Commercial farmers with at least 80% of income from farming, on land they own or hold under a lease running at least as long as the loan
Who it excludes: Part-time farmers, government and SOE employees within a 24-month cooling period, politicians within 12 months, distressed producers, off-farm processors, refinancing of an existing system, and anyone who has already used another government energy programme

Worth knowing up front. One application per applicant, ever. Spend it on the right project rather than the first one — and note the grant percentage stops growing once the rand cap binds.

Blended Finance Scheme

Grant plus Land Bank loan for black agricultural producers.

Term: Set on assessment
Rate: Market related
Deposit: None
Ownership: You
Time to funding: We will not put a number on it — see the warning
Water as well as energy: Follows the underlying project
Tax: Section 12B on the portion you own
Carbon / I-RECs: Yours
Who qualifies: Black agricultural producers
Who it excludes: Non-agricultural applicants

Worth knowing up front. Parliament flagged funding shortages, delayed disbursements and over-commitment in June 2026 — roughly R1.5bn a year needed against R613m allocated for 2026/27. It is a real programme; be wary of anyone quoting you a timeline.

Asset finance

A term loan against the plant. You own it, and you owe for it.

Term: 3 to 7 years
Rate: Prime +1% to +4%, set by covenant strength and term
Deposit: Nil to about 10%
Ownership: You, from day one
Time to funding: Days to weeks
Water as well as energy: Yes — boreholes, storage, filtration, treatment and reuse fund on the same facility
Tax: Section 12B: 100% of qualifying cost deducted in year one, up to 1MW. Water equipment is not a 12B asset and falls under ordinary capital allowances instead
Carbon / I-RECs: Yours. You own the plant, so the I-REC or carbon benefit is yours to keep or sell
Who qualifies: Any trading entity with the cash flow to service it and something to secure it against
Who it excludes: Entities with no balance sheet to lend against — bodies corporate and HOAs — and businesses with no taxable income, for whom the allowance is worth little

Worth knowing up front. Declined on security is not the same as declined on affordability. The first can be fixed with a guarantee; the second cannot.

Rental

You rent the plant. The funder owns it and maintains it.

Term: 3 to 7 years
Rate: Embedded in the rental — quoted as a rand figure, not a rate
Deposit: None
Ownership: The funder, for the whole term
Time to funding: Days to weeks
Water as well as energy: Yes, on the same basis as energy
Tax: No Section 12B — you do not own the asset. The rental is generally deductible as an operating expense instead
Carbon / I-RECs: Usually the funder, as owner. Worth asking for explicitly if it matters to you
Who qualifies: Businesses that cannot or do not want to carry the asset on the balance sheet, and anyone with no taxable income to point an allowance at
Who it excludes: Nothing structural — but it costs more in total than owning

Worth knowing up front. Maintenance sits with the funder for the term, which is worth real money on a remote site. Insurance does not — you arrange that yourself.

Rent-to-own

A rental that ends with the plant becoming yours.

Term: 3 to 7 years
Rate: Embedded in the instalment
Deposit: None
Ownership: The funder during the term, you after the buy-out
Time to funding: Days to weeks
Water as well as energy: Yes
Tax: No Section 12B during the term. The position changes at buy-out, when you become the owner of a depreciable asset
Carbon / I-RECs: The funder during the term, you after buy-out
Who qualifies: Anyone who wants ownership eventually but not the capital event now
Who it excludes: Nothing structural

Worth knowing up front. The buy-out is typically around 10%. At that moment maintenance becomes your problem and your tax position changes — model it before you get there.

PPA

You buy the electricity, not the system.

Term: 10 to 20 years
Rate: Embedded in the tariff, with an annual escalation
Deposit: None
Ownership: The provider, throughout
Time to funding: Weeks
Water as well as energy: Yes — the same structure exists for water as a Water Purchase Agreement, up to 10 years
Tax: No Section 12B for you. The provider owns the asset and claims it, which is part of how the tariff gets competitive. Your payments are deductible the way a municipal account is
Carbon / I-RECs: The provider, as owner
Who qualifies: Anyone with no capital, no tax appetite or no balance sheet — and bodies corporate, for whom it is usually the only workable structure
Who it excludes: Nothing structural, but it is the most expensive route across twenty years

Worth knowing up front. The escalation rate is the number that decides this deal. This market commonly runs 5% to 10% a year, and at 7% the payment roughly doubles over ten years. Get it in writing before you present it to anyone.

Water finance / WPA

The same structures applied to water: buy the equipment, or buy the water it delivers.

Term: Up to 10 years
Rate: Embedded, or priced as ordinary asset finance if you are buying
Deposit: None on a Water Purchase Agreement
Ownership: You if financed, the funder under a Water Purchase Agreement
Time to funding: Days to weeks
Water as well as energy: This is the water route — boreholes, pumps, storage, reticulation, filtration, treatment, reverse osmosis, greywater and reuse
Tax: Not Section 12B. That is an energy allowance; water equipment falls under the ordinary capital allowance rules for plant and machinery
Carbon / I-RECs: Not applicable, though a reduced pumping load changes the energy side
Who qualifies: Any site where water supply or quality is a constraint — and it can be bundled with the generation that runs it
Who it excludes: It cannot be funded inside the Agro Energy Fund, which covers the energy asset only

Khula Credit Guarantee

Not a loan. A guarantee that stands in place of collateral with a partner lender.

Term: Follows the underlying facility
Rate: Follows the underlying facility
Deposit: Follows the underlying facility
Ownership: You
Time to funding: Follows the underlying facility
Water as well as energy: Follows the underlying facility
Tax: Follows the underlying facility
Carbon / I-RECs: Yours
Who qualifies: Any SMME declined for want of security rather than affordability
Who it excludes: Deals that fail on affordability — a guarantee does not improve cash flow

Worth knowing up front. Approvals roughly tripled to about R1.39bn in 2024/25 and most borrowers still never think to ask. If a bank declined you, find out in writing which decline it was.

The Agro Energy Fund, in plain terms

A R1.21bn blended facility — R500m of DALRRD grant money alongside R710m of Land Bank lending. Part of your project cost arrives as a grant you never repay; the rest is an ordinary Land Bank term loan.

It has no fixed closing date. It runs until the money is fully drawn down, which makes it first come, first served rather than window-based.

What the grant is worth

Your producer category comes from a three-year average of turnover in your annual financial statements — not the latest year alone. Two years trading uses a two-year average; one year uses that year.

Smallholder, R50,001 to R1m turnover — 70% of project cost, capped at R500,000
Medium scale, R1m to R10m — 50%, capped at R1,000,000
Large scale, R10m to R50m — 30%, capped at R1,500,000
Mega commercial, above R50m — 30%, capped at R1,500,000

The cap matters more than the percentage

The percentage only runs until the rand cap binds. A medium-scale producer draws 50% — but past R2,000,000 of project cost the grant stops growing at R1,000,000 and every further rand is loan. So a R2m project gets 50% and a R4m project gets 25%.

Sizing the system around your cap is usually worth more than negotiating the rate. The smallholder cap binds at R714,286 and the large-scale cap at R5,000,000.

The trust-owns-the-land structure

A trust holding the land while an operating company farms it is the normal South African arrangement, not an edge case, and it works. The operating company applies and is categorised on its own turnover; a written lease from the landowning entity proves access to land.

Two things it triggers. Because the system is affixed to property the applicant does not own, it would ordinarily accede to the landowner by operation of law — a written non-accession agreement is the standard cure, drawn by your attorney, not by us. And where the landowning trust stands surety, that needs express authority in the trust deed plus a trustee resolution; plenty of older family deeds do not permit it.

If the lease is informal or verbal — very common — one has to be drawn and signed at an arm’s-length rental before submission. Budget two to three weeks. We ask about it at prequalification rather than at document collection so it does not ambush you at the end.

Who it will not take

Stated honestly, because these are worth knowing before you spend three weeks on a business plan.

Under 80% of your income from farming, whether or not a farm manager is in place
One application per applicant, ever — there is no second bite
No refinancing, debt takeover or settling a system you already have
Leased land where the remaining tenure is shorter than the loan term
On-farm activity only: off-farm processors and industrialists are excluded, though on-farm processing qualifies

Excluded is not finished

Failing an Agro Energy Fund gate changes the structure, not the project. Asset finance has you owning the plant in days to weeks with the full Section 12B claim. A PPA needs no capital at all and is the route for a part-time producer, a short lease, an application already used, or a system you want to refinance.

How long it takes

Two to six months depending on complexity. It is a grant-backed facility with a full credit assessment behind it and a substantial document pack. If the system has to be in before the season, start now or take a faster structure and keep your one application for the next project.

Water and power are usually the same problem

On most farms the pump is the load. Sizing generation without looking at the pumping schedule it has to carry is how systems end up wrong in both directions — oversized for the winter, short for the irrigation season.

Water infrastructure finances on the same terms as energy, through the same panel, on one credit assessment and one instalment.

Boreholes and pump systems
Storage and reticulation
Filtration and treatment plants
Reverse osmosis and desalination
Greywater and reuse systems

The grant will not pay for your irrigation

The Agro Energy Fund funds the energy asset. It is not there to pay for irrigation infrastructure, and a bundled water-and-power package does not fit inside it.

So there is a real choice to make. Take the grant on a pure energy project and move in months, or bundle water and power on asset finance or rental and move in weeks. Sometimes the answer is both, sequenced — the energy project through the grant, the water package running alongside it on ordinary finance.

Good questions.

Can the Agro Energy Fund pay for my irrigation system?

No. It funds the energy asset. Pumps, pivots, boreholes and reticulation have to be funded another way — which is straightforward on asset finance or a rental, just not inside the grant.

Can I finance water and solar on one deal?

Yes, outside the grant. One quote, one credit assessment, one instalment, and the generation sized around the pumping schedule it actually has to serve. It is usually how a farm should do it.

How does Land Bank decide my producer category?

A three-year average of turnover from your latest annual financial statements where you have traded longer than three years. Two years trading uses a two-year average, one year uses that single year. Turnover below R50,000 or a greenfield operation is assessed with Land Bank’s own tools rather than the published table.

Can I apply twice?

No. One application per entity or applicant, ever. It is worth thinking about whether this project or a later, larger one is the better use of it.

I lease my land. Does that stop me?

Not by itself. Land Bank requires tenure at least as long as the loan, so a lease shorter than the term must be extended or the term shortened. You will also need a non-accession agreement, because the system attaches to land you do not own.

Can a trust apply?

The published criteria neither include nor exclude trusts — the machinery is written around directors, and a trust has trustees. Family farming trusts are everywhere in South African agriculture and Land Bank lends to them in its ordinary book, so the realistic expectation is yes. That is an expectation, not a published position, and we confirm it with a relationship manager before you spend money.

Find what you qualify for →

Two minutes, free, and non-binding. Every answer carries a route, including the ones that rule a programme out.

Before you rely on any of this

ArkFlow is not accredited by, empanelled with, or appointed as an agent of Land Bank, the IDC, DALRRD, the Department of Tourism, SEDFA or the NEF. Government and DFI programmes are applied for by you. We help you prepare and submit; you remain the applicant.

ArkFlow is not a financial services provider and does not give financial advice, and is not a registered tax practitioner. Nothing on this page is a quote, an offer of finance, an approval, or a recommendation to enter into any credit agreement.

Programme terms, grant availability and application windows change without notice. Figures shown are indicative and depend on the administering institution’s own assessment and on funds available at the time. Where a programme runs in windows we will not describe it as open unless a current window is confirmed.