Bodies corporate, HOAs & complexes

Why estates almost always end up on a PPA

Your levy already pays for electricity. This replaces part of that line item — with no capital, no special resolution, and no trustee liability.

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.

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

Three problems that rule out every other model

This is not a preference, it is structural. A body corporate or HOA runs into the same three walls every time.

No meaningful tax liability. Section 12B is worth nothing to you — and in a PPA the provider owns the asset and claims it, which is part of how the tariff gets competitive in the first place.
No balance sheet. Bodies corporate hold reserve funds, not equity. An asset financier is being asked to underwrite something that does not exist.
Governance friction. Debt typically needs a special resolution and member approval — an AGM, a vote, and trustees personally exposed to a decision that outlasts their term. A PPA is an operating expense against the levy, usually within the trustee mandate already.

The third one is why PPAs win

Even where ownership would be cheaper across twenty years, the governance argument closes the deal and the financial one does not. Trustees are volunteers with a term. Asking them to sign for two decades of debt is a different conversation from asking them to change an electricity supplier.

What these systems actually look like

Published Decentral Energy projects give a sense of scale — and of storage ratio.

Norwood Garden Village, Johannesburg — 373 kWp with 942 kWh of storage
The Junction Village, Pretoria — 600 kWp with 780 kWh
Erinvale Golf Estate, Somerset West — 133 kWp with 340 kWh BESS

Norwood runs 2.5 kWh of battery per kWp

That ratio tells you what these are: outage-resilience builds, not bill-reduction builds. If someone sizes your estate on a bill-reduction ratio, they are solving a different problem from the one your residents complain about.

Ask these before you take it to trustees

Get every one of them answered in writing. The escalation rate especially: PPA escalations in this market commonly run 5% to 10% a year, and at 7% the payment roughly doubles over ten years. If a trustee finds that in the contract rather than in your presentation, you lose the deal and the referral.

The contract term, and the annual escalation rate
The exit and buy-out schedule, year by year
What happens when a unit is sold
Metering — a body corporate reselling electricity to members raises municipal supply and metering questions
Who carries operations and maintenance, and what response times apply
What happens at the end of the term

Water security, on exactly the same argument

The three walls that push an estate onto a PPA for electricity push it the same way on water. No tax liability to shelter, no balance sheet to lend against, and trustees who cannot easily sign for two decades of debt.

A Water Purchase Agreement mirrors the PPA structure: a funder owns the borehole, storage and treatment plant, and the estate pays for the water delivered. It is an operating expense against the levy, which usually means it sits inside the existing trustee mandate rather than needing a special resolution. Terms run up to ten years.

Boreholes and pump systems, where municipal supply is unreliable
Storage and reticulation across the estate
Filtration and treatment, including reverse osmosis
Greywater and reuse systems for irrigation and common areas

Doing both at once is usually cheaper

Water and power on the same agreement means one provider, one set of contract terms for trustees to work through, and one negotiation on escalation. Two separate processes a year apart means running the whole governance exercise twice.

Ask the same six questions of the water agreement that you ask of the power one. The escalation rate matters just as much.

Good questions.

Can we do water on the same basis as the solar?

Yes. A Water Purchase Agreement works the way a PPA does — the funder owns the borehole, storage and treatment plant, and the estate pays for the water delivered as an operating expense against the levy. Terms run up to ten years.

Should we do power and water together or separately?

Together, if the need for both is real. It is one provider, one contract for trustees to work through and one escalation negotiation, rather than running the entire governance exercise twice a year apart.

Do we need a special resolution?

Usually not for a PPA, because it is an operating expense rather than debt — which is the main reason it clears where financing does not. Check your own management rules; we will not tell you your governance position.

Can the body corporate claim Section 12B?

No. The allowance offsets taxable income, and a body corporate has little or none. In a PPA the provider owns the asset and claims it, which is reflected in the tariff you are quoted.

What happens when an owner sells their unit?

The agreement sits with the body corporate, not the individual owner, so it carries on. Get the specific wording from the provider in writing before signing.

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