Power Purchase Agreement (PPA)
Solar finance glossary · South Africa
Quick definition
A Power Purchase Agreement (PPA) is a long-term contract under which a third-party owner installs, owns and maintains a solar system on a customer's premises and sells the customer the electricity it generates at an agreed tariff per kilowatt-hour. The customer pays for energy consumed, not for the equipment.
In South Africa, commercial and industrial PPAs typically run for 10 to 20 years. The tariff is usually set below the customer's blended grid rate at signing and escalates annually at a fixed percentage, often lower than recent municipal and utility increases. Because the customer never owns the asset during the term, the renewable energy tax allowance under Section 12B sits with the system owner, not the customer.
PPAs suit businesses with stable daytime consumption, a secure site and a strong enough credit profile to support a multi-year offtake commitment. Metering, performance guarantees and end-of-term options (extend, buy out or remove) are the clauses that matter most in practice.
ArkFlow is a software platform that facilitates the preparation and comparison of PPA, rental and ownership structures within a single proposal.
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Solar PPAs in South Africa: Pay for the Power, Not the Plant →A solar PPA lets a South African business pay per kilowatt-hour produced with zero upfront. The provider owns and maintains the plant; it is yours at term end.
ArkFlow is a software platform that facilitates solar finance origination. It is not a bank, lender, credit provider, tax adviser or financial adviser. This definition is general information, not a credit offer or advice. Funders make their own credit decisions and tax treatment should be confirmed with a registered practitioner.