We'll be honest...converting your house into a home that is energy efficient and is primarily powered by alternative energy can be pricey in the short term. Yes, it is an investment with long term savings, but the initial outlay is a significant financial commitment. There's a few options available - we can either save, wait for that Christmas bonus or finance a green home project. The last option is becoming increasingly viable for South Africans. As electricity prices increase and the cost of alternative energy products decrease, it's possible for monthly repayments on investments to be offset by electricity savings. We caught up with Tiaan De Jager, the CEO of GreenFin, a company that is making finance for green products possible for South Africans today.
How did the idea for GreenFin start?
We realised that we could help households (1) obtain renewable energy, (2) reduce their reliance on the ever increasing electricity tariffs and (3) structure their repayments to be somewhat similar to what they would have paid electricity for plus have the long term benefits after repayment. Our solution is therefore unique in that we do not require the household to incur any additional upfront costs and in the long run they would actually save money by acquiring green solutions.
We see that GreenFin was only established last year. Can you tell us about this initial period?
The owners of GreenFin have over 20 years combined experience in financial services including secured and unsecured lending, from personal loans to vehicle finance and mortgages. The company Mirrir (Pty) Ltd was established to provide alternative payment solutions to individuals and households for “life enrichment” purposes. Our first product was called MediFin, a company that provides personal loans for procedures that their medical aid does not cover, therefore helping people obtain those desired procedures sooner rather than later. MediFin has been successfully operating for a full year now. GreenFin (launched in October 2013) is based on the same principle in that we want to assist households to obtain alternative energy solutions now in stead of having to save for it over a longer period of time. As GreenFin is based on the same platform, systems and financial backing, we are comfortable that it will work seamlessly.
Do you think finance is the main thing that is holding people back from installing sustainable energy systems in their homes, or is there less interest compared to more developed markets in Europe?
I do not think “finance” as such is the main thing holding people back, as most credit worthy households should be able to easily obtain finance from GreenFin. We believe there are other factors having a bigger impact on South Africa’s historically slow acceptance rate. Many countries around the world have massively subsidized the installations of solar PV panels and geysers and have also put in place more progressive laws for landlords in terms of energy efficiency. For most emerging markets including South Africa the investments have to pay for themselves, like in real electricity savings, and this is only recently started to happen, with product prices coming down and electricity prices raising. Since this year some progressive municipalities allow electricity feed-in of private electricity producers, i.e. Nelson Mandela Bay. For South African households this is a real break through for small PV panels on private houses.
In summary, many home owners in SA do not (1) have the upfront capital and (2) the personal comfort and surety concerning the right quality and warranty of the installation they buy, and both issues GreenFin is solving for them. So yes, we think financing the right product installation is the intelligent choice and with the right incentives by electricity providers we should see a massive drive in solar installations from 2014 onwards.
What is the benefit of financing your green project through GreenFin, as opposed to obtaining a loan from the bank?
Obtaining finance through GreenFin provides a number of benefits:
- Our rates are competitive to that of the banks, PLUS;
- Our application process is online, so there is no need to go to the bank;
- GreenFin only partners with reputable suppliers, distributors and installers (SESSA registered, Plumbing & Electrical certificates AND minimum 5 year warranties on installations);
- GreenFin only finances approved products (SABS approved);
- GreenFin can provide additional services like quality control of installations, before the final amount due is paid.
How do you ensure the quality of your suppliers and installers?
GreenFin has a selective process working only with the high-quality installers, contractors, distributors and products.
- First we look at the financial and professional health of our Partners and whether they have a sustainable business because our financing has normally a 5 year term and we need our partners to ensure the warranty period.
- Second we check on their quality, from management over artisans to the processes - good long-term references are therefore very important to us. SESSA registration is a pre-requisite.
- Thirdly, we analyse the products our partners are deploying - we only work with partners who use top quality and reliable products which produce the results for the customers. SABS- and other industry specific certifications are a pre-requisite.
- Fourth, we do insist on a high level of service, especially after the installation, when customers expect a high amount of responsiveness and reliability. We also monitor the service levels and reputation of our suppliers through electronic means.
- All together the financing through GreenFin does provide more advantages for households and landlords over time.
What are the most common sustainable energy systems that you finance?
We finance a wide variety of solutions as every household’s requirements differ. As we are relatively young in this space, we have not built up a large enough client list to identify the general trend.
We prefer to finance solar systems up to R250,000 which have a payback period for the customer in terms of energy savings of around 5 years.
Normally these are solar gysers, but we see also solar PV panels coming into this efficiency range in the coming years. As we finance the entire installation, this could include a number of different products, including the obvious solar geyser
, but also LED lighting
, double glazed windows and other energy savings products.
We are supplier/ manufacturer neutral, but insist on national standards and registrations, and on high quality and reliability.
Do you assist in the application process for receiving an Eskom rebate?
GreenFin can refer clients to suppliers who specialise in this field, as we maintain our approved/ recommended suppliers/ installers database. These approved GreenFin Service Partners will help our clients with the rebate applications. We try to offer a complete service package for our clients, so that they always feel well supported and guided.
Do you advise on the most appropriate alternative energy systems for households in terms of energy efficiency?
As GreenFin focuses on the client and his finance needs, we just cannot keep up with all the new developments in the renewable energy market, but our qualified partners regularly share their expertise and experience with us and we amend our policies and approved products accordingly. Also GreenFin has started to work with universities and other top qualified bodies to insure the utmost service and quality for its clients.
In a household that uses around 45khW per day, how long would it take to pay back a R14 000 hot water system at a monthly instalment that is the same or very similar to the current electricity bill of that household? (or if you have a similar calculation that would illustrate the monetary savings over a period of time).
This can get quite technical as a R14,000 installation could mean a number of things, especially where different panels and inverters are used from different suppliers, as well as the quality of the installation, the size of the geyser and other more technical components. In general, a R14,000 installation could mean it is either for smaller sized geysers (+-100 L) or from less recognised and accredited suppliers. A decent 200 L system installed will cost between R25k and R35k, However, using a number of assumptions and annual averages experienced in the local industry, we can roughly make a comparison as follows:
Based on your assumption that the daily usage is 45kWh per day, the client would be in the domestic tariff (using a pre paid meter). Over 600 units he would pay R 1,73 (incl. VAT) per kWh.
Lets also assume only 10kWh of the 45kWh daily usage is used to heat the geyser, a good solar system could cover 80% of that. Very important here is that the solar system is sized correctly to the size of the geyser. If it is too small your savings will not be 80%. Therefore the yearly electricity saving would be R 5,052. (10kWh x 365 days x R1,73 x 80%)
Assuming the household qualifies for a 17% interest rate, the monthly loan repayment over 60 months of a R14,000 installation, including service fees, would be R423 (R5,076 per year).
Theoretically then, the finance portion could mirror a portion of a household’s monthly electricity bill but the real savings only start once the finance has been repaid.
As the above example is based on a number of assumptions that will differ from household to household and installation to installation, we do recommend households to consult with one of our approved suppliers and do their own proper research. With a quality product and installation, it makes environmental en economic sense to move to renewable energy solutions sooner rather than later.
For more information about GreenFin
and their services please visit their site. Also remember that before converting to alternative energy, households need to conserve and save energy by having an energy efficient home. This should start with the small steps that we are all familiar with, like switching off lights or putting geysers on timers, but they're necessary first steps to lowering the carbon footprint of your home.