As rolling blackout woes continue, thousands of South Africans are turning to solar power. And as businesses jump on the independent energy wagon, opportunities are opening up for savvy investors.

Steve Holdsworth, a semi-retired UK citizen now living in Cape Town, got in on the ground floor with the innovative solar leasing platform Sun Exchange. Investors like him buy solar assets (cells), which are leased out  via “micro leases” to energy consumers, such as Groot Constantia in Western Cape.

Cell owners are paid monthly for electricity generated by their solar cells, and the energy users pay an agreed rate per kilowatt-hour that is lower than the rate they would have paid Eskom.

Leases are for 20 years. Earnings vary from project to project and depend on a variety of factors, including seasons and weather.

Installation costs, insurance and operational costs are covered by Sun Exchange and factored into the economics of projects.

The Sun Exchange platform has a calculator tool to provide estimates on earnings for each project over the 20-year lifespan. Estimated earnings are 10%-12% IRR (internal rate of return), depending on the project.

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For example:

• Groot Constantia, 11.54% IRR;
• Karoo Fresh (Phase 1), includes battery storage: 12.08% IRR; and
• Karoo Fresh (Phase 2), 11.17% IRR.

Holdsworth started buying solar cells via Sun Exchange about three years ago and now owns 47,000 of them. “I looked at my Sun Exchange portfolio and I earn a return of 12% a year, which beats anything I would get from a bank,” he says.

His latest purchase of solar cells is at Groot Constantia, South Africa’s oldest wine-producing farm and a world-renowned tourist destination, where Sun Exchange held a “crowd-sale” for the 165-kilowatt solar plant to power Groot Constantia’s winemaking facilities and restaurants.

Participants bought solar cells at R64 each, with 893 people from 70 countries purchasing all 43,488 cells. Construction starts next month. Groot Constantia will pay cell owners for clean energy for 20 years, via the Sun Exchange platform.

Groot Constantia gets power at lower than standard utility rates, solar cell owners get income and support the estate’s transition to clean energy, and about 4,700 tonnes of carbon emissions are avoided.

Holdsworth followed the popular Fire (financial independence, retire early) movement and retired three years ago at the age of 43, then set up a consultancy company. 

“I have the traditional investment portfolio with UK and South African retirement funds, but also look for opportunities where I can earn returns while also funding something that has good outcomes, such as job creation,” he says.

Groot Constantia has invested significant time and resources into refining responsible wine production practices, with innovations in water use, energy efficiency, climate adaptation and environmental management systems.

“Groot Constantia is a cultural and historical icon and an environmental leader. We’re honoured to be part of their solar power journey,” says Abraham Cambridge, chief executive of Sun Exchange. “This project will set a precedent across South Africa’s wine and tourism industries, demonstrating that transitioning away from fossil fuels is the best decision, not only from a climate perspective but also financially.”

Some cell purchases in South Africa are in bitcoin but 95% are in rands. For the cell earnings, 36% of South African-based cell owners were paid in bitcoin and 64% in rands over the past two years. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R25.