The upfront price is often the biggest barrier to solar. There are three common ways to pay for it, and each changes who carries the cost, the risk and the savings. The example below uses the 5 kW home system from our solar payback article: KES 520,000 installed, saving about KES 133,000 in the first year, or about KES 11,100 a month.
Option 1: pay cash
You pay the full price and keep all the savings.
- Monthly saving: about KES 11,100 from the first month.
- Payback: about 4 years on honest assumptions.
- Best for homes and businesses with savings or cash flow to spare. Over the system's life it gives the largest total saving.
Option 2: take a loan
Banks, SACCOs and some suppliers offer solar or asset finance. The interest rate and term decide whether the monthly repayment is above or below the monthly saving. With an example rate of 16% a year:
| 3-year loan | 5-year loan | |
|---|---|---|
| Monthly repayment | about KES 18,300 | about KES 12,600 |
| Monthly saving (first year) | about KES 11,100 | about KES 11,100 |
| Net cost per month during the loan | about KES 7,200 | about KES 1,500 |
| Total repaid | about KES 658,000 | about KES 759,000 |
A longer loan brings the repayment close to the saving, so the system almost pays for itself from the first month, but the interest adds to the total cost. After the loan ends, the full saving is yours for the rest of the system's 20 to 25 years.
Option 3: a power purchase agreement (PPA) or lease
A solar company installs and owns the system on your roof, and you pay for the energy it delivers at an agreed rate per kWh, usually below the KPLC rate. You pay nothing upfront.
For example, if the home used 4,900 kWh of solar a year at a PPA price of KES 18 per kWh instead of KPLC's KES 28.30, it would save about KES 50,000 a year, about KES 4,200 a month, with no investment and no maintenance responsibility. PPAs are more common for businesses, schools and institutions with larger, steady daytime loads.
Comparing them
| Cash | Loan | PPA or lease | |
|---|---|---|---|
| Upfront payment | Full price | Deposit, sometimes none | None |
| Saving in the early years | Highest | Low or negative | Moderate |
| Saving over 20 years | Highest | High | Lowest |
| Maintenance responsibility | Yours | Yours | Usually the provider's |
| Main risk | Equipment failure | Interest rate, repayments | Contract terms, price escalation |
Questions to ask before signing
- Loans: the real annual interest rate including fees, whether the rate is fixed, the penalty for early repayment, and whether the system is the only security.
- PPAs and leases: the price per kWh and how it rises each year, the contract length, the minimum purchase, what happens if you move or sell the building, who insures the equipment and the buyout price.
- For all: the exact equipment and warranties, as in how to compare solar quotes.
Work out your numbers
- Get a first estimate of size and savings from your bill in the free solar calculator.
- For businesses and institutions comparing ownership with a PPA, StimaPulse sets the options side by side with every assumption visible; request an assessment.