Access to financing is emerging as a major constraint for commercial and industrial businesses seeking to deploy distributed solar across Africa.

According to ESI Africa, about 80 per cent of distributed solar capacity on the continent serves commercial and industrial customers.

Speaking during a webinar, Editor-in-Chief of ESI Africa, Nicolette Pombo-van Zyl, said the financing structure of solar projects was becoming as important as system design and expected electricity generation.

She said businesses needed to assess project economics, risk allocation, cash flow and implementation timelines when considering solar investments.

Pombo-van Zyl said the availability of capital did not necessarily mean projects would secure financing, as developers and businesses still had to meet lenders’ requirements.

Commercial solar projects can be financed through power purchase agreements, leases, bank loans or upfront capital investment. Each model carries different implications for project costs, cash flow, risk and operational responsibility.

Pombo-van Zyl said the choice of financing model should reflect a company’s cash flow and risk appetite, as well as its willingness to retain or transfer operational responsibilities.

She identified upfront cost as a major hurdle for businesses considering solar installations.

The financing issue comes as businesses increasingly turn to distributed generation to manage electricity costs and reduce exposure to unreliable grid supply.

For commercial and industrial users, the choice of financing structure can therefore affect whether proposed solar projects progress from planning to implementation.