Watts & Rands: How Renewable Energy Projects Get Financed and Built

Understanding the people, processes, and partnerships behind clean energy deals.

Renewable energy is often seen as clean, green and endlessly flowing, and while the sun and wind are free, the infrastructure to harness them is not. Behind every solar or wind farm lies a complex financial engine that ensures the project is bankable, sustainable, and ultimately delivers power to businesses.

This blog unpacks the basics of renewable energy finance, who’s involved, how deals are structured, what risks are considered, and how companies like SOLA make it all happen.

What is Renewable Energy Finance?

Renewable energy finance is the system of funding and structuring the development, construction, and operation of clean energy projects, such as solar PV farms, often through long-term agreements with electricity buyers.

Because building a solar farm can require billions of rands in upfront capital, these projects typically rely on third-party investors, banks, or development finance institutions to provide funding. The return on their investment is secured through Power Purchase Agreements (PPAs), legally binding contracts with energy buyers, usually businesses or government entities, who commit to buying electricity over a specified period of time (for example, 10 to 20 years).

Who’s Involved?

A successful renewable energy project is a result of collaboration between multiple parties, including:

• Independent Power Producers (IPPs) like SOLA – who develop, build, own and operate the plant.
• Off-takers / Buyers – often large electricity users (retailers, manufacturers, mines) who sign PPAs to buy electricity at an agreed price.
• Financiers – such as commercial banks, green investment funds or DFIs, who provide capital.
• EPC Contractors – responsible for Engineering, Procurement, and Construction of the plant.
• Legal and Technical Advisors – who ensure contracts, permits, and technical feasibility align with regulatory and financial standards.

How a Project Comes to Life

1. Development Phase
   Land is secured, permits are obtained, and resource studies (e.g. solar irradiance and environmental studies) are completed. Early-stage discussions with potential buyers begin.
2. Commercial Close
   A Power Purchase Agreement is signed with an anchor energy buyer (or various PPAs with various anchor buyers). This commitment is critical – it acts as the foundation for raising funds.
3. Financial Close
   Once the PPA is secured, financiers assess the project’s viability. They scrutinise risks, revenue forecasts, and project partners. If satisfied, they release funds.
4. Construction & Commissioning
   The EPC contractor builds the plant. In SOLA’s case, based on the size of the project we may partner with a construction company in a joint venture to construct the project. Once tested and operational, energy starts flowing and payments commence under the PPA.

What Risks Are Involved?

Renewable projects, like any infrastructure investment, carry risks, but with proper planning, these can be mitigated. Here are some key ones:

• Off-taker Risk: What if the buyer can’t pay for the electricity? (Solution: Creditworthy off-takers, financial guarantees, or multiple buyers.)
• Construction Risk: What if the project is delayed or goes over budget? (Solution: Fixed-price contracts with experienced EPCs like SOLA Build.)
• Resource Risk: What if the sun doesn’t shine as expected? (Solution: Use of long-term solar data and conservative performance estimates.)
• Regulatory Risk: What if policy changes impact the project? (Solution: Legal due diligence and aligning with national energy frameworks.)

How SOLA Makes It Work

At SOLA, we’ve built a strong track record of developing, financing, and delivering renewable energy projects across Southern Africa. As an Independent Power Producer (IPP) and EPC contractor, we manage the full lifecycle, from site development and PPA negotiations to construction and long-term operations and maintenance.

Some examples of successful projects include:

• Amazon’s solar power plant in the Northern Cape, where SOLA financed and built the first 10MW facility that wheeled energy across Eskom’s grid to power its data centers (the first wheeling project in South Africa).
• The Selemela Solar Park (256MW) which was Africa’s largest corporate renewable energy Power Purchase Agreement awarded at the time with a private offtaker, and the largest renewable energy project in South Africa with a Wheeling Agreement.
• Our portfolio of over 2750MW of utility renewable energy projects developed and over 370MW in operations, many of which are financed via long-term PPAs with industrial and commercial buyers.

By combining deep technical expertise with a strong network of financial and legal partners, we help buyers access affordable, reliable, and clean power – without the headache of navigating the project finance maze.

Why It Matters

Understanding how renewable energy projects are financed empowers more businesses and municipalities to take climate action. By committing to PPAs, buyers not only lock in predictable electricity prices – they also support the development of a greener energy system in South Africa.

At SOLA, we’ve simplified the financing and procurement process by offering wheeled energy through a flexible Power Purchase Agreement (PPA). This means that businesses no longer need to develop their own solar projects or navigate complex financing structures – instead, they can access clean, affordable energy generated by SOLA’s solar plants and delivered via the national grid.

Furthermore, in 2025, Eskom announced the implementation of Virtual Wheeling, which empowers multiple generators and off-takers  to conduct electricity transactions with even greater efficiency, enabling businesses to acquire clean energy while offering a flexible and scalable approach to energy procurement.

With options for both short- and long-term contracts, buyers can choose a solution that matches their energy needs and budget, all without capital outlay. It’s a game-changing model that opens the door for more businesses to transition to renewables with ease, and no upfront infrastructure costs.

Have questions or want to explore energy solutions for your business? Visit our Buy Energy page or get in touch with our team.