In my opinion, 5kWh is too low a limit, but “it’s always been that way” is the worst possible justification for anything. Reforms can be made precisely because the current situation is desired to be changed. If, in the future, people keep the sauna + electric heating on less at the same time, networks can be dimensioned for a slightly lower capacity, which saves resources.
The biggest problem here is that electricity grid companies have been privatized. The electricity grid should be a public service, and all fees should be dimensioned to cover the maintenance and improvement work of the grid, but without needing to make a profit. Then, in my opinion, a power charge would be purely a good thing, because it can optimize network usage and save common resources, which would enable a reduction in the general transmission fee. In the current system, it remains very unclear whether even a smart system generates savings for consumers or society, or if everything goes into the pockets of the grid companies’ owners.
From the citizens’ perspective, the best solution would be a model similar to Norway’s electric car subsidy for solar panels. You would get something like 50% of the price as a rebate, and at the same time, the load on Finland’s entire electricity grid would lighten, as would its fault tolerance. As additional support, similar support for wind farms at the municipal level.
Last time I calculated, the return vs. savings was pretty much zero. So, roughly speaking, if the system costs €10,000 and needs to be replaced every 12 years, it never really becomes cheaper than buying electricity. But the risk is the equipment breaking down before that cost is recouped, in which case you could end up losing money.
One technology that could be of interest to Finland is radiative cooling (there doesn’t seem to be a Finnish translation for that, but perhaps radiant cooling? Radiation cooling?), one practical implementation of which would be a “non-solar panel” – meaning that instead of the sun, it uses not darkness exactly, but the coldness coming from space in the dark. It sounds quite sci-fi, but it’s a real physical phenomenon.
In the panel, it would work so that instead of solar energy, the energy difference from the temperature difference is collected. The underside of the panel is “warm” and coldness comes from space, creating that difference, which produces energy when it radiates back towards the warm side of the panel. Apparently, this very effect also produces more familiar things, namely black ice and frost on car windows. Specifically in winter.
Our expensive two-slope system, installed four production seasons ago and oversized for the house’s consumption, has yielded an average of just over 5% per year, even excluding the 2022 anomaly.
At current prices, the PVGIS yield expectation for the first 6 kWp power plant, priced at 6290 € as a turnkey installation, would generate 380 € for our village with our actual consumption, which is a 6% annual return.
That is a tax-free saving, equivalent to over 8% taxable stock return. The annual return of a well-sized solar power plant can realistically be at the level of long-term stock returns. If a continuous return of over 6% after taxes is not acceptable, then stock picking should also be done reasonably well. There are probably differences in residual values, but it depends on the situation which way?
This un-realistic hectare estimate does not take into account the reduced purchase price due to the household deduction and possible competitive bidding, and the share of own consumption in production has been estimated too low because I used the share of own use of an actual 7.8 kWp power plant located at the same address. As the power and energy amount of the power plant decrease, the share of own consumption in production increases, so the actual outcome is better than this quick estimate of mine.
The warranty periods for panels are 20-25 years, but the inverter may well need to be replaced during that time.
I don’t expect a solar power plant on every roof for a long time, but the expected return and the decrease in panel prices and increase in performance are enough for installations to continue.
At some point, existing solar power plants may start to erode the profitability of new installations. I myself have prepared for the price of electricity on a sunny summer day to approach zero during the warranty period of my panels. If the value of my own production is only the transmission price and taxes, then my annual return will be around 4% tax-free. At that point, a 700 € diesel tax will be replaced by an electric car of the same size class that is cheaper than diesel, which will increase the degree of own use of the panels’ production.
Do you think a 6% return after taxes is not enough as an investment basis, or what did I calculate wrong?
While waiting for that, I have been looking at vertical-axis wind turbines. The structure is cheaper and installation on the roof ridge is simpler, as the three blades do not need to be oriented; instead, a vertical rotor operating in all wind directions rotates the generator.
The downside of these is the moving parts and the generator, so reaching the expected maintenance interval of a
To simplify it a bit, I’ve calculated it like this:
Normal 1500 kWh average electricity costs 85 € / month and transmission 85 € / month, totaling 170 € / month
A 37 x 450 W solar panel system produces that much electricity for 6 months of the year (otherwise it falls far short) and costs roughly 18,000 € based on the latest prices I checked. If the system lasts 12 years, electricity would then cost 125 € / month for those
OK, now I understand our previous difference in opinion and agree that the investment you calculated is not worthwhile. Your system is significantly oversized for a standard-sized detached house. Covering the entire consumption of the house is not profitable. It is more economical to size the power plant to produce the large power peaks that occur during the day.
For us, the theoretical peak power on the roof of a medium-sized house is 7.8 kWp, which is never achieved with a two-slope installation. The peak powers of different panel series occur at different times for hours, and the actual peak power is about 6 kW. The amount of energy produced decreases and spreads over more hours per day, but even then, the house only manages to use just over half of the summer production.
Our production is still oversized by the amount of an electric car that has not yet been purchased, and we get 50 - 60% of the production for our own use. These self-used kWhs are valuable because they remove the energy price + transmission + taxes from our electricity bill.
The rest of our power plant’s output goes for sale at just the spot electricity price. We also have this surplus production going into the grid cheaply, equivalent to one electric car, and you multiplied that in your calculation by increasing the power plant’s output from 6 kW → 16 kW. The investment cost tripled at the same time, so the return inevitably remains small.
Your power plant is also expensive, but that’s not the main point of this calculation.
Panels have generally lasted well and come with a 20 - 25 year warranty, but the inverter may well need to be replaced during the panel warranty period, and that will easily cost a thousand or two.
The annual return can perhaps be understood differently, but I certainly don’t think it can be calculated that way.
If we make a few assumptions to simplify the calculation:
purchase price €6290
annual value of electricity production 6% = €377.4
equipment lifespan 20 years (lifespan of panels perhaps longer; but yield decreases somewhat, inverter might need to be replaced, and equipment needs minimal maintenance, so for simplicity, a 20-year lifespan likely leads close to the correct final result)
system’s residual value at the end of its lifespan €0
With these assumptions, the system produces electricity worth €7548 over 20 years. The purchase cost is €6290 and the system’s value at 20 years is €0, resulting in a return of €7548 - €6290 = €1258. The annual return is €1258 / 20 years = €62.9/year, or 1%.
So I arrive at a considerably lower return percentage.
I recently made a rough calculation of the profitability of a panel system.
The average price of electricity comes from electricity bills; it’s almost free in the summer, and even in the autumn, the storage floor heating collects heat during cheap electricity hours and is otherwise on standby. Transmission 3.6 cents/kWh. The system’s production estimate is taken from suppliers’ promises (5000 kWh/year) minus the ‘Lapland bonus’ (1000 kWh/year) which I assume is included in the sales pitches. I also assume 50% will be for own use, which might be a bit low considering the comments above. Conversely, the system is assumed to last forever without repair or replacement needs.
With these premises, the panels have not appeared to be a particularly attractive investment.
Of course, the more one can use themselves, the better the savings. In addition, the more Finland connects to other electricity markets, the closer the average price of electricity will rise to the level of other markets. Over a 20-year period, that too will start to have an impact. Still, the forum’s idea of buying Fortum shares with the investment sum and paying the electricity bill with its dividends might also be an easy and viable option.
Both electricity and transmission prices include tax here.
Luckily, it’s literally impossible for me to switch to Elenia
Funny you mentioned the Fortum maneuver, because that’s exactly what I’m doing. Fortum’s dividends cover a pretty good portion of my electricity bill (they used to cover it almost entirely, but I sold some of them during a price spike).
You are right, Caruna’s bill still had a separate part for tax, so the previous calculation indeed overlooked it. With the updated calculation, the expected return rises slightly:
The calculation is otherwise realistic, and this combination is also possible, but in my opinion, it is suboptimally sized or configured.
Namely, if there is 50% overcapacity, then there is plenty of choice as to which hours’ overproduction is sold and which part is used for self-consumption. Even a very simple timing automation or a price-following Shelly smart relay pulls down one’s own consumption during morning and evening demand peaks. As a result, the average price of sold electricity exceeds the monthly spot market electricity price by about one cent, and the average price of purchased electricity falls below the spot market electricity price accordingly.
The calculation does not change dramatically as a result, but in a better direction.
In addition, when a 6 kWp system is purchased for €6000, its annual production of approximately 5000 kWh corrects the situation reasonably close to a calculation based on my own experience. Location, cardinal directions, and clear sky are almost never one’s own choice, so a neighbor’s yard birch tree can consume a large part of the production and increase the investment cost through the requirement for microinverters.
Of course, everyone decides for themselves whether the expected return is sufficient for their own investment decision.
This is a good comment, and I had the same thing in mind when mentioning residual value. Against diversified stock indices, panels will certainly “eventually” lose.
The situation for someone competing against panels with stock picking then depends on the choices and the timing. The value of stocks can also go to zero, and the indirect value of panels varies with the spirit of the times. In 2022 - 2023, a home heavily reliant on electricity without a solar power plant and good consumption management was practically unsellable. Now the situation has normalized, and as this discussion also shows, many believe that the expected return of a solar power plant does not justify an investment decision.
The aforementioned years 2022 and 2023 brought back almost exactly 20% of the plant’s investment cost in two years. A solar power plant thus brings a negative correlation to an electricity-dependent home, with the financial return of the plant increasing with the price of electricity, which cuts living costs more sharply the more people complain about electricity prices online.
In addition to these arguments, keeping the compound interest phenomenon going by adding one panel per year is not practical, so annual returns must be accumulated in other ways, such as by buying stocks.
A truly equal comparison would be to compare the returns of a solar power plant to the returns of a stock portfolio of the same value. Let’s see if I have the energy to calculate the five-year interim result when I get next summer’s results and when the plant’s interest-free and cost-free loan is also fully paid next year?
