Investing in Solar Energy: Financial Insights and the Path to Self-Sufficiency
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Chapter 1: Understanding Solar Self-Sufficiency
In Western Europe, there is a prevailing belief that electricity is consistently available year-round and that all methods of electricity generation must be profitable. But how accurate is this assumption?
A previous article discussed the feasibility of achieving self-sufficiency in a contemporary single-family home, even with the inclusion of electric vehicles in temperate regions like Switzerland. As an entrepreneur, I have a keen interest in both the technological advancements and the economic factors related to solar solutions. My first article focused on the technological setup, while this one delves into the financial aspects surrounding my installation.
Recap: The Installation
We constructed our home in a greenfield area in 2012, emphasizing energy efficiency from the outset. Our residence features a Drexel+Weiss Aerosmart X2 combined heating and ventilation system, complemented by a ground heat pump, which has kept our energy consumption for heating remarkably low (approximately 1.2 kW when operating at full capacity during chilly winter days).
Over the years, as we learned more about our energy usage, we gradually integrated several systems:
- 8 kWp east-west solar panels on the carport
- 14 kWp east-west solar panels on the house
- A 12 kWh Fronius Solar Battery
- Two Tesla Model 3 vehicles, each with a 75 kWh battery
A Loxone building control system manages our significant energy consumers (vehicles, washing machine, heating), optimizing operations based on solar energy availability, battery charging levels, and seasonal changes.
Investments Made
Our investments in solar infrastructure include:
- 2014: Solar panels on the carport, including inverter: 20k CHF
- 2016: Solar panels on the house, including inverter and solar battery: 60k CHF
- 2017: Building control system: 2.5k CHF
- 2017: First intelligent car charging station: 1.5k CHF
- 2019: Second intelligent car charging station: 1.5k CHF
Overall, we have invested approximately 85k CHF into our solar infrastructure. Notably, throughout these eight years, no components—such as inverters or panels—have failed, and the system requires minimal maintenance and incurs no significant operational costs post-installation.
Earnings and Savings
Our solar setup has resulted in various income and savings streams over the years, including:
- Subsidies from the local government aimed at promoting solar installations
- Feed-in remuneration from the local utility
- Equivalent compensation for self-consumption
- Equivalent compensation for vehicle fuel
Let's explore these income streams in detail.
Subsidies
Initially, we received substantial subsidies from the local government, which gradually decreased over time. I believe that technology subsidies should be temporary, designed to assist pioneers when initial costs are high while simultaneously fostering demand and lowering prices for broader adoption. In total, we secured 20k CHF in subsidies between 2015 and 2018. However, I haven't monitored the evolution of local subsidies since our installation was completed.
Critics often question the efficacy of subsidies, a sentiment I understand. Nevertheless, as Christoph Brand, CEO of Axpo, pointed out, fossil fuels are subsidized globally without accounting for their environmental costs.
Feed-in Remuneration
In Switzerland, owners of solar infrastructures can feed excess energy back into the grid and receive compensation from local utility companies. The remuneration varies by community but has faced significant pressure nationally.
Between 2014 and 2021, we fed a total of 73 MWh back into the grid, earning about 7.5k CHF in feed-in payments. However, as more solar power installations come online, I expect that the remuneration for excess energy will continue to decline sharply.
Equivalent Compensation for Self-Consumption
Our building control system prioritizes maximizing the self-consumption of solar energy, with both the solar battery and electric vehicle charging schedules playing crucial roles. From 2014 to 2021, we achieved 37 MWh of self-consumed solar energy, translating to around 5k CHF in equivalent compensation. While much of this self-consumption was dedicated to charging our vehicles, the solar battery enables us to operate on 100% self-sufficiency from March to October.
I utilized conservative pricing assumptions based on local utility rates to calculate these savings, which have remained relatively stable from 2014 to 2021. However, I am eager to see how geopolitical tensions will influence electricity prices in the coming years.
Equivalent Compensation for Car Fuel
Before transitioning to electric vehicles, we drove a Volvo V50 with an average diesel consumption of 5 liters per 100 km. The savings achieved from not purchasing diesel between 2017 and 2021 amounted to approximately 7k CHF, calculated based on:
- Total distance driven: 77,000 km
- Average diesel price: 1.83 CHF/liter
While this may not seem like a large sum, home charging is the most economical way to fuel vehicles. Charging on the road requires fast infrastructure, which incurs higher costs. Current models indicate that charging away from home can be three times more expensive than at home.
Bottom Line
Overall, our investment of around 85k CHF has yielded compensations and savings totaling roughly 40k CHF from 2014 to 2021. Is this a worthwhile investment? The answer remains uncertain, as I consider myself a pioneer in this field.
The calculations for compensations and savings were made conservatively, while the investment figures reflect actual expenditures. As electric mobility evolves, it will be fascinating to observe its impact on grid infrastructure and electricity pricing.
Having experienced eight years of maintenance-free operation with my solar setup, noted a 30% efficiency improvement from the Model S/X to the Model 3, and monitored geopolitical developments, I predict that I will break even within another eight years. I also plan to enhance my power infrastructure with vertical panels on the facade to boost winter energy production.
The Price of Resilience
The recent months have highlighted that energy availability is not just an environmental concern but also a geopolitical issue. Energy can be wielded as a weapon, as seen in the ongoing tensions with Russia, which could impact our access to electricity next winter.
Today's energy discussions rest on two flawed assumptions: that electricity is perpetually accessible and that electricity generation must be economically viable. The COVID-19 pandemic taught us that economic optimization cannot prepare us for sudden surges in demand.
If Russian gas supplies to Europe cease, would you prefer to have no electricity at all or be down 40k CHF on your 85k CHF investment?
Navigating a business through turbulent times is a marathon, not a sprint. As a tech entrepreneur, active reserve officer, and father of three, I offer practical advice on entrepreneurship and resilience across various life aspects. I deliver concise, no-nonsense insights, recognizing that entrepreneurs lead busy lives.
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Chapter 2: Insights from Video Resources
In this chapter, we will explore some valuable video resources that complement our discussion on solar energy and self-sufficiency.
The first video, "Striving for Energy Self Sufficiency - One Step Closer to Being Off Grid," offers insights into the journey towards energy independence, detailing practical steps and technologies that can help homeowners achieve self-sufficiency.
The second video, "Solar Panel System Cost & Install | Step towards Self Sufficiency Off-Grid Living," provides an in-depth look at the costs associated with solar panel systems and installation, outlining the financial considerations involved in making the shift towards off-grid living.