According to a research report jointly released by the European Photovoltaic Industry Association (SPE) and the German consulting agency Energy Brainpool, high interest rates and huge capital expenditures will average the installed photovoltaic systems in some EU member states (Germany, Spain and Italy) in 2022. The payback time is extended to around 20 years. Christophe Lits, market analyst at the European Photovoltaic Industry Association (SPE), analyzed the data.
In a recently published study on the symbiosis effect of rooftop PV systems and heat pumps, the Society of the European Photovoltaics Industry (SPE) analyzed the payback times for rooftop PV systems installed in 2022 in Germany, Spain and Italy.
The energy modeling for this study was carried out by Energy Brainpool and considered three different scenarios. The report reviews a "fossil fuel dump" scenario, in which global natural gas demand falls sharply, leading to lower fossil fuel prices. The report envisions a "new normal" scenario in which gas prices remain at current levels. In addition, the report examines a "return to crisis" scenario, in which natural gas prices rise to high prices in autumn 2021. The report pointed out that the average installed capacity of rooftop photovoltaic systems installed in Germany in 2022 will be 8kW, and 7kW in Spain and Italy.
The model shows that under the "new normal" scenario, the payback time for installed rooftop PV systems in Germany is about 18 years, 19 years in Spain, and 14 years in Italy. Under the “fossil fuel dumping” scenario, the payback times are 20, 25 and 17 years, respectively. In the “return to crisis” scenario, rooftop PV systems have the lowest payback times: 17 years in Germany, 12 years in Italy, and 11 years in Spain.
Christophe Lits, market analyst at the European Photovoltaic Industry Association (SPE), said: "We were surprised by the results of the study on the payback time of rooftop PV systems, because we often hear that the payback period of rooftop PV systems is less than 10 years. The model considers All factors up to 2022: capex prices, electricity prices, interest rates, feed-in tariffs, tax rebate schemes, etc. As for how to calculate the return on investment time, it is only necessary to know how much the household user pays for the rooftop photovoltaic system, and does not need electricity from the grid. how much power to procure in. Then, just consider how many years it will take for the cost savings to reach the total capex.”
According to Liets, there are three main factors leading to an increase in the payback time for rooftop PV systems installed in the three countries in 2022: high capital expenditure, assumed to be 1600 EUR/kW (excluding VAT); Lower electricity prices; and high interest rates for using loans to buy PV systems.
"When we talk to PV developers about payback times, they're not really looking at all the differences in subsidies or the capex price increases, they're basically looking at how much electricity is being saved by installing rooftop Solar systems -- When viewed in more detail, the results are much more precise," he said, referring to the stark discrepancy between the generally suggested 10-year payback time and the analysis.
Following the publication of this research report, the European Photovoltaic Industry Association (SPE) and Energy Brainpool also performed a sensitivity analysis of the payback time for different capital expenditure values.
“Based on the capex values of 2-4 years ago, Spain’s capex was around €1,200/kW, so Spain’s payback period is seven years, while Germany’s payback period is around 10 years,” Liets said.
"In an environment of high interest rates and high labor costs, capex support is critical to shorten the time to return on investment," the report concluded.
The report proposes several approaches to capex support for EU member states, noting that 30% capex support could reduce the payback time for PV systems and heat pumps by six to eight years in Germany, Italy and Spain.
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