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Solar panels less lucrative, ‘but still provide 17 years of free power’

Sunny summers were always extra good news for solar panel owners. Besides offsetting their own power consumption, they could sell the surplus power to the energy supplier.

That is now changing. More and more energy companies are charging fees for feeding power back, to the displeasure of customers with solar panels. But: panels remain quite lucrative.

Because panels have become so cheap, the balancing scheme is actually no longer necessary.

Mathijs Bouman, economist
In order to motivate people to install solar panels, the government introduced the net-metering scheme. This means that the electricity that solar panel owners supply to the grid can be deducted from the electricity they consume. In this way, a roof full of solar panels was often quickly earned back.

Energy companies are responsible for the scheme. In the summer they get a lot of power delivered back to them, but then they earn little from it. In the winter, they have to supply a lot of power for free to solar panel owners.

The companies get to decide how to settle those extra costs. Previously, they did so by making all customers contribute. People without solar panels, who often have less to spend anyway, paid for people with solar panels. “More and more energy companies are saying: that’s unfair,” says energy expert Isabelle van der Ende of Milieu Centraal.

Power grid unnecessarily burdened
Economist Mathijs Bouman speaks of “oversubsidization.” “The scheme was primarily intended to develop the solar panel market. But because panels have become so cheap, this subsidy is actually no longer needed.”

Another disadvantage of net-metering: solar panel owners have no financial incentive to use a lot of power when there is a lot of sun. “The power grid is therefore unnecessarily burdened,” Bouman said.

The government therefore wanted to phase out the balancing rules starting in 2025, but the Senate blocked it. As a result, energy companies are left with the costs of net-metering. To ensure that customers without solar panels no longer have to pay for this, more and more energy companies are charging feed-in costs. The costs and rules vary considerably from one power company to another. “That is quite confusing,” says Van der Ende.

At the same time, Van der Ende emphasizes that solar panels are still very lucrative. Milieu Centraal calculated that people earn back their solar panels with feed-in costs in about eight years. Without feed-in costs that was five years. “Now that difference is pretty big, but it doesn’t really say that much. Because those panels are on your roof for 25 years, so you still have seventeen years of free electricity.”

“Moreover, you are not dependent on an erratic energy market. You generate your own green power, which is good for the climate and your wallet.”

Home battery
Solar panels would be even more profitable if all the energy generated could be used by the owners. Large batteries to store excess solar power are expensive for now, but the feed-in costs provide an additional financial incentive. Bouman: “Home batteries become more profitable as the feed-in costs increase.”

Regardless, solar panels remain a good investment, says Van den Ende. People who already have panels do pay a few dozen more each month than they assumed when they bought them. Unfair, some think. Van der Ende: “It is then advisable to look extra carefully at which energy company you are with, because the differences are quite large.”

Source: NOS.nl, May 7 2024

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