The subsidy scheme for solar panels will be cut back from 2025, but it will still be attractive for homeowners to install panels on the roof. The investment will pay for itself within seven years. Under the current so-called netting scheme, which has been under discussion for some time, this is six years.
According to a calculation published on Wednesday by the independent information agency Milieu Centraal, solar panels yield a profit in 25 years that can be compared with a savings interest of more than 4 percent.
Milieu Centraal’s conclusion is largely in line with an earlier study by research institute TNO. However, the efficiency strongly depends on the electricity price, the purchase price of the panels and the year in which they are installed. The favorable location of the panels also plays a role.
Owners of solar panels supply their generated electricity that they do not use themselves at that time to the energy company. That current is offset against the electricity they use at a later time. No tax is paid on this electricity, which is why there is a subsidy. If more is generated than consumed, the owner receives compensation from the energy company.
In the calculation, Milieu Centraal assumes ten solar panels that will be purchased next year for 4,500 euros. These panels last 25 years and, located on the south, yield an average of 510 euros per year. The yield is highest in the first years. If the current arrangement did not change, the annual yield would be 770 euros.
It is uncertain how the electricity price will develop: the example assumes 22 cents per kilowatt hour, while that price will already be above 50 cents throughout 2022. A year ago, a kilowatt hour cost 0.24 cents. With a higher electricity price, the payback period becomes shorter.
Over-subsidy
The phasing out of the subsidy scheme has been on the political agenda for years. The previous government announced in 2017 that a new, less attractive scheme would be introduced in 2020. According to the then minister Eric Wiebes (Economic Affairs, VVD), the netting resulted in over-subsidy in practice. If too much money goes to solar energy, the minister reasoned, less money is left for other sustainable forms of energy, so that subsidies are not used as effectively as possible. 1.6 million households now have solar panels.
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Due to looming problems in the implementation of the new scheme, Wiebes did not come up with a bill until 2020 in which the subsidy would decrease annually from 2023.
Due to the fall of the cabinet, the proposal was put on hold, but the political desire to cut back on the scheme persisted. Current minister Jetten (Climate and Energy, D66) recently presented a new bill, that the scheme from 2025 makes it less attractive. In that year, only 64 percent of own production may be deducted from own use. The energy supplier pays a fee for the remaining 36 percent. This reduces the tax benefit.
The phasing out of the scheme will continue after 2025 and in 2030 only 28 percent of the solar power can be netted. In 2031, the netting will come to an end and the owner of the panels will only receive “a reasonable compensation” for the solar power.
According to the bill, that fee must be at least 80 percent of the electricity tariff from 2025. This concerns the basic delivery rate, so without taxes. At the same time, there will also be a maximum for that rate and that is still being determined. The height is not expressed as a percentage of the electricity tariff, but in cents. If energy companies have to pay too much, it is thought, people without solar panels would unwittingly contribute to the subsidy for owners of solar panels.
TNO concluded earlier this year that for non-residential buildings – such as offices, schools and sports facilities – the payback period can only be four years, despite the scheme being phased out.
A version of this article also appeared in the newspaper of August 4, 2022