Whether a solar system on the roof of a house is worthwhile in Switzerland depends heavily on the local remuneration for solar power and the electricity price – this is shown by a study by researchers from ETH Zurich and the University of Bern. Many power grid operators pay too little and thus slow down solar expansion.
In order to achieve its climate goals, Switzerland must massively increase its power generation from solar energy. Photovoltaic systems on single and multi-family houses play a crucial role here, as they account for 42 percent of the potential on house roofs. But whether it pays off financially to invest in a system depends heavily on where you live and the local power grid operator. A study by researchers from ETH Zurich and the University of Bern shows how strong it is for the first time. The study was carried out as part of the “Sweet Edge” project and commissioned by the Swiss Federal Office of Energy.
Factors that make a solar system profitable
In the 2,067 Swiss towns and communities examined by the study, it is only worthwhile installing a solar system for the owner of a single-family home with gas heating in just under half the cases. According to the researchers, a system is considered profitable if the expected profit over a service life of 30 years is greater than three percent. In addition to the acquisition costs and subsidies, they take into account the performance of the system for each community, the amount of remuneration for the solar power fed into the grid, the electricity costs that are saved through self-consumption of the solar power, and the tax rate.
Depending on the electricity provider, homeowners in Switzerland received between 5 and 22 centimes per kilowatt hour (Rp/kWh) for self-generated solar power in 2022. They paid between 12 and 34 centimes for a kilowatt hour of electricity. These strong local differences mean that the size of a solar system that is as profitable as possible and how much of its own solar power a household consumes varies from community to community. “The less the local power grid operator pays for the solar power fed into the grid and the more it charges for the power supplied, the more likely homeowners are to adjust the size of their solar system to their own consumption. In some cases, this means that they build smaller systems and generate less electricity than they actually could,” explains ETH Professor Tobias Schmidt, one of the authors of the study. A larger solar system that feeds more solar power into the grid than the household itself consumes is particularly worthwhile where the remuneration is high.
Big cantonal differences
A comparison between the cities of Zurich and Lucerne shows how the different factors of the model affect profitability: Although there are comparatively high subsidies and tax deductions in Zurich, it did not pay off for an owner of a single-family house with gas heating in 2022, to invest in a relatively small solar system with an output of 4 kilowatts (kW). In Zurich, neither high subsidies nor low taxes were able to compensate for a weak payment for solar power of 7.9 Rp/kWh and a relatively high electricity price of 26.4 Rp/kWh.
In Lucerne, on the other hand, the subsidies are lower than in Zurich and the investments are not tax-deductible. However, a remuneration tariff of 14.4 Rp/kWh and an electricity price of 22.7 Rp/kWh ensured that the investment in a 12 kW system turned out to be profitable.
The network operator of the place of residence decides
Despite uniform cantonal regulations and subsidies, a few kilometers and another network operator often determine whether your own solar power is profitable. This is also the case in the canton of Zurich: In Rümlang, at current tariffs, a system for a single-family house with an output of 12 kW would yield a return of 6 percent or CHF 7,000 over a lifetime of 30 years.
In Kloten, 6.5 kilometers away, you would make a slight loss with the same system. In addition to the electricity price, the decisive factor here is again the widely differing remuneration of the local network operators: In Rümlang in 2022, for example, you received 16.97 cents/kWh, while in Kloten you only got 6.10 cents/kWh.
The expected yield of a solar system for a family house with gas heating in Swiss municipalities and cities. The brighter the communities, the higher the return over a 30-year period. Communities with zero or less returns are light gray. No return could be calculated for the dark gray municipalities. The box above the color scale represents the middle 50 percent of the results. SC (self consumption) stands for self-consumption. (Graphic: Tobias Schmidt / ETH Zurich)
Larger solar systems with heat pumps more profitable
According to the study, the situation is significantly better for apartment buildings. Installing a system is profitable in almost all towns and communities. “In the case of apartment buildings with larger roofs, a solar system is almost always worthwhile. It is even more profitable with a heat pump, since the internal requirements are higher and more is saved on the electricity purchased,” says ETH Professor Schmidt.
In Rümlang, a 16 kW system would generate a return of 10 percent or CHF 22,000 over 30 years. This variant would also be profitable in Kloten with a return of 5.5 percent or CHF 7,000. But because the compensation in Kloten is lower, a smaller system of 12 kW, which mainly covers self-consumption, would be more profitable than one that uses the entire roof. “If Switzerland’s goal is to have systems that are as powerful as possible on apartment buildings, the incentives for this must be strengthened, for example through higher feed-in tariffs,” says Schmidt.
The installation of a solar system on an apartment building with nine residents spread over four apartments and a heat pump is profitable in almost all Swiss cities and municipalities. The median is a 10.5 percent return. On average, 63 percent of the solar power generated is consumed by the company itself. (Graphic: Tobias Schmidt / ETH Zurich)
Accelerate the expansion of solar systems
In order to accelerate solar expansion, the authors of the study recommend aligning the different regulations and remuneration in Switzerland. “Switzerland is like a patchwork quilt here. It is neither fair nor understandable why the profitability of solar systems varies so greatly from region to region,” says Schmidt. Isabelle Stadelmann, professor at the University of Bern and co-author of the study, adds: “In the case of photovoltaics, the pronounced federalist structures mean that a majority of the cantons are not actively promoting its expansion. A harmonization of binding and more ambitious standards would be necessary.”
The authors of the study see various options: solar systems could, for example, be tax-free in all cantons. In addition, investments in buildings that are less than five years old should be deductible. But whether a solar system on the roof is worthwhile depends primarily on the feed-in tariff and the electricity price. However, these are defined by the more than 600 electricity network operators. The study shows which network operators would have to increase their tariffs and payments in order to promote solar expansion.
This article first appeared on ETH News.
