Solar Self-Sufficiency: The Dollars?Behind
Western Europe assumes that electricity is available 24/7/365 and that all electricity generation needs to be profitable. How flawed is?this?
As described in a previous article, self-sufficiency in a modern single-family home is feasible, even with electric cars in moderate climates such as Switzerland:
As an entrepreneur, I am interested in both the technology and the economic aspects of solutions. After my first article illustrated the technological aspects of my setup, this article is about the earnings and spendings behind my installation.
Recap: The?Setup
We built our home on the green field back in 2012, paying close attention to energy efficiency. The house has a Drexel+Weiss Aerosmart X2 combined heating/ventilation system with a ground heat pump since the first day, which has helped us keep energy consumption for heating very low (when running on full power on a cold winter day, the consumption of the heating system is around 1.2 kW).
After living in the house for some years and learning about our energy consumption, we added the following systems step-by-step:
A Loxone building control system is controlling the large power consumers (cars, washing machine, heating), taking into account solar power availability, charging levels of the batteries, and the seasons.
Investments
We made the following investments in our solar infrastructure:
Notwithstanding the investments into electric cars, we have invested a total amount of around 85k CHF into our solar infrastructure over the years. During these eight years, not a single component such as an inverter or a panel has failed. The entire installation is maintenance-free and hasn’t been incurring any significant running costs after installation.
Earnings and?Savings
Our solar infrastructure has generated the following income and savings streams over the years:
Let’s take a look at each stream in more detail.
Subsidies
Whilst subsidies from the local government were generous in the beginning, they (rightly so) decreased over time.
In my liberal view, technology subsidies should only be granted over limited periods. They serve the purpose of supporting the pioneers when unit costs of new technology are still high. At the same time, they should ease the adoption and increase the demand for new technology, thereby reducing unit costs. In this way, the mainstream can follow the pioneers more quickly.
We have received subsidies of 20k CHF in total, spread over the period from 2015 to 2018. Since our installation was completed some time ago, I haven’t kept track of the development of local government subsidies.
Some people fundamentally question the usefulness of subsidies, which I can understand. Nevertheless, as argues Christoph Brand, the CEO of Axpo : Have you thought about the fact that fossil energies are subsidized all over the world for not bearing their environmental costs?
Feed-in Remuneration
In Switzerland, excess energy can be fed into the grid. The solar infrastructure owner is remunerated by the local utility company for the fed-in energy. Tariffs vary widely between the communities but have seen significant pressure all over the country.
In the period from 2014 to 2021, we have fed in a total of 73 MWh and received feed-in remunerations of around 7.5k CHF.
With more and more solar power coming online, the remuneration for excess energy decreases rapidly, as can be seen from the feed-in tariff development in the chart below:
With more and more solar capacity coming online, I am forecasting a further decrease in feed-in tariffs over the next years?—?excess energy will rapidly lose value, as its abundance will rise. At the same time, energy prices will likely increase significantly during hours of darkness.
Equivalent Compensation for Self-Consumption
Our building control system aims at maximizing the self-consumption of solar energy. Both the solar battery as well as the electric car charging schedule play an important role here.
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In the period from 2014 to 2021, we have self-consumed solar energy of 37 MWh, which equals an equivalent compensation of around 5k CHF. Whilst a significant part of self-consumption went into charging the cars, the solar battery allows us to run on 100% self-sufficiency between March and October.
To be on the conservative side of savings, I used the low-tariff prices as depicted below:
Electricity prices have proved fairly constant throughout 2014–2021; I’m interested to see where they will go over the next few years with all the geopolitical tensions around energy supplies. Christoph Brand, the CEO of Axpo, forecasted three weeks before the war in Ukraine started that four measures are needed to close the upcoming power gap in Switzerland :
Well, I guess we can forget about the last two measures for now. Russia will probably close the gas tap during the next winter, and in times of crisis nations generally take care of themselves before exporting highly needed goods to other countries. It happened to Switzerland during COVID-19, when medical masks were blocked en route in Germany.
All these measures as well as geopolitics will have a direct impact on electricity prices, as large-scale investments will be needed. So, therefore, maximizing self-consumption is a safe avenue to maximize the yield of your existing solar installation.
Equivalent Compensation for Car?Fuel
Before we drove electric, we drove a Volvo V50 with an average diesel consumption of 5 liters per 100 km. Using the following reference values, the savings from not buying diesel amounted to 7k CHF from 2017 to 2021:
This might not sound like a lot of savings. However, charging cars at home is the cheapest possibility to refuel : when charging on the road, charging needs to be fast. For this, high-power grid infrastructure is necessary. The investment costs are eventually paid for by the users, as even Tesla switched to a pay-per-use system for their superchargers. Current models suggest that charging on the road is up to three times more expensive than doing so at home.
Bottom Line
All in all, our investment of around 85k CHF generated compensations and savings of roughly 40k CHF from 2014 to 2021. Is this a good investment or not? I don’t know yet. I’m a pioneer.
As outlined above, I used conservative assumptions for the compensations and savings, and real-life values for the investments. So therefore the business case is likely to be on the conservative side.
It will be interesting to see how electric mobility will develop, and what implications it will have on the grid infrastructure, and hence on electricity prices.
Having witnessed a maintenance-free operation of my solar installation over 8 years, an efficiency improvement of around 30% from the Model S/X to the Model 3, and monitoring the geopolitical developments, I dare to forecast that I will break even within less than another 8 years from now.
And I will continue investing in my own power infrastructure. Next in line are vertical panels on the facade to increase power production in the winter months.
The Price of Resilience
Let’s finish on a gloomy note. The last months have shown that energy availability is not just an environmental topic, but also a geopolitical one. We are currently witnessing how energy is used as a weapon. It is Mr. Putin who will decide if your lights go out next winter, let alone if you can charge your electric car.
Today’s energy considerations are based on two simple yet flawed assumptions: That electricity is readily available 24/7/365, and that electricity generation needs to be profitable.
COVID-19 had us learn the hard way that you cannot optimize hospitals from an economic point of view, and then suddenly be ready to respond to a surging demand occurring out of nowhere.
And if Russian gas stops flowing into Europe next winter?—?would you rather have no electricity at all, or still be down by 40k CHF on your investment of 85k CHF?
Growing a company ?? in troubled times ???? is a marathon.
As a tech entrepreneur ??, active reserve officer ??, and father of three ??????, I can help you with ?? practical entrepreneurship and resilience advice for all aspects of life. To the point ??, no fluff, because entrepreneurs are busy.
When I’m not busy, I get my rest and inspiration in the beautiful mountains ??? around Zermatt ????.