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Does the Installation of Solar Panels Make Sense?

Thursday 03 June 2021

The installation of solar panels on your French property is a tempting proposition for many owners, but the rewards are long-term and it is not without risk.

Thermal or Photovoltaic? 

At the outset it is important to define the term ‘solar panel’ as there are two types of panels, which are frequently confused with one another.

These two types are:

  • Thermal solar panels (solaire thermique) and
  • Photovoltaic solar panels (panneaux photovoltaïques).

The former is merely for the provision of your domestic hot water supply, and rarely a sensible financial proposition.

However, the latter enables you to produce your own electricity for all your personal uses and/or for resale.

Financial Incentives

Since 1st January 2014 there are no longer any tax credits available for the installation of photovoltaic solar panels

Nevertheless in France, as in many other countries, there are incentives in place for property owners to sell electricity back into the grid at preferential prices.

This means it makes more sense to use electricity from the grid for your own supply and sell back to EDF electricity generated from your solar panels.

However, the repurchase price paid by EDF has fallen considerably in recent years, and it continues on a downward trend.

The current price paid by EDF for new installations depends on whether you sell all or part of the electricity you produce to EDF.

i. Sell All

If you sell all of the electricity you generate, then for an installation with a power output of 3kWp the price is 17.93 centimes per k/Wh, while it is 15.24 centimes per k/Wh for an installation of 3kWp to 9kWp. These rates are reviewed every quarter and apply to 31st March 2021, when they will again be revised.

Nevertheless, if you enter into an contract with EDF they have an obligation to buy at the fixed price in the contract for 20 years, which is inflation linked. (EDF Obligation d’Achat).

ii. Sell Surplus

If you elect to consume all the electricity you produce and you sell only the surplus to EDF, the current repurchase price for an installation between 3kWp and 9kWp is 10 centimes per k/Wh.

In addition, for those who sell only the surplus an annual investment premium is payable.

The level of the premium depends on the power output of the installation but for an installation producing of 3kWp it is €380, which totals €1,140 paid over a 5-year period (€228 a year). The premium is €280 (€1,680 in total) for an installation generating 3kWp to 9kWp.

In summary then, for a 3kWp photovoltaic installation where you sell the surplus to EDF, you receive €1,140 (i.e. €380 x 3) and 10 cents/kWh for the surplus electricity sold to EDF.

There are also some local councils who offer additional assistance, but they are few and far between.

There are also grants available for energy conservation (but not photovoltaic solar panels) as part of the home improvement grant regime ‘MaPrimeRénov’ run by Anah, the housing renewal agency, but these are means-tested.

How much does it Cost to install Solar Panels in France?

The costs of installing photovoltaic solar panels will vary by region and type of property.

However, as a rule of thumb, the French energy management agency 'ADEME' considers the cost to be €3,000 to €4,500 per kilowatt of power created. 

As most domestic installations generate around 3k/W of power, this means the cost of the panels themselves is €9,000 to €13,000. For 6 k/W of power expect to pay €16,000 to €19,000

In addition, there are the costs of connecting to the supply, which may be up to €1,500.

To this should be added annual running costs of round €75, and it is likely your annual house insurance premium will increase. The solar panel inverter will also need changing around every 10 years, at a cost of circa €1,500.

How much Income will Solar Panels in France generate?

Just how much income you can earn each year will depend on the size, orientation and location of the installation.

Clearly, the further south is the property, then the greater the income you will earn.

Be careful of the projections given by the installer/supplier for the system, as you will not necessarily achieve the maximum stated in the estimate.

According to ADEME, the return on a solar panel takes between 10 to 25 years, depending on the cost of the installation, the power produced, the amount resold and where you live. In general, it is likely to be towards the latter end of the range before you see a return. 

Solar power is an investment for the long-term. 

Taxation of Solar Panels income in France 

The good news is that income generated from photovoltaic installation no greater than 3k/W is exempt from income tax and social charges, provided the income is not part of a professional activity.

For installations with a power output greater than 3kWp the income generated must be declared and it is taxable.

Panels benefit from a reduced 10% rate of VAT up to 3kWp.

Choosing a Solar Panel Supplier & Installer

A serious health warning needs to be given about the selection of the contractor to undertake the works.

The same goes for the suppliers of the solar panels, the standards of which can vary by a significant margin.

There are also plenty of scams around. Ignore ‘€1 cost’ offers you may receive through the post or by telephone.

The installation of solar panels is still relatively new technology, providing the opportunity for rogue traders to profit from the ignorance of consumers.

A not inconsiderable number of builders and suppliers have established themselves in the market without the requisite skills or experience to undertake the works.

As a result, there have been many complaints from consumers about faulty panels and installations.

Some contractors and suppliers offer a finance package, but you are frequently better off going directly to your bank. If you do take a finance package, the funds are frequently sent direct to the contractor or supplier, increasing the risk to you if the works are not carried out properly or fully.

Accordingly, you need to do your homework before you engage a contractor or a supplier.

You should:

  • Make full enquiries about them, notably by speaking to other recent clients, visiting wherever possible;
  • Obtain from the contractor/supplier evidence of business registration and professional insurance;
  • Ensure at a minimum that the contractor has the quality label 'Reconnus Grenelle de l'environnement (RGE)';
  • Enter into a formal written contract and ensure you have a complete description of the works;
  • Keep to a minimum the amount of money you pay in advance of works being undertaken;
  • Speak to your local energy management agency about your project;
  • Speak also to EDF about the supply of panels (they have a subsidiary) and the connection;
  • Consider engaging an independent professional to run the contract for you;
  • Do not be rushed.

Conclusion

Given the significant costs of solar panel installation and the fall in the repurchase price of electricity, you should count a minimum of 10 years to repay the investment, but more likely to be 15 years. So it is project for the long-term.

If your only objective is to reduce your electricity bill then a cheaper alternative would be to give primary consideration to insulating your property, through draft-proofing, insulating the loft and the installation of double glazing.

There are also the aesthetic implications to consider, as bulky and intrusive solar panels on your otherwise charming French farmhouse may not be to everyone's taste.

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