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Does the Installation of Solar Panels Make Sense?

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 give some greater precision to 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.

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

Thus, the current price paid by EDF for new installations between 0 to 9 kWh is 27.94 centimes per k/Wh, while the regulated price of electricity to consumers from EDF is 13.72 centimes per k/Wh. This repurchase price has fallen very considerably in recent years.

Nevertheless, EDF have an obligation to buy, with a fixed price contract for 20 years, which is inflation linked.

Other points of fine detail in the contract need to be examined, notably the ceiling that applies to the maximum amount of energy EDF are obliged to buy at this price, which varies by region and capacity of the installation.

Installation Costs

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

However, as a general rule of thumb, the French energy management agency 'ADEME' considers the cost to be €3,000 to €4,000 per kiloWatt of power created. As most domestic installations generate around 3 k/W of power, this means the cost of the panels themselves is €9,000 to €12,000.

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.

How Much Income?

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.

The following graphic from ADEME shows the energy generated (k/Wh) from a nominal 1k/W installation.

Based on this table, and the EDF repurchase tariff, ADEME state that a standard domestic installation of 3k/W would produce income of around €770 a year in Lille, whilst the same installation installed in a property in Marseille would earn €1,112 per year.

You can find more about what you might earn at Votre revenue solaire.




Taxation

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 3k/W the income generated must be declared, and is taxable.

Since 1st January 2014 there are no longer any tax credits available for the installation of solar panels, although the material costs benefit from a reduced 10% rate of VAT.

Contractors/Suppliers

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.

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 solar panels on your otherwise charming French farmhouse may not be to everyone's taste.

Related Reading:

This article was featured in our Newsletter dated 02/07/2014





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