Where solar energy in Switzerland is (financially) worthwhile – and where it is not

Every homeowner has probably wondered whether a solar system on their own roof is worth it. The answer is not easy and depends very much on the local payment for solar energy and the price of electricity. Because many power grid operators pay too little and thus delay solar expansion. That’s according to a new study by researchers at ETH Zurich and the University of Bern, published today.

In order for Switzerland to meet its climate targets, it must reduce greenhouse gas emissions. One possible way: investing massively in solar energy. “Photovoltaic installations on single and multi-family homes play a decisive role here, as they account for 42 percent of the potential on residential roofs. But whether it pays off financially to invest in a system depends a lot on where you live and on the local power grid operator,” write the researchers of the “Sweet Edge” project, who conducted a study commissioned by the Federal Office of Energy. These are the findings:

In the 2,067 Swiss cities and towns surveyed in the study, it is only worthwhile to install a solar system with gas heating for the owner of a single-family home in just under half of the cases. According to the researchers, an installation is considered profitable if the expected profit over a 30-year lifespan is greater than three percent.

Depending on the electricity supplier, homeowners in Switzerland will receive between 5 and 22 centimes per kilowatt hour (Rp/kWh) for self-generated solar energy 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 the amount of solar energy consumed by one’s own household differ from community to community. “The less the local grid operator pays for the solar power fed into the grid and the more it charges for the power delivered, the more likely homeowners are to scale their solar system to suit their own consumption.

In some cases, this means building smaller systems and generating less electricity than they actually could,” explained ETH Professor Tobias Schmidt, one of the study’s authors. A larger solar system that feeds more solar energy back into the grid than the household itself consumes is especially worthwhile if the fee is high.

Where you live plays a major role in profitability. Various factors such as subsidies, fees and electricity prices play a role in this. In Zurich you receive relatively high subsidies and you can claim high tax deductions. But poor compensation and high electricity prices make smaller solar systems not worth it.

In Lucerne the subsidies are lower, there are no tax deductions, but because the fee is relatively high and the electricity price quite low, a 12 kW system is also financially interesting.

However, the canton of residence alone is not the only criterion. Despite uniform cantonal regulations and subsidies, a few kilometers and another grid operator often determine whether your own solar power is profitable. This is also the case in the canton of Zurich: in Rümlang, an installation for a single-family house with a capacity of 12 kW at current rates would yield an efficiency of 6 percent or CHF 7,000 over a 30-year life.

In Kloten, 6.5 kilometers away, you would make a small loss with the same system. In addition to the electricity price, the widely varying remuneration of the local network operators is also decisive here: in Rümlang, for example, you received 16.97 cents/kWh in 2022, while in Kloten you only received 6.10 cents/kWh.

According to the study, the situation is significantly better for apartment buildings. Installing a system is profitable in almost all cities and towns. “In apartment buildings with larger roofs, a solar system is almost always worthwhile. It is even more profitable with a heat pump, because the internal requirements are higher and there is more savings on the purchased electricity,” says ETH professor Schmidt.

In Rümlang, a 16 kW system would yield an efficiency 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 fee is lower in Kloten, a smaller 12 kW system, covering mainly self-consumption, would be more cost-effective than a system that uses the entire roof. “If Switzerland’s goal is to have the most powerful systems possible on apartment buildings, the incentives for this should be strengthened, for example through higher feed-in tariffs,” says Schmidt.

To accelerate solar expansion, the study authors recommend aligning the various schemes and reimbursements in Switzerland. “Switzerland is like a patchwork here. It is neither fair nor understandable why the profitability of solar systems differs so much 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 photovoltaic cells, the pronounced federalist structures mean that a majority of cantons do not actively promote their expansion. A harmonization of binding and more ambitious standards would be necessary.”

According to the authors of the study, options for this are: