On Profitability of Solar Panel Installation

Solar panel, photovoltaic system, solar generator. These babies have many names.

There are three of 505 watt panels on my roof. Besides the ones in the picture, I do have more panels. This is just my 1500W on sunrise side. Having micro-inverters works well for east-west -installations.

Conversation around solar panels is constantly bubbling. Lot of discussion, not so much facts. Plenty of opinions back and forth. Topics being reviewed include:

• "Installation is expensive. Is this profitable?"
• "Installation is expensive. What's the breakeven in years?"
• "Sun doesn't shine in Finland! Will this make any sense?"

All of those are valid questions. As I was tempted to find out, I went and ordered an installation last year. In this blog post summarize my experience with solar power since last summer.

Summary

Here's the thing briefly with spoilers:

• No, the thing isn't profitable. It doesn't make any sense as breakeven in cost savings to cover the installation fees is many many many years.
• When it goes to electricity, I wanted some security of supply by having those panels on my roof. That went completely sideways! Those things won't do anything, unless there is a functioning electicity network.
  • This is because inverter needs a place to feed excess electricity into.
  • If no such sink exists, inverter chooses to go silent.
  • This behavior can be altered by going for a more expensive offgrid installation. I do not have such thing.
• Sun does shine in Finland. Savings in electricity is real and tangible.

Measuring stuff

Last summer I wrote a piece about HAN/P1 -port. This is the basis. It is imperative to get exact readings on electricity consumption. Also, as important are readings on exported excess energy. Second thing to measure is the solar production. I'm skipping a ton of details, this is what a Grafana-visualization would look like:

Key:

• Blue area: total electricity consumption of my house
• Black line: amount of imported electricity
• Purple area: amount of exported electricity

Findings:

• When there is solar production indicated by purple excess export, black line for imported energy drops nicely below total consumption.
  • Panels do reduce my electricity bill by providing some of my consumption from own production.
  • There are cases where import actually reaches zero. Momentarily, I'm not paying anything for my electricity. Nice!
• There are many cases where black line for import isn't at zero while there is plenty of export.
  • This is the design flaw with solar panel installation.
  • The only real way of keeping all the solar harvest is to have a battery where export would go to at all times.
  • Also, this is how electricity works. Panel must have a destination where harvested energy goes into each millisecond. If there isn't one, it goes to export.

Results of Measurement

For a period of 10 months, staring from 3rd August 2023 to 29th May 2024 is a reference. No own electricity production. From 29th May 2024 to 3rd August 2025 is the "new normal", panel assisted consumption. As a weekly average, a year with and without solar panels look like this:

Key:

• Orange bars indicate weekly average of produced energy.
• Blue line indicates difference between year without panels and year with panels. There are occasions where saving exceeds produced amount.
  • Years are not comparable. Weather tends to do whatever it likes.

Findings:

• It would have been really nice to have a "clean" reference data for entire 12 month period. Unfortunately, this wasn't possible. Still, 10 months of a year is still a good reference material to measure improvement. The improvement is there.
• There is miniscule amount of solar production in November, December and January.
  • Indeed. Sun does shine occasionally during nothern hemisphere dark months.
• Energy savings are real
  • On the right hand side of the graph, months June and July indicate no energy saving as both years have solar panels. This is the flaw in refenrence consumption data.

The Important Stuff

Lots of graphs and details. What' the key takeaway here? Can we summarize all this somehow?

What Others Say on Profitability

There is a Master's Thesis from Feb 2024: Techno-economic analysis on optimizing the value of photovoltaic electricity in a high-latitude location.

Gist of the thesis is twofold: First, to maximize the profitability, consume your own production. Second, (this is self-evident) installation direction is a factor. In plain words, eat your own dog food and on northern hemisphere, install your panels to southernly direction. The design of PV system installation must be to capture as much sun as possible and consume your own production as much as possible.

Measuring Self-consumption

My Home Assistant setup comes with Energy-dashboard as default:

It has a reading for "self-consumed solar energy". Exactly what I should be monitoring!

As this is important, there is a discussion on calculation "Computation of self-sufficiency/autarkie and self-usage of PV". From the doscussion, following useful math can be found:

• energy_used = energy_imported + energy_production - energy_exported
• net_returned_to_grid = energy_exported - energy_imported
• self_sufficiency_perc = (energy_used - energy_imported ) / energy_used 100.0
• self_consumed_solar_energy_perc = (energy_production - energy_exported ) / energy_production 100.0

Doing the same with Home Assistant is rather simple. Btw. I'm using VictoriaMetrics add-on. Doing something like this in MetricsQL shows following data for the past year:

• delta(sensor.active_energy_import[1y]) = 9000 kWh
• delta(sensor.active_energy_export[1y]) = 1700 kWh
• delta(sensor.total_production[1y]) = 3400 kWh

This is exactly what I'll need to get: self_consumed_solar_energy_perc = 49%
I can self-consume roughly half of my production and rest is exported as excess.

This is a vital metric, as indicated by the thesis on profitability. To increase this percentage, I'd need to store the production in a battery. This battery might be in a car. Little bit of Home Assistant -tinkering and I'd be able to charge the car on excess export energy. Alternative is to double my investment and go for a (expensive) solar battery storage. On those two, I'd might choose the EV.

Measuring Profitability

All the relevant numbers are there, let's convert all this into time and money. More math:

• energy_saved = energy_production - energy_exported
• energy_saved = 3400 - 1700 = 1700 kWh

That is the amount I used of my own production, but didn't have to pay for import. My local network provider takes 4 cents / kWh for transfer. Assuming my energy costs 7 cents / kWh for the entire period, then 1700 kWh would have cost me 190€.

Assuming I'd have a good year and save 200€ on my electricity bill. Further, assuming my PV system cost after tax deductions would be 5000€. A simple 5000/200 division gives the breakeven. That's 25 years! No way, this is profitable nor sensible. Well, at least I have security of supply, when there is an outage .... oh, wait! As mentioned earlier, the panels turn off when there is no electricity. A complete bust!

Finally

On financial perspective, this is not sane. Without batteries, I simply cannot reach the self-consumption numbers needed.

Tinkering with these is a fun hobby, but that's as far it goes.