Study: solar panels only pay off in half of Swiss cities

Expanding solar installations is considered key to achieving Switzerland's climate targets and address energy supply issues. © Keystone / Gaetan Bally

Solar panel installations are only profitable in half of Swiss cities according to a new study. This could create hurdles for the expansion of solar energy in the country.

The studyExternal link, published on Thursday and commissioned by the Swiss Federal Office of Energy, found that the cost effectiveness of installing solar panels depends heavily on local conditions – specifically how much operators pay for the energy fed back into the grid and the price they charge for electricity.

Researchers consider an installation profitable when expected profits are higher than 3% over a 30-year life span. Besides installation and maintenance costs, the study considered the system’s performance capacity, the compensation rate for energy fed back into the grid, electricity cost savings, and the local tax rate.

Installing solar panels only paid off in half of the 2,067 Swiss cities and communities analysed by the Swiss Federal Technology Institute ETH Zurich and University of Bern. There were also huge variations in profitability across locations.

“The less the local power grid operator pays for the solar power fed into the grid and the more it charges for the power it provides, the more likely homeowners are to match the size of their solar installation to their own usage,” said ETH professor and study co-author Tobias Schmidt.

Expansion of rooftop solar panels is considered critical to achieve Switzerland climate targets and ensure stable energy supply.

In order to speed up the expansion of solar energy, the authors of the study recommend aligning the various rules and compensation rates across the country. “Switzerland is like a patchwork quilt in this regard. It’s unfair and incomprehensible that the profitability of solar installations varies so widely from region to region,” said Schmidt.