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Comment by roel_v | Hacker News Reader

Can someone post numbers on the amount of subsidies that are given by the German government? The Belgian system of paying out for each 1000 kW produced is gradually being phased out; For those installed in 2008 and 2009 you got 450 euros, this year 350 and over the next few years this will decrease to 150 I think. Plus you can deduct a mortgage used to buy solar panels from your income. I modeled this fairly extensively a few years ago and it turn out that yields of 7% on the investment are expected. My parents are making more than that because of lots of sunshine over the last few years and higher energy costs so more savings. It's an awesome investment, and unparalleled in its risk class.

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I've done some consulting in the area but don't have any hard numbers at hand right now. But basically, it's lots of money. If the subsidies are taken away then the market collapses. Germany isn't the sunniest country in the world yet was (is?) the largest market. Spain had a recent boom, which was followed by a bust when the subsidies were removed.

France has been playing catchup in this area and they were proposing subsidies that would reduce each year to better match reductions the cost basis of PV. They were predicting ~20 years for solar to reach grid parity.

A more interesting debate is whether governments should be interfering in free market forces to push some technologies over others.

Oh sorry what I meant was more how much an individual can make on these subsidies. I know the aggregate is significant and not in relation to the immediate effects. I think it's also, on a rational level, quite clear that the redistributive effects of the subsidies are of dubious nature and politically motivated; every tax payer contributing to elevated savings yields of those with 20k to spare or the creditworthiness to borrow as much ranges from silly when one is in a forgiving mood to outright immoral when one is not.

Maybe I was diverting the conversation, I was just pointing out that those who installed PV panels in Belgium got a very nice yield on their investment. I haven't run the numbers with the latest payouts and panel costs (PV panel cost has come down significantly already over the last few years) so I don't know the state of the art. I was interested in comparing subsidy schemes with other countries.

(as an extra data point, the Netherlands provides only a fixed subsidy for PV panels, and there's a fairly low ceiling to the total that can be paid out a year; based on a first come, first serve system. The period to recuperate the investment is about 20 years, which is quite long; in Belgium one can earn back the investment in about 6 years and everything after that is pure profit).

I apologize in advance for another short comment, but your reply leads to another interesting point: should entities (individual, companies) be using payback period as a criteria for investments? Everything I learned in b-school pointed us towards using NPV as the best metric, but many entities still use IRR or payback period. I'll try to follow-up tomorrow with some numeric examples so you and everyone else can see the implications of various methods. But the stuff I saw from calculations in France (the most generous market for building-integrated photovoltaic installations) was on the order of 10 years.

Your 6-year payback seems a bit optimistic but I last looked into this stuff 8 months ago and things may have changed.

No, payback period is a silly metric, and my 6 years do account for opportunity cost :)

Actually I tried to make a product out of this. The website is still up on http://www.solar-profit.info/. It's in Dutch but the screenshots speak for themselves. I never sold a single copy, for one because my market is about 500 customers big, and second because I didn't manage to explain the concept of time value of money to my leads (installation companies for PV panels).

So yeah that's the answer to your comment. Payback period everybody understands, and that's the only thing it has going for it, but unfortunately it's such a big advantage that you still need to use it if you want to convince some markets.

Energy production was never a free market and never will be.

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