The installation of a photovoltaic (PV) system represents a significant investment that can be worthwhile both ecologically and economically. For most homeowners and investors, financial profitability is crucial, alongside environmental considerations. The key question is: When will my PV system pay for itself?
This guide guides you step by step through the profitability calculation of a photovoltaic system and shows you how to correctly determine the payback period. With this knowledge, you can make an informed decision about your investment and avoid financial surprises.
Basics of Profitability Calculations
The profitability calculation of a PV system essentially involves comparing the total costs with the expected returns and savings. The payback period indicates the number of years it takes for the investment costs to be repaid through the generated returns.
The basic formula is: Payback period = total investment divided by annual return. However, this simple formula is not sufficient for a realistic calculation, as numerous factors such as interest rates, inflation, electricity price increases, and module degradation must be taken into account. A detailed profitability analysis therefore includes the total investment costs for purchase and installation, the operating costs for maintenance and insurance, the returns from feed-in tariffs and savings from self-consumption, possible subsidies through grants and tax benefits, the financing costs of borrowing, and temporal developments such as electricity price increases and system degradation.
Investment costs of a PV system
The investment costs are made up of several components. The modules typically cost between 600 and 900 euros per kWp, inverters between 150 and 300 euros per kWp, and the mounting system between 100 and 200 euros per kWp. Approximately 200 to 400 euros per kWp must be factored in for installation. Electrical components cost 50 to 150 euros per kWp, while planning and approval costs 100 to 200 euros per kWp. A storage system, if included, costs from approximately 800 euros per kWh of storage capacity.
For an average 10 kWp system for a single-family home, the total costs are typically between 12,000 and 18,000 euros (as of 2025). The exact costs vary depending on the system size, module type and quality, roof conditions, additional components, and the selected installation company. Larger systems often have lower costs per kWp, while high-performance modules are more expensive. Complex roof shapes increase installation costs, and additional components such as storage or energy management systems also affect the price. When reviewing offers, make sure that all costs are transparently broken down and that there are no hidden costs.
Calculating Yields and Savings
The yields of a PV system are made up of various components. The annual electricity generation depends primarily on the system output in kWp, the location factor (solar radiation at the site between 900-1,200 kWh/kWp/year in Germany), the orientation and inclination of the modules, possible shading, and the module efficiency. A good rule of thumb for Germany: A south-facing, optimally tilted 1 kWp system generates approximately 900–1,100 kWh of electricity per year, depending on the location.
For the electricity fed into the public grid, you receive a fixed feed-in tariff according to the Renewable Energy Sources Act (EEG). This is currently (as of 2025) approximately 8.1 cents/kWh for systems up to 10 kWp, approximately 7.9 cents/kWh for systems up to 40 kWp, and approximately 6.4 cents/kWh for systems up to 100 kWp. The remuneration is guaranteed for 20 years, beginning with commissioning.
The self-consumed electricity leads to savings in electricity costs. With an average electricity price of 35-40 cents/kWh (as of 2025), each self-consumed kilowatt-hour is worth significantly more than the feed-in tariff. Therefore, a high proportion of self-consumption is economically advantageous. The self-consumption rate is typically 20-40% without storage and 60-80% with storage.
Consider operating costs
Even though PV systems are relatively low-maintenance, ongoing costs still arise. Approximately €100-200 per year should be budgeted for maintenance and cleaning. Insurance typically costs 0.25-0.5% of the investment costs per year. An inverter replacement is usually necessary after 10-15 years and accounts for approximately 10-15% of the total investment. In addition, there may be meter fees for the feed-in meter and taxes for commercial use. These costs should definitely be taken into account in a realistic profitability analysis, as they can extend the payback period.
Subsidies and Tax Incentives
Government subsidies and tax benefits can significantly improve the profitability of a PV system. Funding options include low-interest loans for purchases from KfW, regional funding programs depending on the federal state or municipality, and subsidies for battery storage in some federal states.
Regarding tax aspects, it should be noted that sales tax has been waived on PV systems up to 30 kWp since 2023. In addition, simplified taxation is possible for small systems with regard to income tax, and there are exemption options for small systems with regard to trade tax. The exact funding options should be researched before installation, as they can change frequently.
Methods for Calculating the Payback Period
There are various methods for calculating the payback period. The simplest is the static payback calculation, in which the investment costs are divided by the annual return (without taking interest into account): Payback period = investment costs ÷ annual surplus. This method is simple, but neglects interest and temporal developments.
The dynamic payback calculation, which takes interest, inflation, and temporal developments into account, is more accurate: Net present value = - investment costs + Σ (annual surplus × discount factor). The payback period is reached when the net present value becomes zero.
The return calculation (internal rate of return) calculates the annual return on the investment. A PV system typically achieves returns between 3% and 8%.
Factors influencing profitability
The most important factors influencing the payback period are the system costs (the cheaper the system, the shorter the payback period), the self-consumption rate (higher self-consumption improves profitability), electricity price trends (rising electricity prices shorten the payback period), the location (better solar radiation leads to higher yields), system degradation (output decreases by approximately 0.5% annually), financing costs (relevant for loan financing), and the operating life (PV systems last 25-30 years, usually significantly longer than the payback period).
Practical example of a Economic viability calculation
Let's consider an example 10 kWp system for a single-family home. The initial data are: system costs of €15,000, an annual electricity yield of 9,500 kWh, a self-consumption rate of 30% (without storage), an electricity price of 38 cents/kWh, a feed-in tariff of 8.1 cents/kWh, annual operating costs of €150, a system degradation of 0.5% per year, and an electricity price increase of 3% per year.
The annual surplus in the first year consists of the self-consumption savings (9,500 kWh × 30% × €0.38/kWh = €1,083), the feed-in tariff (9,500 kWh × 70% × €0.081/kWh) = €539) minus operating costs (-€150), resulting in a total surplus in year 1 of €1,472.
The static amortization is therefore €15,000 x €1,472 = 10.2 years. A dynamic calculation, taking into account electricity price increases and system degradation, improves the payback period to approximately 9.5 years. After 20 years, the cumulative profit is approximately €33,000 (more than double the investment).
Avoid common mistakes
When calculating profitability, mistakes are often made that should be avoided. For example, operating costs are frequently underestimated, and inverter replacement is often forgotten. Unrealistic self-consumption rates are also a problem; values that are often too high are often assumed. Module degradation is often ignored, even though performance decreases over the years. Furthermore, yield forecasts are often too optimistic, and yield estimates should be conservative. Financing costs are often neglected, even though they are an important factor in loan financing. Ultimately, the system's lifespan is often overestimated; realistic assumptions range from 25 to 30 years.
Conclusion and Decision-Making Guide
The economic viability of a PV system depends on numerous individual factors. Typical payback periods today are between 8 and 14 years – significantly shorter than the system's lifespan. The requirements play an important role in your personal decision. Ideal conditions include a south-facing orientation, high self-consumption, and low installation effort. An east-west orientation with a balanced daily cycle and moderate self-consumption also offers good conditions. Limited conditions apply in cases of heavy shading, unfavorable roof pitch, and very low self-consumption.
A PV system is not only a financial investment, but also a contribution to climate protection and the energy transition. Even if the payback period is somewhat longer, the investment can still be worthwhile considering rising energy prices and your own energy security. For an accurate calculation, always obtain several quotes and have the provider explain the cost-benefit analysis in detail. Online calculators can provide an initial indication, but are no substitute for individual advice from experts.