Tax incentives and falling prices: Finland develops solar electricity

1/4/18, 11:00 AM -

So far, Northern Europe has been terra incognita when it comes to photovoltaics. This is now changing – slowly but steadily.

Solar architecture at the front of Vaisala's HQ in Vantaa near Helsinki.

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Norway, Sweden and Finland are not mass markets, far from it. At the end of 2016, around 140 megawatts worth of solar generators were installed in Sweden, around 27 megawatts in Norway and around 20 megawatts in Finland. However, the growth rates for the current year are considerable.

According to Karoliina Auvinen of Finsolar, a start-up at Aalto University, the Finnish market has grown by more than 100 percent between 2014 and 2016. Prices for solar installations fell by more than 10 percent in one year. The self-consumption of smaller installations is exempt from grid charges and electricity taxes, while municipalities and companies receive investment subsidies.

Falling prices drive the installations

According to Auvinen, prices for larger grid-connected solar generators of more than one megawatt fell below 1,000 euros per kilowatt. Rooftop arrays currently cost between 1,300 and 2,000 euros. Off-grid installations equipped with batteries cost between 3,500 euros and 5,000 euros per kilowatt.

In Finland, self-consumption of solar energy is exempt from grid charges and electricity taxes (up to a maximum of 800 megawatt hours per year). Companies and municipalities receive subsidies of 24 to 40 percent if they invest in photovoltaics. However, this subsidy does not apply to residential buildings and building societies.

Tax exemptions as incentives

But the installation of solar systems on private homes is subject to tax advantages of up to 10 percent of the total investment. Taking into account the subsidies and tax exemptions, PV electricity generation costs are currently between 3.3 cents per kilowatt hour for large-scale installations and 11 cents per kilowatt hour for small installations, according to Auvinen.

The kilowatt hour of household electricity costs about 18 cents on average. "The next step has to primarily be to integrate the construction sector and building societies into the support scheme," Auvinen says. More than two million of the overall 5.5 million Finns live in around 80,000 apartment buildings. With a series of pilot projects on micro-grids (island grids) and smart metres, Finsol is trying to demonstrate the potential of solar power in this segment.

Comparable to Central Europe

The annual solar irradiation at least in southern Finland is comparable to Central Europe. The cold weather and the dust-free environment is an advantage, Auvinen points out. This is also confirmed by Matthi Lehtonen, operator an outdoor tracker array (6.2 kilowatts) on a farm in the Helsinki metropolitan area.

Last year, his system generated a total of 7,200 kilowatt hours of solar power, and its specific yield reached 1,148 kilowatt hours per kilowatt. "Only two months of the year, from the end of November to the end of January, yields are quite low because days are so short," the retired engineer says. (Hans-Christoph Neidlein)

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