Photovoltaics is carbon-neutral way of produce electric energy. When the radiation of Sun hits to solar panels, it emits electrons by physical and chemical phenomenon known as photovoltaics effect. The amount of solar radiation is affected by weather conditions, time of day and time of year, which makes solar power variable electric energy production method. Being variable production method, one usually can’t cover whole energy consumption by solar power without times producing more than needed. Thus, solar power is most profitable when one can use production by themselves directly or indirectly through energy storages.

When investing on solar power system, things that affects project viability are target place, sizing, purchase electricity price and possible aid. Photovoltaic system is well suited for target place needing cooling or energy is stored with electricity consuming air or ground source heat pump. When sizing the system, one should take extra care for determining own needs and avoid oversizing. Even if one can sell surplus energy, price for it is lower than bought energy and savings will be lower. Electricity company might offer virtual battery service, in which surplus energy is metered and one can use it later on from the power grid. However virtual batteries have size limits and monthly fees, which makes them complicated and less profitable.

The price of purchase electricity consists of electrical energy, electric tax and the transmission of electricity. Electricity tax liability for own production starts from 100 kVA systems. But electricity tax from own production have to be paid when yearly energy production exceeds 800 MWh. Electricity tax liability obligates separated metering of produced energy own consumption and amount of own electricity production has to be mentioned on tax return.

Solar panel service life for photovoltaic power plant is about 30 years. Yearly wear for solar panel power production is about half percent. Inverter and possible battery storage life expectance are lower than that and they are to be replaced at least once during plant’s service life.  Payback period for right sized solar power plant is well below service life, which means that acquisition first pays itself and produces then profit with savings on electric bill.

Comparable metrics between plant sizes for acquisition costs is euros divided by peak kilowatts, which includes whole expenses of photovoltaic power plant parts and construction in form of turnkey package. Construction part for expenses is site specific but mainly the larger system is the lower €/kWp will be.

Payback Periods and Profitability

As an example, we compare 50 kWp, 70 kWp and 90 kWp solar power plants. Costs for the plants are just for reference and without value added tax such as 1000 €/kWp for 50 kWp, 950 €/kWp for 70 kWp and 900 €/kWp for 90 kWp. Used funding structure for the plants are Business Finland’s 20 % Energy Aid and bank loan with 20 % self-financing contribution.

On table above are calculated payback periods and predicted profits for different self-consumption values. Payback period is the time when system pays itself from produced energy, the higher self-consumption value is the shorter that time is. Net present value is predicted profits, which system has generated after 30 years of service. And again, the higher the self-consumption value is the more profits is predicted to come from the system.

Real production in Lapland

Above examples does not account northern Finland’s snowy winters and set of values are calculated using expectation value for production. Expectation value is from calculator tool (Source PVGIS). which takes sun radiation from past era and calculates yearly production from given plant size. Calculated expectation value in Rovaniemi is 763 kWh/kWp for yearly production. In north solar panels are usually covered with thick snow layer, that is left without cleaning whole winter. This cut energy production for winter months, which is most prominent in early spring.

In this example there is energy production values from year 2020 and expected production for 5.5 kWp photovoltaics system with VAT (24%)

Real production value for 5.5 kWp solar power system was 607 kWh/kWp in year 2020. Payback period and profit values can now be calculated and compared to result obtained from expectation value calculations.

Comparing the real production to expectation we see quite drastic drop in profit and increased payback period. Missing the early spring production is most prominent on small sized systems.

Show available investment grants and subsidies

Investment grants and subsidies

Business Finland Energy Aid
Aid meant for companies and communities, which are investing low carbon energy systems. Under five-million-euro photovoltaic system project can be granted with 15 % Energy aid. Aid must be applied before starting the project.
Investment aid for on-farm energy production
For investments in renewable energy production linked to agricultural production activities. Solar photovoltaic projects are eligible for 40% investment aid. The investment must cost at least 17,500€ and the applicant farm must meet the conditions set by the Finnish Food Authority for applicants. The aid must be applied for before the start of the project.
Tax credit for household expenses
Personal household deduction, which can be claimed as tax credit on tax return. Amount of tax credit is 40 % for done work, i.e. bought solar panel installation work. Maximum tax credit is 2250 € for 5625 € worth of work.


ARA Energy Aid
ARA is the housing finance and development center of Finland. It can grant subsidies for energy efficiency improving housing renovating projects. Subsidies is meant for private, housing associations and special ARA communities.
Aid for giving up oil heating on small houses
Centre for economic development, transport and the environment have subsidies for houses, which are considering changing oil heating to fossil-free heating system. Amount of the aid depends on replacement heating system and to eligible house must have year-round residence. Can’t be combined with tax credit for household expenses.