Swedish government raise the limit for tax exempt on solar onsite

What’s the news?

At a time when solar is at a tipping point globally and costs have decreased by more than 90% the last 10 years, the Swedish government now take action to further improve the business case for onsite solar by raising the limit for tax exempt from 255 kW to 500 kW. 

The change applies to all solar systems installed behind the meter – rooftops, parking lots or adjacent land. That means that installations now will be larger, offset a larger share of the total electricity consumption and have better economies of scale.

The result: total savings first year grow by ~250%

Thanks to the suggested tax exempt, a solar PPA at 500kW will now on average generate annual savings on the electricity bill of approximately 100-150 000 SEK (compared to 20-40 000 SEK with a 255 kW PPA).

The improved savings are an effect of economies of scale resulting in a lower PPA price (75 öre/kWh for 500 kW) combined with the fact that a larger share of the electricity bill can be offset (230 MWh vs 450 MWh). The typical savings will be 15 öre/kWh (compared to 90 öre variable cost from grid). 

Annual savings are also expected to increase over time as market prices and grid fees are expected to increase. 

PPA is a fast track to savings

Large corporations use PPAs, solar as a service, to roll-out solar fast and without any hassle. Power Purchase Agreements allow companies to purchase renewable energy directly from a solar installation during a long period of time. Thanks to reduction in technology and operating costs in recent years, solar energy is now below industrial retail price. Through the PPA model, the customer simply pays less for power from the start, with zero upfront cost and no operational risk.