Amortisation
The period until a PV system's investment costs are recouped through electricity savings and feed-in tariff revenue.
Also known as: Payback Period, Payback Time, Amortisation Period
What Is Amortisation?
The amortisation of a photovoltaic system describes the point at which cumulative savings and revenues exceed the original investment costs. From this point on, the system generates a profit.
Calculation
The payback period depends on several factors:
- Investment costs (system including installation)
- Annual yield in kWh
- Self-consumption rate and electricity price
- Feed-in tariff for surplus power
- Operating costs (insurance, maintenance, meter fees)
Typical Payback Periods
| Scenario | Payback Period |
|---|---|
| Without storage, 30% self-consumption | 8—11 years |
| With storage, 60% self-consumption | 10—14 years |
| Full feed-in | 12—16 years |
| Balcony solar system | 3—5 years |
Influencing Factors
- Higher electricity price shortens the payback period
- More self-consumption improves profitability
- Lower purchase price reduces the payback period
- Good location (high solar irradiance) increases yield
Practical Tip
After amortisation, the system produces virtually free electricity for the remaining lifetime (15—20+ years). A PV system with a 25-year lifetime and 10-year payback achieves an annual return of 5—8% over its entire operating life.
Related Terms
Levelised Cost of Electricity (LCOE)
Total cost of electricity generation per kWh over the lifetime of a system -- for PV currently 5--10 cents/kWh.
Self-Consumption
Share of self-generated solar electricity consumed directly in the household rather than fed into the grid.
Feed-in Tariff
Legally guaranteed remuneration for solar electricity fed into the public grid, governed by the EEG.
kWh (Kilowatt-Hour)
Unit of electrical energy -- one kWh equals the energy converted at a power of 1 kW over one hour.