Is solar the answer to high energy prices in Portugal?

Why the Algarve is ideal for solar energy

300+ Days of sunshine: A perfect opportunity

The Algarve enjoys over 300 days of sunshine per year, making it one of the best locations in Europe for solar energy. With such abundant sunlight, homeowners can generate a significant portion of their electricity needs from solar panels, reducing their reliance on the grid and lowering electricity bills. In our previous article, we discussed whether solar panels are a waste of money or a worthwhile investment. In this article, we’ll focus on the returns and explore how much you can save with solar panels

High electricity prices make solar a smart investment

Portugal faces some of the highest electricity prices in Europe, driven by taxes and network costs. With rising electricity costs making it more expensive to power appliances, heat water, and cool homes, solar energy offers a cost-effective solution. In regions with abundant sunlight, like the Algarve, solar panels not only reduce electricity bills but also increase property value. According to the European Commission, solar energy plays a vital role in lowering electricity prices and fostering economic growth, with Portugal benefiting from this trend. (European Commission).

Understanding your energy savings

Solar panel output and self-consumption

How much energy does a typical home use?

An average home in the Algarve consumes around 6,000 to 8,000 kWh of electricity per year. Usage varies depending on the number of appliances, air conditioning, and heating systems in use. Homes with electric water heaters, swimming pool pumps, and underfloor heating systems tend to have higher consumption levels.

How much electricity can a 5 kWp system generate?

A 5 kWp solar panel system can generate around 7,000 kWh per year in the Algarve's sunny climate. This is more than enough to cover most household electricity needs, depending on consumption patterns. With the right system size, homeowners can meet up to 50% of their energy needs through self-consumption. Additionally, by incorporating solar batteries, this can increase to as much as 95%, allowing homeowners to store excess energy for use during the night or cloudy days, further maximizing energy independence. This means that, apart from the membership cost, most energy expenses can be covered by the solar system itself. Learn more about solar battery storage..

The cost of electricity vs. solar savings

Current electricity prices in Portugal

As of 2024, the average electricity price in Portugal is around €0.23 per kWh including taxes (GPP). With an annual consumption of 7,000 kWh, a household could be paying €1,610 per year for electricity. Given the historical trend of rising energy costs, this amount is likely to increase in the future, making solar an even more attractive investment.

Savings potential based on self-consumption

By installing solar panels, homeowners can directly use the electricity they generate, reducing their reliance on the grid. With 50% self-consumption, a household could save around €805 per year on electricity bills. If a battery storage system is added, self-consumption can increase to 95%, boosting savings to over €1,500 per year.

Selling excess energy back to the grid

How does it work?

Any excess solar energy that is not used immediately can be fed back into the grid through Portugal's self-consumption scheme. Homeowners receive compensation for the surplus energy they supply. This means even if you’re not at home during the day, your solar panels can still generate value by selling energy back to the grid. As discussed by Energy Central, feed-in tariffs play a key role in reducing the cost of solar energy for homeowners (Energy Central).

Is it profitable?

While grid compensation rates are lower than the retail electricity price (around €0.02 - €0.08 per kWh), selling excess energy still provides additional savings, making solar panels even more attractive. However, with the use of solar batteries, homeowners can save up to €0.23 per kWh by storing excess energy instead of selling it at the average rate of €0.04 per kWh. Over time, these savings accumulate, further offsetting the cost of the system.

The return on investment (ROI)

How much do solar panels cost in portugal?

A 5 kWp solar panel system costs between €6,000 and €8,000, including installation and inverter costs. Prices depend on the quality of panels, inverters, and battery storage options. Government incentives and financing options can further reduce the upfront investment, making solar even more accessible to homeowners.

How long does It take to break even?

With annual savings of €805 - €1,500, most homeowners recover their investment within 5 to 7 years. After that, solar panels provide free electricity for their entire lifespan, which can exceed 25 years. Factoring in rising electricity costs, the payback period may be even shorter, making solar panels a highly attractive investment.

Maximizing your savings

The benefits of battery storage

Adding a solar battery allows homeowners to store excess electricity for use at night or during cloudy periods. This increases self-consumption and reduces dependence on the grid, maximizing savings. Popular battery brands like Huawei, Ampower and Growatt offer reliable storage solutions that integrate seamlessly with solar panel systems.

The importance of professional Installation

A well-designed solar system ensures maximum efficiency and durability. Professional installation guarantees optimal panel placement, safe wiring, and compliance with local regulations. A poorly installed system can lead to inefficiencies and long-term losses, making expert installation essential for maximizing energy savings. Explore solar installation service in Algarve.

Conclusion: Is solar worth it in the Algarve?

With rising electricity costs, solar energy savings in the Algarve provide long-term financial relief. A solar system pays for itself within a decade and continues generating savings for decades.

Contact a local solar company for a free consultation

Are you ready to start saving on your electricity bill? Contact Voltaicos solar panels for a free consultation via: +351 926 250 355. The team speaks English, Dutch, German, and French and will help you find the best solar solution for your home.

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