From 1.1.2024, an important measure is in effect to support small residential self-consumption systems, with or without a battery. If you are not participating in a subsidy program, you may benefit from tax deductions (tax deductions do not apply if you are already receiving a subsidy through a program).
According to Law No. 5073/2023, Government Gazette 204A/11.12.2023, expenses incurred for the purchase of goods and receipt of services related to the energy, functional and aesthetic upgrade of buildings that have not already been included, and will not be included, in a building upgrade program reduce the personal income tax, in equal amounts over a period of five (5) years, up to the tax payable for each tax year, with a maximum total expenditure limit of sixteen thousand (16.000) euros. The amount of expenses for the purchase of goods taken into account for the tax reduction may not exceed one third (1/3) of the amount of expenses for services taken into account for the tax reduction. The measure covers photovoltaic self-consumption systems, with or without storage.
Two examples:
Two examples:
- Suppose someone installs a residential photovoltaic system at a total cost of 8.500 €, of which 3.000 € is for services. The benefit is: 4.000 € distributed over 5 years, or 800 € per year.
- Now suppose someone installs a residential photovoltaic system with a battery at a total cost of 16.000 € (the maximum eligible for the benefits of this provision), of which 4.000 € is for services. The table below shows this taxpayer’s annual benefit for various taxable income levels.
Taxable income (€): 10.000
Annual benefit over five years (€): 900
Total benefit over five years (€): 4.500
Taxable income (€): 10.758 and above
Annual benefit over five years (€): 1.067
Total benefit over five years (€): 5.335
In most cases, this deduction results in a shorter payback period for the system than, for example, if the battery were subsidized.
Residential net billing (with expense deductions)
The calculations are based on the average market cost of such systems, and the estimated payback periods naturally vary from one self-consumer to another. As a key viability criterion for the residential sector, we use the EU recommendation for payback periods of less than 10 years (“EU Solar Energy Strategy”, 18.5.2022).
Indicative payback period:
Indicative payback period:
- 5 kWp without a battery: 7,1 years
- 5 kWp with a 10 kWh battery: 6,7 years
- 10 kWp (with or without a battery): 5 years
Commercial net billing
Indicative payback period:
- 20 kWp (e.g., a commercial shop connected to low voltage): 3,6 years
- 650 kWp (e.g., a logistics warehouse connected to medium voltage): 4,5 years
