My finances, my projects, my life
November 25, 2024

Make the move into energy self-generation

  Compiled by myLIFE team me&myFAMILY November 25, 2024 10

Want to reduce your energy costs and help fight climate change? Have you considered generating your own electricity?

Energy self-generation means the consumption of energy we ourselves generate from renewable sources such as the sun or the wind. The solutions available to generate our own electricity include the installation of solar photovoltaic panels or, less frequently, domestic wind turbines.

Electricity self-generation has become increasingly popular in Luxembourg in recent years. According to the Luxembourg Regulation Institute (Institut Luxembourgeois de Régulation, ILR), 76% of households equipped with new photovoltaic panels have opted for electricity self-generation, compared with only 14.7% in 2021.

How do photovoltaic panels generate electricity?

A photovoltaic solar panel is a device made up of photovoltaic cells that capture energy from the sun’s rays and transform it into direct electrical current. This direct current is then converted into alternating current by a power inverter so that it can be used to power the electrical appliances in your home. The amount of energy produced depends on a number of factors, such as the size of the photovoltaic system, the orientation and inclination of the panels, light levels, and so on.

Electricity can only be generated when the photovoltaic panels are exposed to sunlight. This means that the period of electricity generation does not always match that of electricity consumption. As a result, surplus energy is generally fed back into the grid. However, we can install solar batteries to store this surplus for use at night, for example.

Useful info: There are two types of solar panel: solar photovoltaic panels, which produce electricity, and solar thermal panels, which produce heat (e.g. to power a water heater).

Why choose self-generation?

Electricity self-generation has many benefits. First of all, by using a clean and virtually inexhaustible energy source, you’re helping to protect the environment and reducing your reliance on fossil fuels1. By using solar energy, you can reduce your dependence on the conventional distribution grid and therefore cut your electricity bill. You can even boost your income by selling the surplus electricity you produce. Lastly, you can still receive financial aid for installing a photovoltaic system and, depending on the size of the array, tax breaks as well (see below).

Photovoltaic systems do not produce energy twenty-four hours a day, and yields vary according to the time of day and weather conditions.

However, there are a number of things you should bear in mind. The average lifespan of a solar panel is around thirty years, with regular maintenance necessary to ensure the system is working properly. What’s more, depending on your system and your energy consumption, the electricity you produce may not cover all your needs. Photovoltaic systems do not produce energy twenty-four hours a day, and yields vary according to the time of day and weather conditions. To meet your needs, you’ll need a complementary source of energy such as a connection to the conventional grid or storage batteries, for example.

Lastly, while solar electricity doesn’t produce carbon dioxide, the manufacture and transport of photovoltaic panels does have an environmental impact. However, this is offset by the energy produced during the life cycle of the panels, whose components are between 95% and 99% recyclable.2

How do I switch to self-generation?

To go down the self-generation route and install photovoltaic panels on your roof, the first step is to find out whether the project is feasible. Can your roof support the system? Is it facing in the right direction? How much sun does it get? How steep is it? And so on.

Useful info: You can find out how much sun your location potentially receives by checking out the solar map and getting free advice from a Klima-Agence advisor.

Balcony photovoltaic power system

If you don’t have space for a large photovoltaic system, you can still opt for a balcony, or “Plug and Play”, system. These small photovoltaic power systems are generally made up of two modules and a power inverter. Their output is limited to 799 W and they can be plugged into a standard power socket. The electricity produced is then fed into the domestic electricity grid and can be consumed directly.

If this project seems feasible, get in touch with an electrician. They’ll tell you about your grid’s available capacity, the ideal size for your system depending on your energy consumption, and the cost of the project. Remember to get quotes from several professionals and be careful when choosing your tradesman.

Check with your municipality whether you need specific authorisation to install solar panels.

You can choose whether to sell all the electricity you produce, feeding it back into the grid, or to use it for your own consumption, selling the surplus.

Once you’ve made these checks, contact your grid operator so that they can authorise your system. You can choose whether to sell all the electricity you produce, feeding it back into the grid, or to use it for your own consumption, selling the surplus. You can also choose the tariff model for the remuneration you receive for surplus energy. You can choose between:

    • the state-guaranteed feed-in tariff: a buy back agreement with the grid operator, offering guaranteed remuneration based on a fixed price for 15 years (from the moment the system is put into service)
    • variable feed-in tariff: electricity buy back agreement offered by your supplier of choice at a rate that varies according to market prices and for a period to be agreed with the supplier

Please note that if you choose the variable feed-in tariff, you’ll no longer be able to change to a guaranteed feed-in tariff.

Useful info: income generated by the resale of surplus electricity is taxed differently depending on the power of the system and the use you make of it (resale of all energy produced, total or partial consumption). However, systems with a power of 30 kWp (kilowatt-peak) or less are exempt from tax beginning from the 2023 tax year. More details on the tax treatment of an individual operating a photovoltaic system.

If you already have a photovoltaic system and want to switch to self-generation, you can contact your grid operator to change your agreement.

Share electricity you produce with your neighbours

Did you know that you can share electricity you produce with neighbours and friends? Since the law of 9 June 2023 came into force, owners of photovoltaic panels can share surplus energy they produce with neighbours, instead of feeding it into the electricity grid, subject to certain conditions. For more information, visit www.weshareenergy.lu or contact your grid operator.

What financial aid is available for your project?

Luxembourg aims to increase its use of renewable energy to 25% by 2030. To encourage consumers to meet this target, financial incentives have been put in place in addition to the electricity buy back scheme.

Klima-Agence has created a simulator that allows you to estimate the amount of aid you could receive for your photovoltaic system.

The Luxembourg government’s Klimabonus scheme provides investment aid for the installation of photovoltaic panels for self-generation. There are two options:

    • Aid covering 20% of the investment, if you opt for the state-guaranteed feed-in tariff for 15 years (maximum €500/kWp)
    • Aid covering 50% of the investment, if you opt for a variable feed-in tariff based on market prices (maximum €1,250/kWp) For orders placed up to 30 September 2024, the aid stands at 62.5% of the investment (maximum €1,562.50/kWp).

Klima-Agence has created a simulator that allows you to estimate the amount of aid you could receive for your photovoltaic system. This investment aid is granted subject to certain conditions (order date, invoice date, power of system, location of panels, etc.). The application must be made to the single point of contact for housing assistance after the system has been installed. For support, you can get basic, free and independent advice from Klima-Agence’s advisors.

Useful info: from 1 January 2023, you can also benefit from a super-reduced VAT rate of 3% on the supply and installation of your photovoltaic panels, subject to certain conditions.

Some municipalities also offer subsidies for the installation of renewable energy systems. The amount of aid varies from municipality to municipality and represents a percentage of the aid granted by the state. For further information, get in touch with your local municipality.

Lastly, a number of Luxembourg banks offer special loans for eco-friendly projects. This includes BIL’s Green Loans, which offer loans of up to €100,000 to finance the purchase of energy-efficient equipment for your home. If eligible, you may be able to benefit from a state guarantee and/or an interest subsidy for your climate loan.

You should now know enough about energy self-generation and how it works in Luxembourg to make an informed choice. Get in touch with industry professionals (Klima-Agence, energy advisors, suppliers, electricians and heating engineers) about any remaining questions you may have and make your contribution to the energy transition and the fight against climate change.

1 Sources: Klima-Agence and ILR.

2 Sources: Engie and Greenpeace.