The Biggest Mistakes Beginners Make When Investing in PV
This guide refers to German law and the German tax system. It is a translation of our German original and does not replace individual tax or legal advice.
For several years now, the photovoltaic business has offered an attractive opportunity for investors and those leasing out land or roof space. Thanks to the German Renewable Energy Sources Act (EEG, Erneuerbare-Energien-Gesetz), photovoltaic systems enjoy special consideration in terms of acquisition, maintenance and taxation. If you are considering a PV system, planning is the most important task, especially for new investors. Those who avoid mistakes at the outset can benefit from their PV systems without worry over the long term and expand their investment within this asset class. In this article, we explain what you should bear in mind when assessing basic profitability. We also answer the question of why the price per kWp is not the only decisive factor.
Neo Capital supports high-net-worth individuals and the self-employed in tax-optimised investment in PV systems and in converting tax liabilities into private wealth. In doing so, we put legal structuring models into practice and look after our clients together with their personal tax advisers. Our financial experts accompany you through the entire process of your investment and ensure that all procedures are implemented smoothly and in a sustainably optimised way.
Sound foundations for the PV business
Every investment begins with research and the preparation of documents. This is where the first mistake lies: the frequent inexperience of motivated investors. Anyone who examines the required documents only superficially risks jeopardising the successful implementation of their investment. The grid feed-in approval and the structuring of the easement (Dienstbarkeit) in particular are fundamental to being able to operate a photovoltaic system. In order not to jeopardise approval, prospective investors should pay particular attention to the completeness of the documents. Only in this way can lengthy reviews and possible rejections be avoided. With growing interest in photovoltaic modules, potential roof and land areas for lease are also increasingly in demand. Through our independent experts, we arrange the most attractive form of installation, taking full account of the targeted returns over the next 20 to 30 years. Without this consideration, serious errors can occur in the calculation of your system, reducing your yield due to incorrectly accounted-for lease costs. To capture all components of your system, we work with a comprehensive approach to calculating your potential return.
Calculating the return correctly: minimum remuneration for PV modules
An investment in a PV system must be assessed far more comprehensively than is the case with shares or traditional investments. Besides the specific yield in kWh/kWp, there are other factors that feed into planning and acquisition. At the top of the list are the acquisition costs, running costs such as maintenance and monitoring, as well as insurance and the size of the photovoltaic system. In addition to these factors, the year of commissioning is also decisive in order to calculate with the fixed minimum remuneration per kWh over the next 20 years. Depending on when a photovoltaic system is commissioned, investors can expect EEG feed-in tariffs of different amounts. Looking at recent years and the trend in electricity prices, a return of 7% is the average. Thanks to the growing demand for green electricity and the declining share of electricity from conventional sources, investors can expect an increase in the coming years. In the direct marketing of photovoltaic systems, the average monthly market value in 2022 was around €0.20 per kWh. Due to the continuing trend, yields of up to 10% are forecast, which would mean the photovoltaic system pays for itself after just 10 years. Because of the high potential of the systems and the average service life of PV modules of 20 to 30 years, the term "solar pension" (Sonnenrente) keeps cropping up in connection with PV investments — an analogy that aptly describes the opportunities of timely investment.
Neo Capital: PV systems as an investment with expert support
The world is changing, which in particular burdens traditional asset classes with a considerably higher investment risk. Solar systems, by contrast, form a long-awaited and secure foundation for retirement planning and capital protection, particularly thanks to the EEG (Renewable Energy Sources Act). The latter can be combined particularly well with tax-relevant structuring, as photovoltaic systems, being eligible for the Investitionsabzugsbetrag (IAB, investment deduction), are ideally suited to converting tax liabilities into private wealth. Would you like to secure your capital with solar systems and invest it sustainably and tax-efficiently? Our team at Neo Capital supports you in arranging photovoltaic systems and corresponding opportunities to lease suitable land. Working with you and your tax adviser, we carefully review your documents in advance and calculate your profitability. In this way, we ensure that you can benefit privately from the politically subsidised path towards an ecologically sustainable future. Avoid mistakes when entering this forward-looking asset class and get in touch for advice from our experts. We are at your side together with our network of tax advisers and independent financial advisers.