The Algarve enjoys over 300 days of sunshine per year, making it one of the best locations in Europe for solar power. This abundant sunlight allows homeowners to generate much of their electricity, reducing reliance on the grid and lowering electricity bills.

High electricity prices make solar a smart investment

Portugal has some of the highest electricity prices in Europe, driven by taxes and network costs. Rising energy prices make it expensive to power homes, heat water, and run appliances. Solar panels help cut costs and even increase property value. The European Commission highlights solar energy as a key factor in reducing electricity prices and supporting economic growth in Portugal.

Understanding your energy savings

An average Algarve home consumes 6,000 to 8,000 kWh of electricity annually, depending on heating, cooling, and appliance use. A 5 kWp solar system produces around 7,000 kWh per year, covering most household electricity needs. With solar batteries, self-consumption can increase from 50 percent to 95 percent, reducing grid reliance and boosting savings.

The cost of electricity vs. solar savings

As of 2025, electricity costs €0.23 per kWh according to EUROSTAT, meaning a home using 7,000 kWh annually spends €1,610 per year on electricity. With energy prices rising, solar becomes an even smarter investment. With 50 percent self-consumption, homeowners save around €805 per year. Adding a battery storage system increases savings to €1,500+ annually.

Selling excess energy to the grid

Portugal’s self-consumption scheme allows homeowners to sell unused solar energy back to the grid. While feed-in tariffs are lower than retail electricity prices (€0.02 - €0.08 per kWh), it still provides extra savings. However, storing excess energy in batteries is more profitable, avoiding grid buy back rates and maximizing long-term returns.

Return on Investment (ROI)

A 5 kWp system costs €6,000 - €8,000, including installation. Government incentives and financing options help reduce upfront costs. With annual savings between €805 - €1,500, most homeowners recover their investment within 5 to 7 years. Given rising electricity prices, the payback period may be even shorter, making solar a highly attractive investment.

Maximising your savings

Solar batteries store excess energy, increasing self-consumption and reducing grid dependence. Brands like Huawei, Ampower, and Growatt offer efficient battery solutions. A properly installed system maximizes efficiency and durability. Expert installation ensures correct panel placement and safe wiring, preventing long-term losses.

Conclusion: Is solar worth it in the Algarve?

With rising electricity costs, solar energy offers long-term savings and energy independence. Most systems pay for themselves within a decade, delivering decades of free electricity.

Source:

Voltaicos | Solar panels in Portugal based in Guia | +351 926 250 355 | Info@voltaicos.pt