What If Energy Prices Keep Climbing?

Why This Guide Exists

Every solar installer shows you a payback calculation. Almost all of them assume electricity prices will rise 5–10% per year. That assumption can cut the reported payback in half — turning a 14-year investment into a "7-year no-brainer."

But what actually happens to energy prices? History shows 2.5–3.5% long-term growth, punctuated by crisis spikes (like 2022's Russia-Ukraine shock). The truth is: nobody knows. That's why this guide models five distinct scenarios using the same band-by-band engine that powers our calculator — so you can decide which future you're betting on.

Source: All numbers from the hourly engine with 25-year lifecycle, 6% discount rate, inverter replacement at year 12, 5 kWp system, 10 MWh heat pump demand. Prices compound cumulatively each year.

Historical Context: What Energy Prices Have Actually Done

Country 2010 2015 2020 2025 CAGR Notes
Germany €0.23/kWh €0.29 €0.32 €0.38 3.5%/yr High prices, gas phase-out, EEG surcharge history
Italy €0.20/kWh €0.24 €0.26 €0.28 2.5%/yr Steady increases, high grid costs
Spain €0.18/kWh €0.22 €0.24 €0.28 3.0%/yr Tax reforms, renewable boom lowered wholesale but retail rose
Netherlands €0.17/kWh €0.20 €0.24 €0.30 4.0%/yr Gas-dependent, strong growth post-2020
Ireland €0.18/kWh €0.23 €0.28 €0.37 5.0%/yr Fastest EU growth; isolated grid, high gas dependency
France €0.13/kWh €0.17 €0.20 €0.24 4.0%/yr Nuclear-heavy but regulated tariffs rose with grid costs
Portugal €0.15/kWh €0.19 €0.21 €0.22 2.5%/yr Moderate growth, renewables reduced wholesale costs
Poland €0.10/kWh €0.13 €0.14 €0.12 1.0%/yr Coal-dominant, regulated; 2022 spike reversed
Hungary €0.09/kWh €0.09 €0.09 €0.10 <1%/yr Regulated, subsidised; capped prices since 2022
EU average ~€0.17/kWh ~€0.21 ~€0.23 ~€0.25 ~3%/yr —

Over 15 years, the EU weighted average grew ~3% annually — with wide variation by country. Gas-dependent countries (NL, IE, DE) grew fastest. Regulated markets (HU, PL) grew slowest. No country saw sustained 5–10% growth, which is what many installers assume.

Important: These are residential all-in prices (Eurostat nrg_pc_204). Wholesale prices are more volatile and show larger spikes. The retail prices consumers actually pay smooth out those spikes through fixed tariffs and government caps.

The 2022 Crisis: A Case Study

When Russia invaded Ukraine, European electricity prices spiked dramatically. The impact varied enormously by country:

Country Pre-crisis wholesale (~2021) Peak wholesale (2022) Retail impact
Germany €0.03–0.05/kWh €0.50–0.70/kWh Full pass-through, now €0.35
Netherlands €0.04–0.06/kWh €0.60–0.80/kWh Severe; TTF gas hit €300/MWh
Ireland €0.05–0.07/kWh €0.50–0.70/kWh Full pass-through, isolated grid
France €0.04–0.06/kWh €0.40–0.60/kWh Blunted by ARENH regulated nuclear price
Spain & Portugal €0.05–0.07/kWh €0.30–0.40/kWh Iberian exception capped gas for power
Italy €0.06–0.08/kWh €0.50–0.70/kWh Full pass-through, gas-dependent
Poland €0.05–0.07/kWh €0.30–0.50/kWh Regulated caps limited retail impact
Hungary €0.04–0.06/kWh €0.20–0.30/kWh Government price cap absorbed most of the shock

Key insight: The countries that saw the biggest spikes (DE, NL, IE, IT) are now also the ones where solar is most attractive. The countries that capped retail prices (HU, PL, ES, PT) protected consumers from the worst — but also made solar less compelling.

Prices have since stabilised but remain elevated — current calculator prices already reflect post-crisis levels. A future crisis would start from today's elevated baseline.

What Drives Future Prices

Driver Direction Magnitude
EU carbon price (ETS) ↑ Up €80→€200+/t by 2035
Gas dependency phase-out ↑ Up (transition) then ↓ Down Volatile 5–10 years
Grid build-out costs ↑ Up €0.02–0.05/kWh added
Renewable penetration ↓ Down (long term) -
Geopolitical risk ↑ Up (unpredictable) 0–100% spikes

The pattern: Long-term growth of 2–4%, interrupted by crisis spikes of 10–100% in single years.

The Five Scenarios

# Scenario How prices grow What it represents
1 Flat (0%) Prices never change Honest worst case — "what if nothing changes?"
2 Historical (3%) 3% every year Long-term EU average 2010–2025
3 Moderate (5→3%) Years 1–3: 5%, then 4%, then 3% Sustained upward pressure, carbon costs
4 Severe (7→3%) Years 1–3: 7%, then 5%, then 3% Geopolitical tension + carbon + grid costs
5 2022 Shock (15→3%) Y1: 15%, Y2: 10%, Y3: 5%, then 3% New crisis spike like Russia-Ukraine

Country-by-Country Results

All scenarios: 5 kWp system, 10 MWh heat pump demand, band-by-band simulation.

Germany (€0.35/kWh, 800 kWh/kWp yield, €7,000 system)

Scenario Payback 25yr NPV Y1 Saving Y5 Saving Y10 Saving
Flat 11 years €763 €724/yr €698/yr €668/yr
Historical 3% 9 years €3,477 €743/yr €795/yr €869/yr
Moderate 5→3% 9 years €4,559 €755/yr €851/yr €975/yr
Severe 7→3% 8 years €5,751 €768/yr €911/yr €1,092/yr
2022 Shock 8 years €5,995 €817/yr €980/yr €1,077/yr

Key takeaway: Even flat, Germany's high electricity prices make solar viable (11yr). A 2022-style shock drops payback to 8 years and doubles lifetime savings.

Portugal (€0.22/kWh, 1,540 kWh/kWp yield, €5,500 system)

Scenario Payback 25yr NPV
Flat 8 years €2,674
Historical 3% 7 years €4,842
Moderate 5→3% 7 years €5,705
Severe 7→3% 7 years €6,656
2022 Shock 7 years €6,849

Key takeaway: Portugal is the best case — high yield and low system cost mean even flat prices give 8-year payback. Price growth just adds upside.

Spain (€0.22/kWh, 1,300 kWh/kWp yield, €7,000 system)

Scenario Payback 25yr NPV
Flat 13 years −€38 (negative)
Historical 3% 10 years €2,024
Moderate 5→3% 10 years €2,846
Severe 7→3% 9 years €3,751
2022 Shock 9 years €3,936

Key takeaway: Spain is a borderline case at flat prices — NPV is essentially zero. Just 3% growth makes it clearly viable. This shows why the growth assumption matters so much.

France (€0.24/kWh, 1,245 kWh/kWp yield, €9,000 system)

Scenario Payback 25yr NPV
Flat 18 years −€2,534 (negative)
Historical 3% 15 years −€342 (near zero)
Moderate 5→3% 14 years €531
Severe 7→3% 13 years €1,492
2022 Shock 11 years €1,689

Key takeaway: France has the highest system cost (€1,800/kWp) and moderate electricity prices. Solar is marginal without price growth. A crisis scenario transforms it to an 11-year payback.

Poland (€0.12/kWh, 1,000 kWh/kWp yield, €6,750 system)

Scenario Payback 25yr NPV
Flat Never −€3,326
Historical 3% 20 years −€2,361
Moderate 5→3% 19 years −€1,977
Severe 7→3% 17 years −€1,554
2022 Shock 17 years −€1,467

Key takeaway: Poland's low electricity prices mean solar struggles even with crisis-level growth. NPV stays negative in every scenario. Solar in Poland only makes sense with subsidies or if you value independence above money.

Hungary (€0.10/kWh, 890 kWh/kWp yield, €3,750 system)

Scenario Payback 25yr NPV
Flat Never −€2,474
Historical 3% 22 years −€1,663
Moderate 5→3% 20 years −€1,340
Severe 7→3% 18 years −€984
2022 Shock 18 years −€911

Key takeaway: Hungary has the cheapest system costs in Europe (€750/kWp) but also the cheapest electricity. Even a 2022-style shock can't make NPV positive. Price growth needs to exceed 7% sustained to make solar break even.

The 2022 Shock in Detail: Germany Year-by-Year

To show what a crisis scenario actually looks like:

Year Price Elec Bill (solar) Baseline (no solar) Annual Saving Cumulative
1 €0.403/kWh €985 €1,881 €821 €821
2 €0.443/kWh €1,109 €2,069 €885 €1,706
3 €0.465/kWh €1,181 €2,173 €917 €2,623
4 €0.488/kWh €1,257 €2,281 €950 €3,573
5 €0.513/kWh €1,337 €2,396 €984 €4,557
10 €0.594/kWh €1,621 €2,777 €1,081 €9,761
15 €0.689/kWh €1,953 €3,219 €1,191 €14,440
20 €0.799/kWh €2,342 €3,732 €1,316 €20,763
25 €0.926/kWh €2,795 €4,327 €1,456 €26,706

What this shows: Under a 2022-style shock, energy prices more than double over 25 years (€0.35 → €0.93/kWh). Solar savings grow from €821/year in year 1 to €1,456/year by year 25. Total lifetime savings: €26,706 on a €7,000 investment.

The If-Then Decision Guide

If you believe prices will... Then solar payback in your country is...
Stay flat (0%) Only viable where electricity is already expensive (DE: 11yr, PT: 8yr). Skip if you're in Eastern Europe.
Grow at historical 3% Viable in most countries (DE: 9yr, ES: 10yr, FR: 15yr). Marginal in HU/PL (20–22yr).
Rise at 5%+ (moderate onward) Profitable in all Western Europe (DE: 8–9yr, ES: 9–10yr, FR: 11–14yr). Still marginal in Eastern Europe.
Spike like 2022, then normalise Best time to install is during the spike — but you can't predict it. Install now, benefit when it happens.

The €0.30/kWh Threshold

Looking across all countries and scenarios, there's a clear pattern:

If your electricity price is below €0.15/kWh, solar is primarily an energy-independence purchase, not a financial investment. The numbers work best in high-price countries regardless of scenario.

Why Installers Push 5–10% Growth Assumptions

Here's the uncomfortable truth: the growth assumption is the single biggest lever in any solar payback calculation.

For Germany:

Assumption Payback Difference from flat
0% (flat) 11 years —
3% (historical) 9 years −2 years
5% (optimistic) ~8 years −3 years
10% (aggressive) ~6–7 years −4–5 years

An aggressive 10% growth assumption can cut payback by nearly half. If an installer shows you a 7-year payback, ask: "What growth rate did you assume?" If they say 5–10%, ask to see the flat-price version.

The honest approach: Always start with the flat scenario. Then show how growth improves it. Never present a growth-based payback as the primary number — it's a gamble, not a guarantee.

Bottom Line

Your situation Likely price scenario Solar verdict
High-price country (DE, IE, DK, BE) Even flat works Install now
Medium-price country (ES, FR, IT, NL) Needs 2–4% growth Install now, but check sensitivity
Low-price country (HU, PL, SI, SE) Needs crisis-level growth Only with subsidies or independence motivation
Any country, during a price spike Crisis (15%+) Install immediately

The honest truth: Energy prices have risen 2.5–3.5% annually for 15 years, with crisis spikes along the way. If history is any guide, prices will keep climbing — and solar will keep looking better. But the difference between "flat forever" and "crisis next year" is the difference between a marginal investment and a spectacular one. Nobody knows which future we'll get.

What you can do: Install solar sized for today's consumption. If prices stay flat, you still save money (in most countries). If prices spike, you win big. It's an option on future energy prices — and that option is free.

The Waste Footprint: What You're Buying Alongside Your Savings

Every solar installation creates physical waste. These numbers don't change with energy prices — they're the fixed cost of going solar.

For a 5 kWp system (all scenarios in this guide):

What Weight Per €1,000 NPV
Hardware total (panels + mounting + cabling + inverters) ~330 kg Varies by scenario
Under flat prices (Germany): 432 kg per €1,000 NPV
Under 2022 shock (Germany): 55 kg per €1,000 NPV
Best case (Portugal, shock): 48 kg per €1,000 NPV

The higher the NPV (driven by price growth), the less waste per euro of value created. Under flat prices in Germany (NPV €763), each €1,000 of value costs 432 kg of future waste. Under a crisis scenario (NPV €5,995), that drops to 55 kg — nearly 8× more efficient.

This is the hidden trade-off: Solar is not zero-waste. It's a trade of future waste against current energy savings. The better the financial case (higher prices, crisis scenarios), the more favourable the waste-to-savings ratio becomes.

See our Lifecycle Calculator to model your system's waste footprint, and the Environmental Lifecycle Guide for the full carbon and recycling analysis.

Last updated: May 2026