In short
The residual value of a PV system is its value at a defined point in time, usually the end of a financing, a lease or a planning period. It equals the present value of the surpluses still expected from that date, minus replacement investments and removal.
Residual value, remaining value, net book value, market value
| Term | Meaning for PV systems |
|---|---|
| Residual value | Value at the end of a defined period (end of term, planning horizon). In project finance also called terminal value. |
| Remaining value | Economic value left from the valuation date. Often used interchangeably with residual value. |
| Net book value | Balance sheet value after depreciation over 20 years. Not a market value. |
| Income value | Present value of all future surpluses from the valuation date. The usual method for calculating remaining and residual value. |
| Market value | Price achievable in ordinary business on the valuation date. |
| Actual cash value | Replacement value minus age and wear, mainly for insurance claims. |
The value terms used by German experts are explained by IHK München (in German). Before every report we therefore clarify which value is needed for which purpose.
How is the residual value of a PV system calculated?
The building blocks are the same as for remaining value, only the valuation date lies in the future. Anyone valuing a system in 2026 with ten-year financing asks: what will the system be worth in 2036, when the tariff may already have expired?
That is exactly the trap. For many systems from 2010 to 2014, the feed-in tariff ends before a financing or lease does. The residual value then drops to the value of post-tariff revenue. With full feed-in at 4 to 5 ct/kWh, that is often little more than the removal cost.
What is residual value needed for?
- Financing the bank wants to know whether the system is still adequate collateral at the end of the term.
- Leasing and hire purchase residual value determines the final payment and therefore the instalments.
- Insolvency the administrator must decide whether to continue operating the system or realise it. We compare both in the report.
- Roof leases if the lease ends before the technical useful life, the residual value falls due at the end of the lease.
- Portfolio and balance sheet investors apply a residual value at the end of the planning horizon, which easily turns out too high without an inspection.
Example
The 250 kWp commercial system from our remaining value example is worth around €205,000 as of 1 January 2027. At the end of the tariff, on 1 January 2032, the residual value is only the present value of seven years at 4.5 ct/kWh minus removal. Mathematically that is almost zero. For a bank financing until 2033, that is the decisive figure.
Frequently asked questions
What is the residual value of a PV system?
The value of the system at the end of a defined period, such as a financing or lease term. It is calculated as the present value of the surpluses still expected from that date.
Is residual value the same as remaining value?
In everyday language usually yes. Strictly, remaining value means the value from today, residual value the value at a later date.
Who needs the residual value of a PV system?
Banks, lessors, investors, insolvency administrators and roof owners leasing out space, in other words everyone whose decision depends on the value of the system at a later date.