Industrial photovoltaic panel disposal costs: a guide to provisioning for CFOs
When a company decides to invest in the energy transition, the attention of the finance department is focused almost exclusively on capital expenditures (CAPEX), the calculation of return on investment (ROI), and the cash flows generated by savings on energy bills. However, to ensure the true long-term economic sustainability of the project, a CFO cannot afford to ignore the decommissioning phase, that is, the dismantling of the asset.
Addressing the disposal of industrial photovoltaic panels means planning a complex operation which, if not properly managed from an accounting perspective, risks generating substantial cash outflows at the end of the plant’s useful life. While the strictly legal aspects and bureaucratic procedures are extensively covered in our guide dedicated to the RAEE photovoltaic disposal regulations, here we will focus exclusively on the financial impact and the correct accounting strategies.
Table of contents
Beyond bureaucracy: the hidden costs of decommissioning
A common mistake in energy business plans is to believe that the withholding by the Energy Services Manager (GSE) or membership in a consortium fully solves the end-of-life issue. The operational reality is very different. When a Finance Director asks how much it costs to dispose of an industrial photovoltaic system, they must separate the bureaucratic cost of the waste from the operational site costs.
The withholding by the GSE (currently equal to 20 euros per module for various categories of Conto Energia systems, or 10 euros in the case of membership in specific collective schemes) governs coverage for the recovery of professional WEEE. However, this guarantee essentially covers only the waste treatment cycle. The end-of-life costs of a B2B system related to site operations fall entirely on the company and include significant expense items:
- Dismantling and electrical disconnection: Highly specialised labour for making the medium/low-voltage system safe and physically removing it.
- Safety and lifting equipment: Lowering modules from an industrial roof requires the rental of truck-mounted cranes, the installation of fall-arrest systems, and extremely strict safety protocols.
- Logistics and transport: Moving the materials to collection centres requires authorised vehicles for special loads.
The sum of these items represents the real cost of disposing of photovoltaic panels. Considering that a 500 kWp system generally includes more than 1,000 modules, the overall estimate for dismantling, lowering to the ground, and logistics—to be assessed case by case depending on accessibility—can generate outlays in the order of tens of thousands of euros.
The accounting management of end of life: the provision for risks and charges (OIC 31)
From an accounting perspective, connecting the system to the grid and using it generates a future obligation. According to national accounting principles (OIC 31), if there is a present obligation whose amount can be estimated reliably, the company must assess its recognition in the financial statements.
The most rigorous practice for the accounting management of the end of life of photovoltaic systems consists in establishing a provision for risks for the disposal of company WEEE. Supported by its accounting adviser or auditor, the company thus prevents the risk that the profit of a single future financial year may be undermined by the substantial decommissioning costs.
How to calculate the provision for photovoltaic panel disposal
To establish the provision correctly, the CFO must collaborate with their technical partner (EPC Contractor) for an adequate assessment. But how should the provision for photovoltaic panel disposal be calculated rigorously? The process follows these steps:
Estimate of the future cost: The current cost of dismantling, logistics, and restoration operations is defined, applying inflation rates to project the figure over 20–25 years.
Discounting (if relevant): If the time effect is significant, the estimate of future costs is discounted using an appropriate market rate.
Recognition in the financial statements: An amount is defined to be recorded in the income statement in order to fund the provision in the financial statements for photovoltaic disposal, ensuring the accrual principle throughout the entire useful life of the asset.
Joint liability and M&A transactions
Adequate financial coverage is crucial in extraordinary transactions (M&A). Liabilities related to end of life follow the asset. During the Due Diligence phase, the absence of a provision covering dismantling is immediately flagged by auditors as a potential liability, affecting the company’s value. Establishing the provision is therefore synonymous with transparency and financial reliability.
From this perspective, end-of-life cost should not be considered an ancillary item, but a structural component of the economic and financial assessment of the investment. For a CFO, setting up the project correctly means looking not only at the savings generated during operations, but also at the future costs related to management, administrative continuity, and decommissioning. This is also why it can be useful to engage from the outset with a qualified technical partner: Southenergy, active since 2008 in the design and implementation of turnkey photovoltaic systems for businesses, also operates in the field of technical-administrative management, O&M, due diligence, and asset management, offering a useful approach to evaluating the investment in a more complete and informed way.
FAQ – Frequently Asked Questions
The final cost is the sum of two factors: the fees for WEEE recycling (e.g. GSE withholdings) and the operational costs. For business systems, items such as truck-mounted crane rental, specialised labour for dismantling from the roof, and exceptional transport represent very significant costs, which must be carefully estimated during the project phase.
Under OIC 31, in the presence of a present and estimable obligation, the company records a specific Provision for Charges in the financial statements. The total future dismantling cost is estimated and the related accrual portions are recorded in the income statement over the useful life of the system, increasing the provision in the Statement of Financial Position.
No. Membership in a collective scheme or the applicable withholdings (e.g. €10 or €20/module depending on the case) finance the correct management and recycling of professional waste. The physical “site” costs (electrical disconnection, lowering from the roof, logistical transport to the collection centre) remain the responsibility of the company.
Regulatory and financial responsibility lies with the Responsible Party of the system (registered with the GSE). In the event of the transfer of the property or corporate transactions, it is essential to manage the formal transfers and define who will bear the future dismantling costs, transferring any provisions that have been set aside.
Are you interested and would like to receive more information? Contact us using the form below.