Concerns surrounding high costs of solar, assumptions that panel prices will plummet and concerns about our cold climate have traditionally kept Canadians from considering solar energy as a serious investment option.

The current incentive framework in Ontario has now made a solar investment competitive with the best long-term vehicles available on the market!

Solar Electric (PV) Systems

The economics of generating solar PV electricity in Ontario are becoming increasingly clear with the announcement by the Ontario Power
Authority of proposed feed-in tariff rates. The feed-in tariff (FIT)is the policy mechanism that has proved most successful in incenting renewable power generation and is used in countries such as Germany, Spain and France. This is a production incentive that pays generators a set rate for each kilowatt hour (kWh) of electricity they produce and is designed to make financial forecasting for project revenues much easier than if the project were to try to bid into the Ontario electricity market where prices fluctuate hourly. The proposed 80.2 cents/kWh tariff for projects 10kW or smaller, 2009 system price quotes from GTA vendors and some real world data from rooftop systems in the GTA informed the numbers in the following table:

System Size20 Year Average System ProductionSystem CostFeed In Tariff RateAnnual IncomeSimple PaybackInternal Rate of Return
1kW1074 kWh/kW/year$13 000$0.802/kWh$861.7515.1 years2%
2kW1074 kWh/kW/year$21 500$0.802/kWh$1722.7012.5 years5%
3kW1074 kWh/kW/year$28 750$0.802/kWh$2584.0411.1 years6%

The economic piece that is definitely material but difficult to price is the fact that a PV system will still produce 80% of its rated power in its 21st year, once the 20 year FIT contract expires. Whether there will still be a FIT program or what the market price of electricity will be is anybody's guess but the fact remains that these systems will continue to generate revenue for years after the FIT contract expires.

Solar Domestic Hot Water Systems

Incentive Structure - Solar thermal incentives are structured to help offset the capital cost of thermal systems unlike PV incentives which are based on system performance. The main reason for this difference is that solar thermal systems are cheaper than PV systems making it more affordable for the government to offer effective up-front subsidies.

Solar Thermal System Cost with Incentives

Typical System Cost - $8400

Federal ecoEnergy Incentive - $1250

Provincial ecoEnergy Incentive - $1250

ecoEnergy Audit Cost - $350*

Home Renovation Tax Credit - $1200

Net Cost to Customer - $5050

  • $350 initial audit + $150 follow-up audit - $150 audit rebate

Heating Costs Over 10 Years

The economics of solar domestic hot water system system payback are not as cut and dried as they are for PV. The payback period can vary widely based on household water consumption and the type of system purchased. In this context, the hedge that solar hot water provides against uncertain long term natural gas costs is important although this issue has been complicated recently by new gas shale deposits and significant reductions in natural gas costs for those not on fixed term contracts. Also the idea of putting money back into your home as opposed to giving it to your natural gas supplier is an important consideration.

Solar Thermal System Cost After Incentives - $5000
Natural Gas costs in Year 1 - $0.50/m3 in 2008 currently $0.30/m3 June 2009
Annual Gas Consumption for Hot Water Heating (based on a family of 4) - 1000 m3
Gas Boiler Efficiency - 60%
Hot Water Tank Heat Loss - 20%

This Solar Hot Water Calculatorsolar hot water calculator on the Home Depot website is based on an Enerworks Solar Hot Water System and provides a good indication of the savings available when using solar hot water.

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