OWNING A RESIDENTIAL SOLAR PV SYSTEM IN ONTARIO:
HOW DOES IT ALL ADD UP?
HOW DOES IT ALL ADD UP?
With Ontario's groundbreaking new Feed-In Tariff (FIT) program, there is a sudden rush of interest to add these systems. This is a truly groundbreaking program that has put Ontario squarely in the lead of North America for renewable energy. Our provincial government are to be congratulated!
Unfortunately, I'm already seeing some solar vendors quoting wildly optimistic figures as to what you can earn on these systems. I am a strong solar advocate with a 5.7kW system on my Toronto home and a small system (25 years old and working perfectly) at my off-grid cottage, so don't get me wrong, I do love solar. I feel compelled, however, to have the real facts honestly presented to homeowners so that they make an informed decision. I therefore have created this page to tell what I think are the financial realities of the situation.
Will a solar PV system give you a 5 year payback? No it won't. But what is the monthly income you receive from that kitchen renovation or landscaping job you just did? A FIT contract guarantees you 20 years worth of income, on a system that will be wonderfully dependable and long lived. And one in which you can take great pride!
In purchasing your own solar system you are achieving these important results:
* Assisting on our move towards a coal-free Ontario in 2014 (a provincial government target) which will:
-reduce one of Ontario's largest source of greehouse gas emissions
-reduce one of Ontarios largest source of air pollution which according to the Ontario Medical Association, is badly affecting the health of
us all at a cost of over one billion dollars per year
-reduce a leading source of Mercury pollution. Mercury is one of the most toxic elements known to man, and its full effects are not well
known by most people
* Demonstrating leadership, showing your neighbours that you care enough to make this investment and that these systems are ready to
go ...TODAY
* Demonstating to our provincial government that they were right to encourage the development of clean, safe renewable energy and you
have just confirmed this by voting with your dollars
* Adding to our energy security and stability of the electrical grid by adding a long term form of local generation
* Possibly sending a message to our federal government that in igoring our Kyoto committments and avoiding progressive legislation to
limit pollution, they are badly out of touch with the wishes of Canadians and they should get with the program... Ontario has!
Having said all of this, I've saved the best of the news 'til last. All my figures ignore one real bonus: 20 years after you have installed your system, and it has long since paid for itsself, provided that you purchased crystalline panels, you may have to replace your inverter if you haven't already, but your system should then dependably be generating power for another 20 years, essentially for free! What will the eceonomic benefit to that be? Who knows, but energy prices will sure be higher then than they are today, so it will be appreciable.
Please see my notes below which accompany the spreadsheet and explain my assumptions. Note that retail sales tax on these systems is refundable. Also, I'm not aware of any other incentives currently available, so if someone claims otherwise, make it part of your purchase agreement in writing that they will get it for you, or allow you to deduct it from your payment. If you know of some, email me! (click here)
To download a version that you can play with yourself, click here. (excel spreadsheet)
To learn about the tax implications of owning a residential PV system, click here.
Scenario 1: Purchasing a system without using bank financing:
Unfortunately, I'm already seeing some solar vendors quoting wildly optimistic figures as to what you can earn on these systems. I am a strong solar advocate with a 5.7kW system on my Toronto home and a small system (25 years old and working perfectly) at my off-grid cottage, so don't get me wrong, I do love solar. I feel compelled, however, to have the real facts honestly presented to homeowners so that they make an informed decision. I therefore have created this page to tell what I think are the financial realities of the situation.
Will a solar PV system give you a 5 year payback? No it won't. But what is the monthly income you receive from that kitchen renovation or landscaping job you just did? A FIT contract guarantees you 20 years worth of income, on a system that will be wonderfully dependable and long lived. And one in which you can take great pride!
In purchasing your own solar system you are achieving these important results:
* Assisting on our move towards a coal-free Ontario in 2014 (a provincial government target) which will:
-reduce one of Ontario's largest source of greehouse gas emissions
-reduce one of Ontarios largest source of air pollution which according to the Ontario Medical Association, is badly affecting the health of
us all at a cost of over one billion dollars per year
-reduce a leading source of Mercury pollution. Mercury is one of the most toxic elements known to man, and its full effects are not well
known by most people
* Demonstrating leadership, showing your neighbours that you care enough to make this investment and that these systems are ready to
go ...TODAY
* Demonstating to our provincial government that they were right to encourage the development of clean, safe renewable energy and you
have just confirmed this by voting with your dollars
* Adding to our energy security and stability of the electrical grid by adding a long term form of local generation
* Possibly sending a message to our federal government that in igoring our Kyoto committments and avoiding progressive legislation to
limit pollution, they are badly out of touch with the wishes of Canadians and they should get with the program... Ontario has!
Having said all of this, I've saved the best of the news 'til last. All my figures ignore one real bonus: 20 years after you have installed your system, and it has long since paid for itsself, provided that you purchased crystalline panels, you may have to replace your inverter if you haven't already, but your system should then dependably be generating power for another 20 years, essentially for free! What will the eceonomic benefit to that be? Who knows, but energy prices will sure be higher then than they are today, so it will be appreciable.
Please see my notes below which accompany the spreadsheet and explain my assumptions. Note that retail sales tax on these systems is refundable. Also, I'm not aware of any other incentives currently available, so if someone claims otherwise, make it part of your purchase agreement in writing that they will get it for you, or allow you to deduct it from your payment. If you know of some, email me! (click here)
To download a version that you can play with yourself, click here. (excel spreadsheet)
To learn about the tax implications of owning a residential PV system, click here.
Scenario 1: Purchasing a system without using bank financing:
Disclaimer: The information above is intended to make residential homeowners aware of residential solar electric system income tax implications as a guide only, but does not constitute an opinion and should not be relied upon as such. The advisability of any course of action mentioned above depends on your particular financial, tax and legal circumstances. Readers may wish to consult an accountant before implementing the suggestions made above.
