With the cost of solar panels having dropped dramatically over the past decade, it seems that using rooftop solar panels could be a great way for homeowners to save on electricity costs and reduce carbon emissions.
That’s what Ashley Reid thought when she installed solar panels on her home in the Kitchener-Waterloo region of Ontario a year and a half ago.
“I’m an accountant,” she said, “and when you do the math, it makes financial sense to install solar panels on your house.”
An analysis by Radio-Canada earlier this year found This is the case in most major Canadian cities.
But not everyone agrees. “I wouldn’t recommend people install it for economic reasons,” said Heather McDiarmid, a climate and energy consultant who a report in early August on the climatic and financial benefits of residential rooftop solar panels for the Ontario Clean Air Alliance.
From an ecological point of view, the arguments for solar energy are clearer: a recent study comes to the conclusion that solar energy on house roofs is even better for the climate than large-scale solar parks.
Here’s a closer look at rooftop solar in Canada and things to consider, including upfront costs and a mix of policies and incentives that vary widely across the country.
Calculations show that solar energy is more environmentally friendly for private households
While the installation of large solar parks is cheaper per kilowatt, a recent study Led by Joshua Pearce, a professor of engineering at Western University, it was found that residential solar energy is actually more environmentally friendly.
“It simply requires fewer materials,” he said, pointing out that solar parks mount their panels on concrete or steel, which generates a lot of emissions during manufacturing, while residential installations usually use existing infrastructure – the roof.
The study found that rooftop solar systems produce 18 to 59 percent fewer carbon emissions per kilowatt during production and installation than solar farms.
Both Pearce and McDiarmid found that even in Canada, solar panels generate more energy in less than two years than was used to produce them.
Residential solar power is particularly beneficial to the climate in provinces where it replaces fossil fuel electricity, such as Alberta and Saskatchewan, which also happen to be the sunniest.
The new report from the Ontario Clean Air Alliance finds that solar energy generates the most electricity during the times of day when Ontario relies most heavily on gas-fired power plants. The institute calculates that a 10 kW solar system could avoid 1.5 tonnes of carbon emissions in 2024 and 3.9 tonnes of emissions per year (roughly the amount of emissions produced by a car) by 2030, at which point Ontario is expected to rely more heavily on gas generation during peak periods.
But only one percent of the electricity generated in 2022 came from solar energy. Reports from Natural Resources CanadaAccording to the Canadian Renewable Energy Association (CanREA), the majority of this came from large-scale solar farms, also known as utility-scale solar power.
To date, only one in 200 Canadian households has a solar system. A 2023 report by consultants Dunsky Energy and Climate foundIt was pointed out that models and calculations show time and again that these solar systems are a key component in growing electricity demand while Canada’s goal was achieved, Net zero emissions by 2050 at the lowest cost. To achieve this, solar energy on house roofs would have to increase by 20 to 40 times.
Higher upfront costs
One of the biggest challenges with solar energy is the high initial cost. BC and Ontario have some of the lowest residential solar energy costs in Canada. according to Energyhuba marketing agency for private solar developers. Nevertheless, an average 7.5 kW solar system, which would cover most of the electricity needs of an average household, costs estimated $22,500 in BC And $25,000 in Ontario.
Some utilities and federal, provincial and local governments offer incentives to help cover costs. CanREA lists many of these in its Go Solar Guide.
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Reid installed her system with the help of a $5,000 Canada Greener Homes Grant (no longer available) and the 10-year, interest-free Canada Greener Homes Loan of up to $40,000, which homeowners can still apply for. She also boosted her savings by simultaneously electrifying her car and other appliances so she could run them on solar power instead of racking up high gas bills.
Once the solar panels are paid off, she says, “We won’t have any electricity bills anymore, it’ll be great.”
Many people decide whether solar energy is worth it based on the time it takes to save enough money on their electric bills to cover the initial cost and get to the point where they are “really” saving money each month.
Erwin Hueck, national director of distributed resources at CanREA, said the payback period is shorter in provinces with higher utility tariffs.
“In a number of jurisdictions, such as Alberta and Saskatchewan, payback periods are around 10 years,” he said, noting that incentives could reduce them even further.
Radio Canada found that rooftop solar systems paid for themselves in just five years in Calgary when the Greener Homes Grant was available, in ten years in Toronto and in eleven years in Halifax. Due to cheap electricity in Quebec, the payback period was longest in Montreal at 19 years.
But McDiarmid’s Ontario analysis, released this month after the Greener Homes Grant ended, concludes that payback times are “disappointing.”
For a 7.5 kW system, the payback period was 25 to 27 years – the official lifespan of solar panels (although McDiarmid says they have been proven to work much longer). That assumes that electricity prices only increase by two percent annually. If electricity prices increase by four percent annually, the payback period is 18 years.
Pearce, who installed solar panels on his own home, suggests calculating the “return on investment” over the lifetime of the system, taking inflation into account.
“When you do that, you see that solar energy is actually a massive hedge against inflation and that all of your ‘income’ from it is not taxed because it is savings.”
How energy suppliers “pay” people for solar power
In Canada, most jurisdictions or energy providers limit the amount of solar energy citizens are allowed to generate on their own to the amount of electricity they use annually if they wish to remain connected to the grid and receive a credit for the solar energy they generate.
Because consumption is averaged over the year and days are longer in summer, households with rooftop solar systems tend to generate more electricity in summer than they use and consume more than they generate in winter.
Many utilities use a form of net metering, where solar power customers receive a credit for additional kilowatt hours of electricity in the summer that they can use in the winter.
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The value of the credit and its term may vary. In Ontario and Quebec, credits are canceled and customers’ balances are reset to zero after one or two years.
Reid considers this a double standard.
“If you owe money to the utility company at the end of the 12 months because you did not pay your bills, your debt will not be forgiven.”
Some other countries use net billing, where credits are worth a different amount than the regular price of electricity – generally less. For example, SaskPower offers its customers half the price for the electricity they produce compared to what they use, which sometimes leads to a considerable billeven in months when they produce more than they consume.
Pearce said net billing is also used in London, Ontario, where he lives. “It discourages solar energy in general,” he said.
Given the environmental benefits and potential financial gains, Pearce believes anyone considering installing solar should think again now: “Solar prices have come down to the point where it makes economic sense when you take inflation into account.”
