A relatively unnoticed part of the McGuinty government’s Green Energy Act is the plan to establish a preferential feed-in tarriff (FIT) for renewable energy generation. The FIT program provides incentives for homeowners to install rooftop solar and other renewable energy generation equipment (windmills, etc.).
Homeowners who produce energy can tie into the Ontario electrical grid and sell their power at rates up to 10x more than their cost of electricity from the grid! The rate for rooftop solar (80.2 cents) is double the previous fixed rate for purchasing power from home solar systems and 10x the average rate for electricity during daylight hours (8 cents). The approval process is also simplified and streamlined for home and small-business-scale systems that are less than 10 kW.
The rationale for the program is that it is cheaper to encourage consumers to install their own micro-generation capability than to spend hundreds of billions replacing the coal-fired generation stations that currently produce 20% of Ontario’s power (the current installed capacity at Ontario’s four coal-fired generating stations is 6,434 MW and this is used 15 – 30% of the time depending on the availability of other non-coal generating stations).
Each home that micro-generates its own power displaces demand for centrally-produced power. Solar generation is especially valuable as an energy source because it produces power during peak periods of energy demand as shown below.
The FIT price schedule is still being fine tuned pending final approval of the Green legislation. The average price for most non-solar energy production is 13.5 cents per kWh. Solar production is clearly favoured and ranges from 44 – 80 cents per kWh.
Suppose the average home installs a 0.32 kWh rooftop system costing approximately $4000. Typical PV Solar panels have a life expectancy of 20 – 25 years. These systems are virtually maintenance free and, because your extra power goes into the grid, you don’t need to mess around with batteries. The expected efficiency of a grid-attached PV Solar micro-generation system is about 95% since the primary loss is only when the DC output is converted to AC by your onsite inverter.
According to Natural Resources Canada, Stittsville has a PV potential of 1201 kWh / 1000 kW installed generation. So a 0.32 kW system x 1201 hrs = 384 kWh per year x .95% efficiency = $365 kWh x $0.802 = $293 per year. A system costing $4K will pay back in just under 14 years. A good guide to calculating the economics of PV Solar in Canada can be found in the Photovoltaic Buyer’s Guide.
Under the FIT program, you get the benefit of this production even if you consume more energy than you produce. When a FIT micro-generation system is installed, your local power company will install a meter that measures it’s output and you will be give a credit for the energy produced based on FIT pricing. Your electrical bill will reflect the cost of your power consumed from the grid (at an average of 8 cents during peak period) minus the credit for your power produced to the grid (at a rate of 80 cents during peak period).
If you plan on selling your house within the 15 year payback period, your buyer will benefit from the micro-generation and you should be able to negotiate that value into your resale price for your home.