Feed-in Tariff rates change, but the program still offers investors an attractive ROI
As of March 15 2012, the Ontario Power Authority set new tariff rates for its FIT and microFIT programs. The solar installation industry breathed a collective sigh of relief as manufacturers and installers are finally able get back to work after months of delay caused by the tariff review process. With the first tariff review complete, the new rates see a reduction of 30%. Does this dramatic drop in revenue render Feet-in Tariff programs untenable?
New Feed-in Tariff rates for Ontario
A 30% decrease in tariffs may seem like a giant leap for some, but the incredible drop in panel prices helps to absorb most of this reduction. The reduction helps to create a renewable energy plan for the province that is sustainable and offers fair compensation for renewable energy. Rooftop mounted Feed-in Tariff systems of 10 kW or smaller will now receive 54.9 c/kWh and ground-mounted units of 10 kW will receive remuneration of 44.5 c/kWh. See a full table of pricing here. All applications submitted after September 1, 2011 will be subject to the new tariffs.
The 60% local content stipulation for those who wish to participate in the FIT and microFIT programs has meant that a growing local industry has been created. This industry of panel manufacturers and installers has floundered in the months it has taken the government to review the Feed-in Tariff programs. Thousands of jobs have been created and millions invested in the province to meet the demand created by these programs. The OPA has to price the programs fairly so that this burgeoning industry is able to survive. Tariff cuts may seem drastic, but they reflect the massive reductions in panel prices and the Feed-in Tariff programs remain viable for prospective applicants.
Prospective Feed-in Tariff applicants can still look forward to a 15% yearly ROI on both rooftop microFIT and FIT projects and 12.4% on a ground mounted tracking systems. If you are considering a unit, it may be pertinent to remember that the government will be reviewing tariffs every two years. It’s best to act now while tariffs are at a premium.
Feed-in Tariff in action
When SolarLine Power was asked to install a microFIT system on an apartment block, they met with some challenges. The 2.5 story building contained 6 apartments on three floors and the challenge was to maximize the total kW amount to the microFIT 10kW maximum. Other tenders were unable to design systems over 5kW due to weight limitations on the roof which could only safely sustain a total of no more than 5 pounds per square foot. The full quota of panels needed to be installed for the project to be financially viable.
SolarLine Power, a local Ontario solar panel installation company, designed a system for the flat roof that consisted of 36 solar roof panels (9kW) with non-penetrating ballast weighing approximately 3000 pounds over 855 square feet resulting in an average additional load of less than 3.6 pounds per square foot. Additional pales were mounted on a custom awning attached to the side of the building.
Solar System Size
11.4kWh DC – 8.78kWh AC (77% derate factor)
AC Output Average Over 1 year
Daily: 36 kWh
Monthly: 1,098 kWh
Yearly: 13,148 kWh
1 Month: $879
1 Year: $10,545
5 Years: $55,383
20 Years: $221,439
With a 15% ROI, the solar installation pays for itself in no time at all and then goes on to make the property owners a tidy sum. If you are considering a Feed-in Tariff install, it’s still well worth it. With the nest OPA review scheduled in two year’s time, its best to act soon.
So you’ve been thinking about generating your own power and taking your home or cottage off “the grid”? Or taking advantage of the government incentives and making some money with the Ontario microFIT program? Either way, there are a few things to consider before you add a solar power system to your home.
Here’s a short guide to what you’ll need to get those solar panels from being just a good idea to an installed power-generating (and moneymaking) part of your home.
First you need to understand what solar panels (photovoltaic or PV panels) are – and aren’t. They aren’t simply plug-in play. There’s no extension cable where you can plug them directly into your house to power your appliances. They require installation, just like your other electrical equipment, or house plumbing. As well, they need other components to do their job, because by themselves they can’t work in a home. To understand this better we need to understand how solar cells, the pattern on the panels which are typically blue and sometimes black, work.
Obviously, a solar cell works from the sunlight hitting it, which causes electricity to flow. However, that electricity differs from your household current in three major ways. Firstly, solar panels are low voltage, typically 35-55 volt, and so solar cells have to be joined together to get that voltage higher. As well, the voltage is irregular. Whereas your house voltage is constantly around 120 volts, a solar cell generates more in the strong sun, and less in the shade (and of course nothing at night). Thirdly, a solar cell’s power is DC, or Direct Current. That means all the power flows in one direction in the wire, witch is different from a home’s AC, or Alternating Current.
So much of solar power installs will not be just the solar panels, but devices to solve these three problems. For example, you’ll use a battery to provide power in off times; of course, if you are connected to an electric utility through the Ontario MicroFIT or FIT programs, referred as “on the grid”, then you may not need batteries, since you can put your excess power “out there” for others to use, and end up making some money. However, if you’re on your own (such as a cottage), then you’ll need deep cycle batteries to keep your lights going at night.
Another device you’ll need with your batteries is a battery charge regulator, also known as a charge controller, which makes sure the batteries are charged and discharged properly to avoid problems, such as shortened battery life (and of course, if you don’t use batteries, you won’t need this device).
Finally, the DC current, whether from the solar cells or from the storage batteries, needs to be converted to AC. If you’ve seen anything about electricity, you’ve seen what is called a sine wave, like the ripples in water when a pebble goes in. DC is like a quiet lake. So another device, the inverter, not only creates those waves, turning the DC into AC, but it can make those waves nice curved sine wave shapes, which is better for appliances using the power. It also makes sure the rate is 60 cycles a second, which we in North America expect from our power lines. Once that’s done, it’s good to go, whether into our home, or onto the grid.
So knowing the components, what else needs to be done? Specific installation will require specific things – for example, you’ll need the roof reinforced if you’re planning a lot of solar panels and your roof isn’t up to code. However, at about 50 pounds a panel, most normal roofs can handle the load. Different types of roofs will require different supports (a shingle roof versus a metal roof, for example). It’s also important to analyze your roof for the ideal place for the panels. If you have nearby trees or objects that might block the panels, consider another location or you might want to have a shade analysis, or move the obstruction. Aiming the cells properly can mean a big difference in power generation. For example, if you have a flat roof, you will have to use a solar panel rack that is designed to angle the panels in just the right position to better face the sun.
As well, you’ll also need a place for the support equipment your solar panels will need. A wall in the garage will likely do for the inverter, but not for the batteries if you use them. Depending on the battery type, you may require good ventilation, since some of them can give off hydrogen gas, which is dangerous in enclosed spaces. As well, batteries work poorly at too hot or too cold a temperature, so an unheated garage in Canadian winters is a definite no-no for them!
Eventually you’ll meet with a contractor or reputable solar installers and go over the details of your specific install. While each one will be different, the preliminary work you do beforehand will make their job easier – and could save you money. Additionally, by planning ahead of time, you’ll be aware of what you’ll need and what you won’t (like batteries if you are connected to a grid).
Solar energy is getting bigger, and it’s here to stay. It’s a great way to lower your energy costs, and it helps prevent further damage to our ecosystem. Adding solar panels to your home is not only ecologically sound, it’s also a boost to your resale value – and that’s yet one more reason to make the move to solar!