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by John Wilson
Welcome. 17 years ago we set out on a journey to create a home that was sustainable for our children (my son Ian was born in 1992 and my daughter Claire was born in 1994). Part of that plan was to make the house a renewable energy power plant elliminating the need for any non-renewable energy sources. By 2001 we had built our award-winning sustainable natural home using local straw bales for the north wall, a green roofing system we custom designed, and passive solar design (click here for all the details on the design of our house).
Then in 2002 we selected Solera Energies to start building our renewable energy system in the form of a 1 kW Bergey wind turbine and a 400 W Siemens solar PV array in a net meter (running the meter backwards) configuration. Then in 2009 again working with Solera we added a 1.2 kW Sharp solar PV array on the Ontario renewable energy standard offer program (RESOP) for which we were being paid 42 cents/kW for 20 years.
Finally, to complete the 100% renewable energy goal and in order to turn the house into a power plant (generating more than we consume) we've added an additional 6 kW of Sanyo solar panels that complete the passive cooling awning system that has always been the planned design of the house. 5 kW of the new Sanyo panels and the 1.2 kW Sharp panels are now combined on a MicroFIT (the 1.2 kW RESOP system was grandfathered into the MicroFIT program upon request) contract for 20 years at 80.2 cents/kW generating about $500/month in income (the remaining 1 kW and the original 400 W Siemens panels will be used for some "off-grid" research and development projects related to an autonomous aquaculture system being designed and built for the greenhouse area in the house as well as an electric sailboat conversion).
Ultimately the goal is to switch to an electric car next year (finally it should be possible to buy them from your local Mitsubishi, Toyota, Chevy, Nissan, and other major manufacturers with the Ontario government giving you a $10,000 rebate as an incentive) to combine with our 35 foot 1974 C&C sailboat (floating cottage) which is being converted to electric so that both home, floating cottage and transportation are 100% powered by renewable energy power plants.
Bottom line is that installing a solar system on your roof offers one of the most important investments you will ever have the opportunity to make. You will make a better than average return on your investment while contributing in many ways to a sustainable future the value of which is beyond measure.
By joining thousands who have already put solar on their roof you become part of a movement that provides hope for our children. It has been estimated that if just 10% of us cover our rooftops with solar we could power the entire country...specifically the United States and Canada (who consume substantially more than European countries per capita). Imagine millions of us, making a reasonable investment of $200/month ($20,000 loan over 10 years) that will double our money in twenty years, while generating electricity without any pollution or fuel costs. While 90% of us want to protect the environment it is my belief that at least 10% of us are willing to invest now to make it happen. That gives me, and should you, a great deal of hope. We can do this.
So, now it is your turn. Let us get started.
Before you go to the next step, check out Renewable Energy essentials. This documentary video shows you in about ten minutes the background of feed-in tariffs (FIT) and why they make so much sense.
The more you learn about solar energy, and in particular what others have done with it, the better prepared you'll be with the right questions. As with anything new to you it is hard to know where to start or what questions you should be asking. Three main sources have helped me get informed enough to feel prepared to develop a plan for investing in solar energy:
Three main types of "solar" power exist. The first, is passive solar that relates to the ability of the greenhouse effect to store heat from the sun inside an insulated building.
Passive solar home design, Source: Wilson Natural Home
The second, is solar thermal. This type of system uses the heat from the sun hitting dark panels to heat a liquid that can then be used to heat or preheat water. In a home these solar thermal systems can be used to heat water for your water heater or for your home heating system if it is a radiant water based system. They typically can reduce the demand for this type of energy by up to 60%.
Solar thermal system, Source: Solera Energies
The third,and the one which applies to generating electricity that will be the focus of the remaining pages, is solar photo voltaic (PV) or solar electricity generation. Photo voltaic refers to the technology, based on solid state (no moving parts), silicon that converts sunlight into electricity. Solar PV systems are typically composed of two main components linked together by wiring. First, the panels which are composed of many solar PV modules linked together during manufacturing. These panels can then also be linked together into larger "arrays" of panels in order to increase the generating capacity of the system. The second component, is an inverter that converts the direct current (DC) generated by the panels into alternating current (AC) which is compatible with the grid. To do this and allow for safely connecting your system to the grid and AC appliances the inverter ensures the quality of the AC conversion and provides automatic disconnect if the electricity grid fails (ie. when the electricity on the grid goes down) so that your solar electricity generating system isn't injecting into the grid potentially creating a hazard for line workers.
Solar electricit grid-tied system, Source: Solera Energies
Let us start with the simplest case which is that you own a home or commercial building with a single consumption electrical service in place with a single consumption meter. Most residential homes are in this category. So far so good.
In order to get through the process of getting quotes from vendors and knowing who to deal with when different questions arise, some understanding of the way the electrical system works, and who does what can be important. So now we'll look at who does what.
The electricity you consume is measured by the meter attached to your house. In Ontario, a local distribution (LDC) company provides the meter and wires to get the electricity to your building. Generators are also connected to the electricity grid through these wires and provide the electricty you consume (ie. the generator in Niagara Falls that produces electricity from water turning a turbine, or a a coal plant that creates steam, that turns a turbine that generates electricity, or a nuclear reactor that creates steam that turnes a turbine that generates electricity, or a wind turbine where the wind turns the turbine that generates electricity). So, we have LDCs like Hydro One and Toronto Hydro that "distribute" electricity maintaining the wires and meters that get the electricity from generators to consumers.
On one end of the "grid" of wires are the generators that create electricity typically with a turbine and various types of fuels (like coal, uranium, or gas). In the case of water and wind generators the fuel is a renewable source, wind and water driven by natural renewable processes. The big generating company in Ontario is Ontario Power Generation (OPG) that operates the nuclear, hydro and coal plants. Other smaller generating companies exist as well.They sell the electricty into the grid so they also have a meter that measures the amount that they generate and supply to the grid. Although we say "sell" into the grid, they don't really sell it to the LDCs who operate the grid. We can be confused into thinking this way because the LDCs do the billing for electricity. However, the LDCs only keep the portion of the bill related to "distribution". The electricity portion, often called the commodity, is paid back to the generators.The generator gets the "cost" prices of the power they produce as measured by the generator meter.
Keep in mind that the consumption meter and electricity you pay for is marked up and includes a "load factor" that accounts for the roughly 10% loss of electricity that occurs in the distribution process itself. The LDCs or utility companies end up billing you for the electricity you consume because they manage the meters. They do not actually generate the electricity, there business is solely to manage the wires, distribution process and metering and billing processes...at least in Ontario as of a few years ago when the market was deregulated partially.
Now, with solar panels that generate electricity you are interested in becoming a generator. In order to get paid like other generators you are going to need an additional meter to measure the electricity you produce. This is typically provided (Toronto Hydo has been providinig them for free while I had to pay Hydro One $800 for a new meter installation) and specified by the LDC. They'll be able to tell you what it will cost you.
Ontario Sustainable Energy Association presentation by Hydro One on FIT process - click here (pdf file, size 4 MB)
One other important player in the process is the Electrical Safety Authority (ESA). Once a solar system is installed by a qualified installer the ESA will need to inspect the system before it goes live on the grid. You'll find a fair bit of information on what they require for solar installations and the FIT/MicroFIT on the Electrical Safety Authority (ESA) web site . Check it out and read through their various guide books at least as far as you can before they get too technical.
Since we are dealing with small scale solar on the roof environmental assessments are NOT required. For large systems an Environment Assessment is usually required.
Before we get into these details, a little history may be helpful. As of about two years ago the only connection option for small scale solar electricity generators was to "run the meter backwards". That meant that the solar system would run the existing consumption meter backwards when more electricity was being generated by the solar system than was being consumed in the building. The value of this type of electricity generation has been in the 12-14 cents/kW range (which is a combination of the electricity price and distribution charges that were being reduced by the amount of electricity being injected back into the grid as measured by the meter running backwards). Some concern existed with the ability of meters to correctly measure electricity when running backwards. So, some of the LDCs came out with a Net Metering program that required that the consumption and generation be measured separately, originally with two different meters but more recently with a single meter that has two registers (one for consumption and one for generation). The LDC would then, once you signed a Net Meter agreement with them, reduce the commodity charge on the consumtion bill by the amount you generated. Not quite as good as running the meter backwards but pretty close. Given the 75+ year payback on this type of configuration in Ontario there have been few of us who've gone down this path (I did, starting about eight years ago with a wind/solar hybrid system).
A couple years ago the Renewable Energy Standard Offer Program (RESOP), precursor to the new FIT/MicroFIT program, came into effect. Under this system solar electricity could be generated and every single kW (kilowatt, a measure of electricity) was paid at 42 cents/kW. This program required a new meter to measure the generation. Two connections options to the grid were typically available. There was series and parallel. Series made sense if this was the first and only generation system installed. Parallel would have been required if an existing Net Meter system was already in place (that is what I had). This type of system, RESOP, had a roughly 20 year return on investment profile.
Finally, as of Oct 1, 2009, the new MicroFIT, is now in place and can provide, through a similar connection configuration as the RESOP, a twently year contract to pay you 80.2 cents/kW for every kW your panels generate as measured on a new generation meter. The one gotcha on this new program is that certain Ontario content requirements exist that will require that your solar system supplier provide written confirmation of conformance (40% up until the end of 2010 and then 60% after that). This option can provide a return on investment of less than 10 years potentially. The larger you scale your system, typically the better the return on investment as the generating panels represent a larger portion of the overall costs. This is the type of system that is the focus of this guide.
NOTE: For a great primer on Feed-in Tariff see the Using feed-in tariffs to capitalize on renewable energy PDF document put out by the Pembina Institute. Also, as I mentioned earlier read the Ontario Sustainable Energy Associations (OSEA) Community Action Manual.
The Ontario Feed-in Tariff (FIT) system has been developed by the Ontario Power Authority (OPA) on behalf of the Ministry of Energy who enacted the Green Energy Act that precipitated this program. The OPA plans and provides electricity on behalf of the citizens of Ontario. For information about OPA, check out their web site - here. Specific to the FIT program and the MicroFIT program (MicroFIT is for systems rated at less that 10kW). The details of the MicroFIT program that pays 80.2 cents/kW in Ontario for a 20 year contract is explained and managed through a new service web site developed by the OPA. Go through this site thoroughly - OPA MicroFIT web site: http://microfit.powerauthority.on.ca/ .
As with anthing related to taxes you'll need to get professional advice to be sure you are handling your particular circumstance correctly. The main points are that your solar system installation makes you a business in terms of taxes related to the income generated by the solar system. This allows you to deduct expenses from your income from the system for tax calulations. Capital Cost Allowance (CCA) rules exist in Ontario that allow you to claim accelerated depreciation since solar falls withing "class 43.2" type assets for tax purposes. This essentially means that you can claim up to 100% of the income each year as depreciation expense up to the full cost of the system, less any insurance or loan expenses which may also be claimed.
Purchase of equipment for the solar system will include GST.
Under $30,000 per year of income and you are GST exempt. Once HST arrives it is expected to be the same as for GST except that the rate will rise from 5% to 13%.
For a good overview of tax considerations and legal issues, as well as a good general overeview of the process see:
Also read this for details on income tax reporting: Income tax implications of residential solar in Ontario
Before you go any further take a look at the following videos to get some background that includes some visuals.
Okay, hopefully that gives you lots to think about regarding the different aspects of operating a solar system on your building. Now, get ready and take the next step...
In order to develop a plan that will allow you to make a decision on whether to proceed with a solar system on your roof, you'll need to get the details on all costs, permits, and contracts. Here it is easy to get confused or start to worry about how confusing everything appears to be. In the name of keeping things as simple as possible, start by finding a solar system supplier that has done this type of installation before. Check their references. Get them to explain the entire process to you. They should be saying that they will help you every step along the way. Speak to a few different providers. Ask the same questions of each and compare what they are saying. If things don't conform to your understanding then ask for further clarification.
Hopefully, you've read through the OPA FIT/MicroFIT information at their web site. It is worth starting the contract process early on so that you can get a sense of how their contracting process works. Don't worry, you won't be signing the contract until you have all the information required and until you are comfortable that you want to move ahead. You'll be able to save what you've completed and read through the sections you still need to complete to get a sense of what is required or what you are missing. Starting this process can help you determine all of the questions you'll need to ask your solar system supplier, LDCs and others.
So, does you house or commercial building have what it takes to hold up some solar panels? Is there a place on the roof where you can mount and face the panels south without any shadows or other obstructions during any part of the year. Remember that the sun is much lower in the sky in the winter than in the summer causing very different shadow patterns from obstructions. Also, it maybe worthwhile mounting the panels above windows on the south side of the building as an awning that protrudes from the side of the structure as this will make use of the panels for two purposes, shading in the summer from the sun, and generating electricity all year long. Of course, you'll need to get some expert advice on these matters but the first step is for you to decided whether you think it is conceivable at which point you can proceed to get confirmation. There may be a cost to getting a building permit. In Toronto it can be $95 for a permit plus if engineering drawings are required additional costs may be involved.
Have you thought about a budget for this project? Typically bigger the better from a return on investment perspective. You may be limited by space or load capacities imposed by your roof or structure. Get a rough sense of how much space/panels you think you might be able to put up. Call some solar system suppliers to get a rough idea of costs. My 1.2 kW solar system on the RESOP program was $14,000. This is a rather small system where the inverter and installation costs are high in proportion to the total generating capacity. Assuming you are able to budget for a larger system the more of your money will be going into the generation side of your investment. Ideally for a house, you should get into the 3-5 kW array size. For larger commercial buildings or industrial roof systems you may be able to fit a 10kW array (make sure you are under the 10kW limit imposed for MicroFIT...or if your roof and budget allow for a much bigger system go for the FIT program which supports solar projects of a greater size albeit with lower rates). The only solar system supplier I've ever worked with is Solera Energies. You should be able to do some searching online to find other solar system suppliers in your area that can provide information and quotes. Another way to get good pricing and quality system providers is through neighbourhood purchase groups like WISE, RISE and others. A central clearing house for the neighbourhood purchase program seems to be a group/web site called ourpower.ca. Check it out. They have some good information and example projects to learn from. The Canadian Solar Industry Association (CanSIA) can also provide information on system providers.
For some detailed information on a much large installation rated at 100kW, see the Exhibition Place, Horse Palace report. This system and the report provide some good insight into the performance variation that may be expected with different angles. Also, the numbers are detailed and analysis quite extensive. The system cost $960,000 fully installed. Several different panel types were incorporated including Sharp and Evergreen:
Exhibition Place 100kW example
"The Project, started in 2005, was installed in summer of 2006 at a cost of $960,000. This first year of monitoring resulted in the identification of several key operational issues and challenges, including complications with inverters and monitoring equipment, shading issues, and data collection and management issues. Securing interconnection with the electricity grid in order to sell the power being produced was also a complicated
and protracted matter.
At the end of the first year of the pilot project, an external technical advisor was brought on to
correct some technical issues and provide ongoing support to the project. At this time, a problem
with the baseline performance modeling used to assess the project was identified and a decision
was made to extend the pilot data collection for a second year. A team of project supporters, composed primarily of Exhibition Place staff, took over monitoring and management of the site and began regular meetings to ensure that data flows and technical matters were handled quickly and effectively.
Once baseline performance modeling was adjusted to reflect more realistic assumptions, expected output from the plant was 103,275 kWh/yr. In 2008, the Horse Palace PV Pilot Project produced 96,724 kWh. The slight underperformance (six percent) was caused by energy production losses experienced in part of the array due to a problem caused by night-time power use by inverters. Simple payback for the project is 16.7 years when taking into account grant support for the initiative and the Standard Offer premium of 42 cents per kWh (without the grant support, the system would have a 30.5 year payback at 42 cents per kWh, and closer to 50 years if the system switched to net-metering at 12 cents per kWh after the 20 year Standard Offer contract ended). The plant is now participating in RESOP and receiving monthly payments, although difficulties in establishing the interconnection delayed payments for a full year at a loss of $36,000 in expected income."
Get three quotes from different solar system providers. No doubt this process will require that you quickly refine your requirements including mounting decisions, permitting, array size, panel options, inverter types, and connection options. My experience has been to determine my own budget for the job as much can be adjusted in the array size to accommodate the budget. So, ideally you'll want to invest $20,000 to $40,000 for a residential roof mounted solar system. For a commercial or industrial building you may be able to justify and support a much larger budget. Scale really does help, so budget and work out financing for as much as you can to allow for as large of a system as possible. The only other factor are the FIT rate differences depending on size and other factors...check the FIT contract. The MicroFIT must be under 10kW, which may be the other factor to keep in mind if you are want to get the 80.2 cents/kW rate.
Most of this process is actually quite easy. The hardest part MAY (hopefully less so as time goes by) be contacting your LDC in order to get a quote on having a new meter installed for your solar generating system. Some utilities seem to be providing this new meter for free, seemingly as an incentive for this worthwhile cause. Others, like Hydro One who I've had to deal with, charge $800 (it may be more or less by the time you get a quote). In any case, these large utility companies can be difficult to deal with because of their size and their lack of interest in supporting these types of programs. It would appear that the FIT/MicroFIT program may change that as the OPA seems to be leading the charge to try and make this process easier. As of this writing, however, we will have to see how well they are able to follow through on that goal.
Hopefully, over a period of a week or two you should be able to get three quotes and lots of information from solar suppliers. You should be able to complete more of the OPA contract information requirements as you go along. The LDC should also be able to explain how much it will cost and when they might be able to put in a new meter for your generating system. This starts to complete the picture of a budget and potential dates/timelines for getting things operating. Your solar system provider should be able to help resolve any questions related to the LDC with contacts they have at these utilities. Also, ideally the references provided by the solar system provider can give you a sense of what the process was like for them and how they overcame any issues with the LDC (assuming the LDC is the same one the services the grid in your area). An example of what a quote should include - here is the one I got from Solera for the 1.2kW solar array on the RESOP program.
Other cost concerns to build into your plan includes borrowing interest costs and tax implications. Talk to your accountant regarding both of these concerns. Related to this is the rate of inflation which will affect your return on investment.
'There's also that nagging tax thing. Your three-kilowatt solar system might be small, but in the eyes of the Canada Revenue Agency, your contract with the power authority makes you a business. This means the income you earn from selling kilowatts is taxable.
But don't stress, says Toronto resident Mike Brigham, who since January has been feeding power from his 5.8 kilowatt solar system into the grid under the old standard offer program.
Brigham says your taxes might become more complicated, but you can reduce your taxable solar income by depreciating the capital cost of your PV system. If, for example, you earn $3,000 each year you can bring the taxable portion to zero by deducting $3,000 each year over 10 years – that is, until the $30,000 cost of the system has been fully depreciated.
"It means you can pretty much write off everything you earn," says Brigham, who still advises: "Hire an accountant."' - Tyler Hamilton, Toronto Star, March 23, 2009, Solar-power feed tariffs windfall for homeowners
Knowing what all the potential costs are going to be you should be in a position to determine which vendor you want to proceed with. On a spreadsheet you can work out the return on investment based on assumptions that the quotes should provide regarding the amount of electricity you can expect to generate. In order to help you with this process I've developed a Solar energy investment calculator.
Investment Analysis Tool: Solar investment calculator, ROI, break-even and more - click here now.
The quote I got estimated electricity generation amount that is 10% less that what I am actually generating so far (early days on this though...I am only ten months in on this project). So, keep in mind that the quotes estimated generating capacity will be higher or lower than you get in reality. A good installer would estimate on the lower side, so it may be that you can expect to generate 10-20% more that estimated in a good year. The estimated generating capacity will also be a reflection of the different solar panels being proposed, each with different levels of efficiency at converting sunlight into electricity. Higher efficiency panels will tend to cost more while generating more electricity to compensate. The return on investment calculations should allow you to compare resulting long term investment benefits of each system whether they be lower cost, lower efficiency panels, or higher cost, higher efficiency panels.
The quote should also provide details on permits required and dates when the system may be installed and completed. The LDC quote for a new meter should also provide you with a sense of when the LDC can coordinate a "disconnect" in order to install their new meter in coordination with the completion of the solar system install. Also, you'll need to plan to get Electrical Safety Authority (ESA) to inspect your setup before going live on the grid with it. Go back to the OPA MicroFIT web site and updated your contract details in preparation for final submission. This should also provide you with dates that you can use for planning the start of your generation system and when OPA, through the LDC, will start to pay you.
You now should have the components you need to develop a plan for implementing your solar system. The quotes and information provided by the solar system suppliers will allow you to finalize your budget and prepare for final negotiations. Discussions with your LDC will provide the details on how to get a new meter installed and when this might be possible. If any structural work on the roof is required, that quote and permitting should be determined at this point. You know the what, where when, why, and how. Review the and compare options using the Solar investment calculator tool. A more detailed calculator is available for free from the government of Canada called RETScreen (renewable energy and energy efficiency technology). If you have any questions at all get them resolved now. Time to make a decision.
Just do it. This is one of the most powerful things you can do to ensure a sustainable future for your children while also providing you with a reasonable return on investment. Pick the vendor you feel most comfortable with, sign the contract, finalize your financing, order the equipment, sign the online contract at the OPA web site, scheduled the meter install with the LDC and solar system installer, and start getting paid.
1. Apply for a contract with OPA (Ontario Power Authority). Get all the details on the program which currently pays 80.2 cents/kW for every bit you generate with solar PV.
Once you submit your FIT/MicroFIT contract for approval through the OPA web site you will be informed that the the following are your next steps:
So, the next thing to do if you haven't already is contact your local distribution company to get all the details and paper work requirements for getting your system onto the distribution grid.
Completed documents that must eventually be faxed, emailed or mailed to OPA.
Along with the completed OPA MicroFIT contract form the following also had to be sent in. Solera, the installer I've used in the past, helped prepare most of these documents:
2. Hopefully your solar system was installed by Solera in compliance with Green Energy Act, MicroFIT and ESA (Electrical Safety Authority) standards. It took a few days when I did it for RESOP program. They did a great job including preparing the system a new second meter base and directly wired through the electrical panel until the new meter is installed by Hydro One in our case or whatever LDC is doing your meter install.
3. ESA inspection was requested by Solera. ESA inspector came by the house and took pictures. He approved the setup in principle from what he saw and put a sticker on the new empty meter base. We then received the approval paper from ESA by mail.
4. We then requested our LDC, Hydro One, install the new second meter for mesurement of generation by new solar panels. They first had someone do an inspection of the setup. Several months later after they got around to installing the new meter (an Elster meter that measures both consumption and generation).
Before the new meter was installed I had to pay for it. Hydro One asked that we pay $930 for the new meter, installation service and tax. Although the service order does not detail the cost breakdown my understanding is that the meter cost about $100, so the service and taxes for what should have taken just a few minutes of install time (according to Hydro One literature on smart meter install process). For that service it would appear I paid about $700.
5. With the new meter installed I called Hydro One customer service to ask when I'd start getting my cheques for the my solar PV generated electricity. Hydro One confirmed that they will send a package for the program now that the meter is installed. They tell me I must complete some forms and then I should finally start getting paid the for the new solar PV systems generation. Can't wait to get the first cheque. Not quite so fast! Waited a bit but then finally after calls to Hydro One failed to provide any answer, remebered that the OPA web site suggest I need to send in declaration of operation letter. I never got a welcome package.
6. Finally think I've figured out what forms are required to complete the process. On the OPA web site and in the email confirming my contract it says I need to send both OPA and Hydro One (your LDC whichever one you deal with) my "Declaration of Commercial Operation". I should have known it would be something like this. The template for this document which I completed and emailed to each party can be found on the OPA web site (for old RESOP)- here. There may be a new form to go with the MicroFIT program.
7. Now you are officially a solar farmer. Get farming! Your utility will likely want to setup an EFT process for payment. Hydro One pays quarterly. I provided my bank account information and they automatically deposite about $200/quarter in my account (that is for the 1.2 kW solar system on the old RESOP contract at 42 cents/kW...I would be getting $400/quarter with the 1.2 kW solar system if it was on the MicroFIT...but don't worry, I am looking at putting int a 5 kW solar system on the MicroFIT.).
Well done! Now get your friends to join the club.