How much money do you make?
The short answer is:
We make about $3,000 a year.
We are paid 80.2¢ for every kilowatt hour of electricity that we produce (What’s a kilowatt hour?). 80.2¢ was the rate in effect when the microFIT program launched. If you turn on a system today, the rate is lower: 54.9¢ for every kilowatt hour, for 20 years. Every two years there is a review of the program and the rates for future contracts will be adjusted.
So once you know the contract rate that you’ll be paid, the big question is how much electricity can you produce? In our case, we produce an average of 10.3 kWh per day over the course of the year. The math is then pretty simple:
10.3 kWh x 365 days x 80.2¢ = $3,015.12 per year
Over the 20 years of our microFIT contract, that means we’ll earn gross revenue of around $60,000. When you take the cost of the system into account, the return ends up about the same as a 20 year GIC at 4.5%.
It’s no get-rich-quick scheme, but it’s a good deal, considering you can’t get anything close to that from any bank at the moment. Plus, you can write off the purchase price against your income tax (and you can write off any loan interest as well).
The long answer is:
With the microFIT program, you’re likely to earn a good, nearly guaranteed, return on your investment. Some people claim the rate of return is 10% or higher, but there’s a few different ways to look at it. It all comes down to how much electricity you can produce, because you’re paid based on how much you produce.
According to figures from the government of Canada about average sunlight, a Toronto-based system can expect to produce an average of around 1,140 kilowatt hours of electricity each year, for every kilowatt of production capacity in your system. Besides the average sunlight in your location, the exact figure depends on many other factors which are hard to predict in advance. But the variance isn’t going to be wild; the published averages are a good general guideline.
So once you know that, the only other thing you need to know is the the production capacity of your system. This is also called the “nameplate capacity” which is just the manufacturer’s rating for how much power the panels can produce.
Imagine you have a 5 kilowatt system. The math is:
5 kW of capacity x 1,140 kWh x 54.9¢ = $3,129.30 per year
The microFIT contract guarantees the price for 20 years. So that means gross revenue of approximately $62,500.
But that’s just your revenue. The costs are important as well. You can read our page about how much our system cost to get some idea about that, however the costs in the industry are always changing, due to worldwide trends in demand.
There are tax implications and depreciation and other things to take into account as well. The Canada Revenue Agency has a page that explains what you can write off for owning a microFIT system. Toronto solar pioneer, Mike Brigham, also has an excellent, detailed analysis of the cost and revenue of owning a solar power system on his website.
You can get an impartial site-assessment of your house from Our Power, a community-focused group promoting solar energy in Toronto and across Ontario. The site assessment will give a detailed estimate of what you can expect to earn from a solar system on your property.
The bottom line: the guaranteed rate of the microFIT program is high enough that you can probably get a loan or line of credit to help with the purchase of the equipment, and you are likely to still have some profit at the end of the 20 year contract period. For tax purposes, you can write off the interest on the loan against the income from the system. And at the very least, at the end of the contract you’d have a solar electric system on your house which would offset your electricity bills.