Solar Power Income and Costs
The financial side of solar power
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Our anticipated solar power income from the Ontario microFIT program was slightly higher than average as we purchased the most efficient solar panels in the world (see solar panel efficiency for more details). We anticipated income of $3,970 per year (4.5 kWh x 1,100 x $0.802). With a system cost of $44,572 our payback would be 11.2 years - but, because we were purchasing green electricity at a premium, and discontinued that due to our production of clean energy, we're saving about $60 per month. So at $720 per year of savings, our estimated payback was 9.5 years.
The amount of income you generate is directly related to how much solar power you can generate. Our system went live in November 2010 and in the first year we generated 5,277 kWh of power. Here`s how the cheques rolled in throughout the year:
To simplify the summary of payments, the following is a summary of the calendar year net incomeÈ
The following are the numbers for our 4.5 kw solar array (near Toronto, Ontario) to give you an example of how this works. The total cost of our system was $45,462, which included the following:
Looking to understand the payback (the number of years it takes to make back the money you invested) of installing solar panels is not easy due to the number of variables involved. This web page will give you the information to understand how to determine your payback period and give you all the details from our solar panels as an example.
The amount of energy you can produce from a rooftop depends on a few things - location, location, location. Homeowners in California get more sunshine than Toronto, so geography plays a role in the potential for solar energy. The orientation of your roof is also very important, as the South and South-West facing roofs get the most sunshine. The ideal location should also get full sunshine and not shaded part way through the day from something such as a tree. In our case, we have a South facing roof with no obstructions - perfect! (note: we’re located near Toronto, Ontario, Canada).
The other two important parts are how much you’re getting paid for the electricity you produce, and the effectiveness of your solar panels. There are a large number of solar panels to choose from. Some are more efficient than others. Refer to solar panel efficiency for more details.
Lastly, the cost of your system can vary by installer and the equipment you choose (solar panels, inverter, racking, wiring, etc.).
Based on data for the first year, and considering we`re not purchasing green power due to our investment, our payback period will be 9 years.
Some solar companies will make the payback sound wonderful (e.g., 6-7 years), but you need to do the math yourself. For an effective solar installation in the Toronto area, you'll likely generate 900 kWh of electricity per year for every KW of your array (e.g., for a 5 kWh solar array, you can produce 4,500 kWh of electricity per year).
To calculate how much you should get paid each year under the Ontario microFIT program, multiply the size of your solar array in KwH by 900, and then by $0.802 (e.g. 5 kWh solar array x 900 x $0.802 = $3,609).