Within five years Ontario homeowners could save enough money by putting solar panels on their roofs that they won't need any subsidy to make installation worthwhile.
That's the conclusion of a new analysis from the Canadian Solar Industries Association being released Thursday, which says the plunging costs of solar equipment, combined with rising overall electricity costs, will put the two in balance by 2020.
Currently, many Ontario homeowners are installing solar panels, but the incentive is a provincial program that pays them high rates for the electricity they generate – considerably above market prices.
The CanSIA analysis essentially says that within five years, without any kind of subsidy, homeowners will save enough money by generating their own power to pay for the solar equipment over its lifespan.
"There has been a 50-per-cent drop in the price of residential solar already," said CanSIA president John Gorman. "We're going to see continued drops over the coming years, and that means not only diminishing subsidies, but an actual payback starting in five years time."
The analysis is based on a 3 kilowatt solar system costing about $7,800 in 2020, with a 25-year lifespan. It models electricity rates rising at about 2 per cent per year, and installation costs for home solar panels falling by about 26 per cent between now and 2020.
Mr. Gorman said that by 2025 it will be economic for homeowners to also shell out for a battery system to store solar power, essentially allowing them to tap into their solar panels to supply their electricity around the clock.
There has been criticism that the current subsidies for renewable power – including commercial scale solar and wind farms – have been driving up the overall cost of electricity in Ontario, thereby hurting both homeowners and businesses. The Ontario Chamber of Commerce released a survey on Wednesday that suggested as many as 5 per cent of businesses in the province say they might have to shut down in the next five years because of high electricity prices.
Mr. Gorman said the subsidies to solar power generators, and other renewable power companies, contribute only a very small part of higher power prices.
"The rate increase has been the result of investments that are made in all parts of the system – transmission lines and other things that desperately needed to be done to modernize our antiquated system," he said. These investments will make the electricity system cheaper over the long run because they will "produce and monitor electricity better," he added. Mr. Gorman also noted that most power systems in North America are seeing the same kinds of price boosts.
CanSIA's director of policy and regulatory affairs Ben Weir said the price analysis would also apply to other provinces, if the capital costs for a solar system were roughly the same at in Ontario, and electricity prices at or above those in Ontario.