microFIT
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Financial Planning for microFIT
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How much Revenue Can Be Generated

In Almonte and using 2017 rates, you could generate 12070kWh per year with a 10kW nameplate rated system, +-10% yearly deviation. This is a fixed installation facing exactly south, and tilted 45 degrees. This comes from an NRCan web site. With a NRCan estimated average lifetime system efficiency of 75% this generates $3476.16 a year. This is $69523 over the 20 year contract. These numbers above assume a rooftop installation pricing at .288, and are using average efficiency of many systems, of various ages installed worldwide. The NRCan web site for solar potential for most municipalities is found at Solar potential maps. For Almonte, in the 2nd column you will see 1207, the annual potential of a 1kW panel, using 75% system efficiency.

A ground mounted installation in the same location and orientation with a price of $0.21 per kWh would earn $2534.70 a year.

These are the most conservative number available, and with the latest panels and inverters you will exceed these values. A tracking mount will increase the yield, and so will using 15 to 25% more panels than inverters, to operate in an inverter limited configuration, for example 12 kW or panels with a 10kW inverter. Both of these methods can be combined. Note: This oversizing is no longer permitted.

These numbers can be verified by visiting NRCan's web site and by using PvWatts 1.1, a US government funded solar estimation tool, which has climatic data for Ottawa and some other Canadian cities. PvWatts will predict a slightly higher yield.

We suggest that you base your expectations of the extra revenue possible by single axis and dual axis trackers on numbers provided by NRCan or PvWatts as more conservative values, rather than the tracker manufacturer's claims which may be exaggerated.

  • NRCan suggest a dual axis tracker harvests 30% more.
  • US NREL suggests a single axis tracker 28% and 36.3% for dual axis.

In all cases, a tracking mount requires a horizon to horizon view of the sky to achieve these gains. When shading is present, the gain will be less.

Size of a microFIT System.

When a microFIT PV system is intended as a financial investment, to make the best possible return both the size and location are important considerations.

Each installation has a certain set of fixed costs that can't be avoided. These include the connection fee charged by your local hydro company, such as Hydro One which is about $1200, and and ESA permit which is about $410 plus HST. In most cases the existing meter base must be changed to a dual ganged meter base, and in other cases a new single pole mounted meter is added. In addition there is an AC disconnect switch and the wiring from the AC disconnect to the PV system. For most home owners this part of the system is done by a licensed electrician. We recommend allowing about $2000 for this part of the installation. If you are doing a roof mount, then a building permit is required. These costs do not scale with the system size, so this suggests two conclusions. The best return on investment occurs with the largest sized installation to minimize the percentage of the system that is composed of the fixed costs. The second conclusion is that there is also a minimum sized system where the fixed costs make the return on investment very low and not justifiable as an investment decision.

There can be other reasons for a microFIT installation such as reducing greenhouse gases and obtaining a neutral cost of electricity by balancing you generation revenue with your hydro costs. For the very handy homeowner, the homeowner is permitted to do all of the electrical work which will reduce the fixed costs.

We recommend for the best return, you generate as much electricity as possible. Under the microFIT rules you can install 10 kW of inverter capacity and put in 12 kW of panels so that your system operated inverter limited during the middle of the day. During the shoulder hours of solar intensity the greater panel capacity will permit you to output 10 kW per hour to the grid for more hours of the day and thus increase the total amount of power delivered to the grid. About 15 to 25% extra capacity is recommended. (Only for older contracts)

If you have no shade at your site, then string inverters are recommended as they have a significantly lower cost for a 10kW installation than micro inverters. Generally for a system size of over 3kW using a string inverter will be less expensive.

 

Ground or Roof Mounted?

Currently a roof mounted installation in 2017 will receive $0.288 a kWh and a ground mount $0.21. Should I put in a roof mounted installation to earn more money? This used to be a common question. Now that the IESO rules prohibit ground mounted systems in residential areas, unless you are on rural, non-residential zoned land there is no choice, it must be a roof mounted system. One reason for the higher price paid for a roof mounted installation is the same number of panels mounted on a roof will usually generate less electricity over a year than an identical set mounted on the ground. The reasons for this are:

  • The roof does not face due south
  • The slope of the roof is not in the optimum range
  • The roof is not big enough to hold the desired number of panels
  • The roof has dormers or vent pipes that shade some of the panels during part of the day
  • The roof may be shaded by other buildings during part of the day
  • The snow stays on the roof mounted panels longer as it can't be reached to clear it off after a snow fall

The answer as to which will produce the greatest number of dollars is provided by the shading analysis done during a site assessment. Normally a ground mounted installation is assumed to be pointed due south, at an optimum angle and will be positioned to avoid any sources of shading. In almost all cases a ground mount will produce more kWh per year. However what is usually more important, is the question of "which will provide the most revenue"? This is usually answered by data obtained by a pathfinder analysis of the site.

Frequently in rural locations a roof mounted installation on a garage, barn or utility building can be the best choice. When this was originally written, the advice above was sound. Now only rural residents are permitted to have a ground mounted microFIT installation, and the price paid for ground mounted installations is so low it is no longer attractive.

Minor Considerations

There is lot less concern over potential leaks in a roof with a ground mounted installation.

A ground mount normally does not require a building permit. The building permit is a municipal matter, and is not required by the IESO.

Can I Make a Good Return With a Ground Mounted System?

Initially this was the best option. The prices changes over the last few years make the answer no in 2017. The OPA was convinced in 2010 that you will, and they thought that ground mounted systems were too profitable, and so they lowered the price paid for ground mounted systems, to make the return on investment about the same as for an average roof mounted system. In practice, if costs are carefully controlled particularly by doing some or all of the labour for the installation yourself, a ground mounted system can vastly exceed the return possible in a typical stock market portfolio without all of the risks and uncertainty.

 

When will Rates Change?

Solar panels prices have been declining due to a lot of competition between Ontario qualified panel manufacturers. This is good for the end user. We expect that the prices paid for electricity will drop to track lowered costs for key parts of solar systems. Therefore we suggest that you apply to the IESO for a contract before the adjusted price is announced, to get the current price.

The OPA and now the IESO originally stated that they will review the prices every two years and adjust them if necessary. Now they are adjusted once a year. Once you have been offered a contract, the price you receive will not change, even if rates are subsequently reduced.

Insurance

Insurance is available for your solar installation. Most insurance companies are learning all about this and are beginning to develop a reasonable pricing package to add this to existing home owner policies. This will help protect your investment in a solar installation. The major risks are wind damage and to a much less extent damage due to hail. The panels are designed to withstand hail up to one inch in diameter. Hail in larger sizes than this would be very unusual. The last risk is due to theft, and this threat is highly dependant upon your location.

Insurance coverage provides peace of mind that your investment will remain secure and operational.

How much Sun do I need?

You need to have a shade free from 9AM to 3PM standard time all year round to be practical for a PV system. This can be determined during a site analysis, using an industry standard tool called a Solar Pathfinder. If there is shading during this time, your productivity will be less than ideal, and you return on investment will be lower.

If there will be shading on some of the panels during the day, then the type of inverter selection will be more critical, and there will be less options available.

Tracking or Fixed Mount?

A dual axis tracking ground mounted system will produce more revenue than a fixed mount. Beware of exaggerated claims for the extra amount of electricity produced. Instead use Canadian government's NRCan site or the numbers provided by the US government's PVWatts program for a more realistic figure. However a tracker costs more to install, and has more parts that can fail. A fixed mounted system is much easier for a DIY person to assemble and install themselves, and so reduce the installed cost and therefore to improve the rate of return. The tracker is the opposite, it costs more for the tracking mounting system, and so more money is required for the initial investment, and it may take longer for the system to produce enough revenue to reach the break even point. After that it will produce a bigger cheque for the remainder of the 20 year contract. Fewer owners are prepared to provide the installation labour themselves, and in order to receive the full warrantee coverage, a dealer must verify that the unit was installed correctly, and in some cases supervise the installation.

A typical increased yield of a dual axis tracker would be about 30 to 36% more than a fixed mount. The difference in component costs between fixed and tracker is closer to 50% more for a DIY installation, so the return on investment ratio is lower with a tracker, even though over the life of the contract it will produce more revenue and a bigger monthly payment for the power that is generated.

To achieve the increased yield with a tracker, your site needs to have an unobstructed view of the sky for about 248 degrees in the Ottawa Valley, so the tracker can track the sun from sunrise to sunset. If this is not the case, then the benefit of the tracker will be reduced.

In the summer of 2010 the OPA did a survey of the costs of typical systems installed under the microFIT program. They concluded that a tracker (presumably dual axis) cost about $90,000 and a fix ground mount cost $65,000. With these numbers it costs $25,000 more to have a tracking mount, and with 10kW of panels this will generate an additional $46,493.64 of revenue over 20 years, while costing $25,000, or an additional profit of $21,493.64 over the profit of a non-tracking system. Disclaimers: These are OPA's numbers, and very conservative numbers for the output of panels and for the extra 30% generated due to tracker. This also does not use the 15 to 25% extra panel capacity that we highly recommend. There are no vendor independent figures for the summer of 2011.

Generally it is harder for the home owner to improve their rate of return by providing sweat equity on a tracking system than it is on a fixed system. The DIY person has to rent a crane during the setup of the foundation and concrete pouring, and then later during the assembly of the frame onto the masts.

The assumption is that a tracker is a ground mounted installation. Tracking rooftop mounted systems do exist but are very unusual in Ontario. There are very few that are both proven by long term use, and are qualified as Ontario content. Typically they are mounted on flat roofs, such as supermarkets or warehouses, and track in one axis.

Getting Started

You will need to state on your IESO application if you wish to have a ground mounted or rooftop installation. Therefore you should have a site assessment done before to help decide which is best if both options are available to you. You should also consider before you apply to the IESO if you wish to become a HST participant, and if so you will need this number for the IESO application.

You must be the owner of the property, and it can't be owned by a business or a corporation. You can only put one microFIT installation on a single parcel of land.

Once you have decided to proceed, first you apply online to the IESO, and then with your microFIT application number in hand, immediately apply online to your local Hydro for a connection.

The first feedback that you will receive will be from your local hydro company, and they will inform you if it is possible to connect you to the grid. If not, then you can't proceed at this time. If the response from the local hydro is positive, then there should be no reason why the IESO should not issue a conditional offer. The only other reason you might be decilined is that the quota for new generation capacity has been fully subscribed. If this is the case, then wait until a new amount of quota is released.