Your home’s
renewable energy system: An investment with dividends By: Tim Brien
Once upon a time, investing was only about putting money
into some form of savings vehicle: deposit money into an account,
and you could watch it grow. Then came other investments:
guaranteed investment certificates, stocks, bonds, mutual funds,
you name it. Some money went to real estate investments: you could
re-model a home and sell it for a profit, or perhaps purchase an
income property and collect rent. These investments all have their
purposes, but have you ever thought about turning your home into a
power plant and getting paid to sell electricity? The recently
introduced Green Energy Act is designed to push Ontario to the
forefront of renewable energy innovation, with the aim of creating
jobs and promoting investment on a large scale.
Recent plans unveiled
by the government of Ontario and the Ontario Power Authority (OPA)
will enable you to invest your money in solar photovoltaics, or
PV, and earn a rate of return comparable to, and in some cases
better than many traditional investment products. Here’s how it
will work, under the proposed Feed-In-Tariff (FIT) which is due to
launch this summer:
As a home or
business owner, you will sign a contract for 20 years with the
OPA, which states that the OPA will pay you 80.2 cents per
kilowatt-hour for all the electricity you produce. To give you an
idea how much money this is, take a look at your residential
monthly hydro bill. You will notice that you pay an average of
about 5.6 cents per kilowatt-hour. The amount you’ll be paid by
the OPA under the proposed FIT program is around 14 times that.
The reason for the high rate is that by providing a guaranteed
price, home and business owners are encouraged to invest. The
substantial dividend makes PV much more attractive than in the
past.
Now that you know the basics, you should also know the
up-front costs of investing in solar PV. A few things to consider:
Its fixed costs are those associated with connecting to the power
grid, electrical permits and inspections, and the cost of having a
secondary hydro account which records how much you produce and
sell to the power grid. The variable costs are those associated
with your property’s solar potential assessment, as well as
planning, design, and installation of your chosen PV system. For
instance, you could choose to either have the solar array mounted
on your roof, or ground-mounted on a solar tracker. After
factoring everything in, a good round number for cost is about $10
per watt of installed PV. In other words, if you install 1000
watts, or 1 kilowatt of PV, you can expect to pay in the
neighbourhood of $10 000.00.
Have you ever spent this much on renovations, or on a vehicle?
Read on—you’ll be very pleased at how this investment will quickly
pay for itself and eventually provide a profit, unlike most
renovations and vehicles.
