Ontario`s Feed–In Tariff - a Solar Investment?

[Nir]

Hi,

Anyone invested in this/participating in this program? is it worth it?

http://heshomeenergy.com/fit.html

Financing may be provided! but...... what about depreciation? is it worth zero after around 30 years!?
- if this is the case then unfortunately it kills the deal.

Thoughts?

N.

 

[Thomas Beyer]

@ 80 cents per kwH .. why not ?

reverse some of the socialistic schemes (i.e. free tax $s) in Ontario back int your own jeans if you own 200 sq ft or more of roof space facing south in Ontario !!

We are looking into this right now in Sudbury, ON where we own 3 side-by-side 31 suiters with BIG roofs !

The risk is that sub-sequent (more sane) governments will dial the $s down when they realize that 80 cents is nuts as one can produce other green power (namely hydro or nuclear) for less than 1/10th that amount !!!

a 72-75 cent subsidy per kwH .. insane !!

I installed an solar thermal system on my roof in Canmore (not solar voltaic) and I did not see significant enough gas consumption reductions to warrant the expense .. but if you get 80 cents/kwh you should seriously consider it !!

 

[Nir]

Hi Thomas,
What about the fact it only lasts around 25 years!? when you take a loan to buy a house you do not expect its value to be ZERO after 25 years.
THANKS.

 

[bizaro86]

QUOTE (investmart @ Oct 2 2010, 12:32 PM) Hi Thomas,
What about the fact it only lasts around 25 years!? when you take a loan to buy a house you do not expect its value to be ZERO after 25 years.
THANKS.

If the numbers work, why not? A bank makes you a loan, and after 25 years you`ve amortized it all their loan is worth zero. They`re still making money. At 80 cents, how long does it take to make back the cost of install? If its only a few years, you`re getting the system`s other 20 years of life for free, and those government subsidized profits can keep rolling in.

Michael

 

[FraserCampbell]

QUOTE (investmart @ Oct 2 2010, 12:57 PM) Hi,
Anyone invested in this/participating in this program? is it worth it?

http://heshomeenergy.com/fit.html

Financing may be provided! but...... what about depreciation? is it worth zero after around 30 years!?
- if this is the case then unfortunately it kills the deal.

Thoughts?

N.


I like the idea - no headaches, no maintenance issues (assuming you go with reputable vendor offering full warranty). Government "guaranteed" return of about 10% for 20 years isn`t a bad deal at all (sure beats a GIC!). If you are financing it will cash-flow (even 100% financing at today`s rates). Your decision, do you think you can get a better return by using that $100K (or financing) elsewhere - I`m sure you can but perhaps it`s good at least as a means of diversifying.

My wife wasn`t excited about putting a solar panel system in the back yard and our roof is shaded by trees so that won`t work either, once I get a multi-family with the right roof I`ll definitely give it more consideration.

 

[Thomas Beyer]

QUOTE (FraserCampbell @ Oct 2 2010, 09:22 PM) .. Government "guaranteed" return of about 10% for 20 years..
...
The feed in tarif is not guaranteed to my knowledge .. and I expect it to drop significantly with a new, less left-of-centre more sane provincial government .. as a subsidy of over 90% is not sustainable !!

QUOTE (FraserCampbell @ Oct 2 2010, 09:22 PM) .. My wife wasn`t excited about putting a solar panel system in the back yard and our roof is shaded by trees so that won`t work either, once I get a multi-family with the right roof I`ll definitely give it more consideration.
or remove a tree ?

 

[FraserCampbell]

QUOTE (ThomasBeyer @ Oct 3 2010, 07:20 PM) The feed in tarif is not guaranteed to my knowledge .. and I expect it to drop significantly with a new, less left-of-centre more sane provincial government .. as a subsidy of over 90% is not sustainable !!

The price certainly borders on insane but I believe it`s guaranteed to those with approved contracts. See
http://microfit.powerauthority.on.ca/ - specifically, "Under the microFIT Program, you will be paid a guaranteed price for all the electricity your project produces for at least 20 years.".

Changes may be made for newcomers but once you have your contract I think it would be very hard for them to change your rate.

 

[brentdavies]

The feed in tariff at 80 cents is being reduced to about 55 cents shortly, according to the National Post in the past 2 weeks.

No statement on the wisdom of installing lots of high priced power, that will cost the consumer lots of money in the future for little benifit.

 

[DaveL]

Is there anything like this in BC and Alberta?


QUOTE (brentdavies @ Oct 3 2010, 07:25 PM) The feed in tariff at 80 cents is being reduced to about 55 cents shortly, according to the National Post in the past 2 weeks.

No statement on the wisdom of installing lots of high priced power, that will cost the consumer lots of money in the future for little benifit.

 

[bizaro86]

QUOTE (DaveL @ Oct 3 2010, 09:20 PM) Is there anything like this in BC and Alberta?

Alberta has a program for micro-generation, but you don`t get a huge gov`t subsidy. (Thank goodness!) Basically you get the market price for the power you sell, probably <10 cents, as opposed to the 80 cents guaranteed in Ontario. As an Alberta resident/taxpayer/utility buyer, this is good, as that program is wasteful and expensive. Of course, one man`s wasteful expenditure is another man`s effective and profitable subsidy.

Michael

 

[Nir]

QUOTE (FraserCampbell @ Oct 2 2010, 10:22 PM) putting a solar panel system in the back yardHi,

Wouldn`t vandalism be a concern installing in a back yard/city instead of on a roof? an important question, I think, as, depending on the lot size, some investors can install 50kW module in the back yard instead of only 10kW on the roof!

THANKS.

 

[Thomas Beyer]

QUOTE (brentdavies @ Oct 3 2010, 07:25 PM) ..No statement on the wisdom of installing lots of high priced power, that will cost the consumer lots of money in the future for little benifit.
votes today with money paid tomorrow by others .. a brilliant political scheme that has corrupted our democracies for decades !

 

[jseib]

I looked at doing this for my house. The problems that kept me from pulling the trigger are:

A) Solar panels typically are expected to last 25 years and degrade in efficiency by at least 1% per year. So how does a future home buyer valuate them at. Would they rather have $150-300/month in taxable income or spend the same money to get the house down the street with a nicer kitchen.

What are the panels worth in 5 years, 10 years or 15 years when a home owner may be able to buy far more efficient panels for a fraction of the price I paid for mine relative to inflation. I don`t like to bet against technological progress. Also how does an unsophisticated home buyer valuate the panels, would they rather have the panels or spend the same money to get a nicer house?

B) Energy production estimates are based on historical information on amount of sunlight, but do not take into account snow coverage etc.

C) The interest rate on solar projects is about 6% (last I checked), sure I could tap into my HELOC or savings but it`s not the most efficient use of resources. So yes it cash flows just barely at 100% financing when you don`t take into account snow and yearly production degradation.

D) The efficiency is reduced by dust/dirt over time so eventually someone will need to climb up and clean them, if you want to reach that earnings target the installers publish.

E) If your roof needs to be fixed or replaced then the solar panels have to be removed and reinstalled. Given that my roof is already 5 years old and they never last as long as advertised I am guaranteed to need to cover this cost before the contract expires.

When you really add it all up I`m not sure it`s worth it, at least if you need to finance it or plan to live in your home for a long time.

 

[Thomas Beyer]

QUOTE (investmart @ Oct 2 2010, 09:57 AM) Hi,

Anyone invested in this/participating in this program? is it worth it?
Apparently it is worth it to IKEA .. c/o of the Ontario rate payers who will destroy their Canadian and worldwide competitiveness through very high electricity rates !

http://www.financialpost.com/Power+failure...1528/story.html

Ikea`s gain .. GM`s, Ford`s, Toyota`s and 10,000,000 Ontarians loss !!

 

[FraserCampbell]

QUOTE (ThomasBeyer @ Oct 8 2010, 01:37 PM) Apparently it is worth it to IKEA .. c/o of the Ontario rate payers who will destroy their Canadian and worldwide competitiveness through very high electricity rates !

http://www.financialpost.com/Power+failure...1528/story.html

Ikea`s gain .. GM`s, Ford`s, Toyota`s and 10,000,000 Ontarians loss !!

Very interesting, I had read The Star`s version at http://www.thestar.com/business/article/87...-from-roof-tops - "it`s all good for Ontario" vs Ontario subsidizing U.S. Prices or "we`re heading towards European prices".

 

[Thomas Beyer]

QUOTE (FraserCampbell @ Oct 8 2010, 05:32 PM) Very interesting, I had read The Star`s version at http://www.thestar.com/business/article/87...-from-roof-tops - "it`s all good for Ontario" vs Ontario subsidizing U.S. Prices or "we`re heading towards European prices".
why are higher energy prices good for Ontario ??

 

[FraserCampbell]

QUOTE (ThomasBeyer @ Oct 8 2010, 08:36 PM) why are higher energy prices good for Ontario ??

I`m with you, strange math to be sure.

 

[Nir]

QUOTE (ThomasBeyer @ Oct 2 2010, 11:49 AM) We are looking into this right now

Hi Thomas,

have you decided to apply/implement this in Ontario or still checking?

Thanks for sharing the link on Ikea - interesting!

Regards,
Neil

 

[Nir]

Hi All,

I am surprised so few investors are interested/participated in this discussion. (maybe because program is for Ontario only and not many ON members here?)

This solar panel investment opportunity is in a way better than real estate because it truly generates passive income where RE requires MUCH more work to maintain.

Plus, it is government funded so different financing options are available including an interesting refinancing option some banks will offer by appraising your property significantly higher thanks to the additional solar panels!

Well, maybe another reason there isn’t much interest is investors do not have large lots or appropriate roofing(?)

Regards,
Neil

 

[willy]

Well, it`s something I`m definitely considering for the roof of the addition on our duplex. There`s quite a learning curve unless you`re willing to just lay out a pile of cash for a company to handle everything for you.

I`m looking at this:

http://www.theresourcestore.ca/proddetail....UN-ENPH-4000-RF

It`s a complete kit, which if I install, will reduce the overall cost by about 30-40%, which, if you believe all the numbers they throw around, means it should pay for itself in about 6 years. I`m a bit of a skeptic, so I estimate 8-10 years.

From what I understand, the Ontario government is trying to build a solar industry in Ontario, which is why they insist on a certain amount of domestic content. Apparently, their idea of building an industry just involves throwing billions of dollars at it and then sit back and watch it grow. Interesting theory.

Anyway, if the Liberals in Ontario are giving out free money, it seems to me kinda silly not to queue up for it.