Tim Sawatzky never tires of the sight of the 80 solar panels that make up his 20.8 kilowatt (kW) solar energy system on his farm near MacGregor, Manitoba. He’s happy to talk about how pleased he is with the system, which is already saving him money three months after he installed it.
Sawatzky gave his solar system the acid test by seeing how it performed during the three coldest, snowiest winter months. He’s pleased with the results so far. He didn’t have the special meter, which counts backwards when more energy is being produced than being consumed, until mid-February, so he doesn’t know how much energy he was producing in December and January, but after the new meter was installed, he received a credit, granted a small one, of $3.90 on his very next energy bill.
Reducing his energy bill is the main reason Sawatzky installed the solar system, taking advantage of a two-year, Manitoba Hydro incentive program launched last April, which offers a rebate of $1,000 per kW on solar installations ranging in size from one kW to 200 kW. “What prompted me to do this is the fact that I’ve been involved with the Bipole III project as some of the proposed transmission towers will be coming across our land, and at the meetings there was a lot of talk about hydro going to go up in price, and nobody knows how much,” says Sawatzky. “I’ve always been interested in solar, and when they announced the program I thought it was a good opportunity to take advantage of the incentive and see if it actually makes sense.”
Sawatzky estimates he will completely pay for the system, which currently powers his home, in 12 to 15 years. “That depends of course on where hydro rates go,” he says. “My 15 year payback estimate is based on hydro rates increasing by 3.95 per cent a year over those 15 years, so it could be faster or slower depending on what happens.”
It may end up being a much quicker payback though, because installing the system has made him more conscious about reducing his energy consumption. “It started out basically as just a financial incentive but the more I get into it, the more I want to see how much I can decrease my consumption,” says Sawatzky. “I have put in LED bulbs and a few other things, so I can reduce my consumption even more and try to get that credit as high as I can.”
Hedging against energy price hikes
Since Manitoba Hydro announced its solar incentive program, Justin Phillips, president of Winnipeg-based Sycamore Energy, has seen an upsurge in interest in solar, especially from the agricultural sector.
“The uptake in the agricultural sector has been significant,” Phillips says. “Our company alone has either installed or will install over 2.3 million watts of solar here in the province, and the majority will be in the agricultural sector. The biggest portion of a producer’s overhead is electricity and some farms are maxing out on their systems. We’ve signed half a dozen farms that are 150 kW or greater, and three of them have maxed out their incentive with a 200 kW system to help reduce their dependency on hydro.”
What’s helping to drive the uptake is the fact that Manitoba’s incentive program is currently the most lucrative in Canada. “There are various programs around the country to incentivize homeowners, businesses and farmers to install alternative sources of energy, specifically solar, but Manitoba’s is the best rebate available in Canada right now,” says Phillips.
Costs to install a solar system vary depending on the size, but the larger the installation, the greater are the economies of scale that a farmer can benefit from, says Phillips. Generally, the incentive will provide somewhere between a 25 and 40 per cent rebate on the total installation cost. “They are buying electricity in perpetuity,” he says. “What farmers are doing right now is hedging against electricity costs rising, and there’s certainly been a lot of talk about that lately with respect to hydro. They are seeing the upfront investment in solar as a smart move.”
Don’t expect to get rich selling power
Homeowners, or commercial businesses and farms eligible for the program, will have the amount of the rebate calculated on their average electricity consumption over the past two years. An average home, using around 10,000 kW/h annually, would be eligible for an eight kW solar system to ensure that it brings the homeowner to net zero and doesn’t overproduce. “A homeowner may overproduce if they reduce consumption, or they may not, they may add a hot tub and become a bigger consumer but generally speaking, most people are trying to reduce their consumption, so they get rid of the hot tub, or they put LED lights in,” says Phillips “The Manitoba Hydro program is not set up for them to make money from selling power.”
Manitoba Hydro does not pay for excess energy production fed back to the grid. Instead, producers receive a credit against their hydro or natural gas bill for any extra power produced. Each system is essentially designed to produce only as much energy as the home, business or farm can use, not to produce any substantial amount of excess energy.
Once a customer knows the rebate he or she is eligible for, the next step is to assess the type of system — a ground or rooftop mount — that a customer can accommodate, says Phillips. “In most cases outside of an urban centre, whether customers are farmers or not, they often have some available space to utilize so they can maximize their rebate. If they are in a city they may only be able to have what their roof will allow them to do. They may be eligible for a 20 kW system, but if their physical roof space can only fit five kW they are limited to that size of system.”
Budget is obviously a factor as installations — especially large commercial or agricultural ones — can cost up to $300,000, but can be self-financing if they generate enough to eliminate the electricity bill, which has happened in some cases. It’s a long-term investment, but one that customers feel is well worth it, says Phillips. “We are going to be with our customers for the next 25 or 30 years because we’re monitoring these systems virtually through our computers, iPhones, and iPads, as is the customer,” he says. “Our customers are willing to invest in solar and lock in their electricity rates at a certain amount over a 30-year period.”
Tim Sawatzky’s brother is going ahead with a solar installation in his own home, and the two of them, who farm together, are planning to convert their entire 4,500 acre grain farm over to solar next year.
“We had natural gas put into our yard two years ago but, it would cost a lot to convert all our buildings to use natural gas, so we decided to stay with electricity because it is such low cost, and low maintenance, and we don’t have to switch anything,” says Sawatzky. “All we have to do is put up the solar panels.” He expects the $300,000 system will pay for itself in seven to nine years, because a larger system is cheaper to install thanks to economies of scale.
Other Prairie provinces
Other provinces are also offering incentives for various renewable energy systems, including solar. Alberta recently announced a $36 million Residential and Commercial Solar Program that will begin this summer, and will offer up to 30 per cent off the cost to install solar panels on homes, businesses and farms.
Saskatchewan already has a number of solar incentive programs including a Small Power Producers Program, which allows individual customers to generate up to 100 kW of electricity to offset their electricity purchases, or to sell back to SaskPower under a power purchase agreement with the utility. According to SaskPower’s website, the 2017 program price that it will pay for electricity is 10.82¢/kWh, which will increase at a rate of two per cent each year after that.
Homeowners, farms and businesses in Saskatchewan can also participate in the Net Metering Program, which allows them to generate up to 100 kW of energy, and feed it back to the grid for a credit against their electricity bill. They can bank credits for up to 12 months, after which they reset to zero if they haven’t used them. There is also a rebate available to cover up to 20 per cent of the cost to install a net metering system.
Farms in Saskatchewan can also access a grant up to $500 towards the cost of purchasing and installing a solar or wind-powered water pumping system for livestock.
“In the Prairie provinces, we’re certainly seeing a significant uptake in solar, and that’s good because it’s a resource that needs to be utilized,” says Phillips. “Costs are coming down significantly too so it’s making it much more affordable.”