Solar Investment: Financing Your Solar Panels

Let me start off by saying that investing in solar is not always a good option for everyone.  Yes you can save money on your electric bill, but you need to compare this to how much you have to spend.

The cost of solar panels in Canada can vary. It will even vary depending on whether you’re looking for solar power in New Brunswick, Nova Scotia, Quebec, or any other province.

Conservatively saving between 60% to 90% off your electric bill could mean over $1,000 worth of savings every year.

First you have to consider the cost of Solar:

Lets look at 3 different system sizes @2.6/watt + HST:

8kW could cost $23,920  (8,000W x $2.60/W)

10kW could cost $29,900

12kW could cost $35,880

*price per watt varies.  This is just an average.

That is essentially the price of a new car.  Luckily in these cases there is a government incentive.  So with the incentives it can lower the cost considerably.

There are 3 main options to finance this.  You could pay with cash, apply for an energy efficiency loan, or choose the leasing model.

Cash

Not everyone has the money to pay cash upfront but if you can you have to examine how many years it will take to save the amount of money you just spent.

In all 3 of these scenarios our estimated production projections worked out to be 10 years for full payback of the system cost.  After that point, anything you save on your electric bill is profit! Considering the life of the system is 25 years that’s 15 years of profits.

Energy Efficiency Loan

Your solar provider should be able to provide you with some of the many financing options available in your area.  These could include provincial loans.

I’d also recommend talking to your bank as they sometimes have loan products specifically for renewable energy projects.

For the purpose of this exercise we will look at a 5% loan for a 15 year period.  In our 3 examples the clients typically did not start seeing savings until the 5th year.  

Leasing Model

In this model, a solar provider will lease the solar system out to you at 0% financing and at the end of the lease you will own the system.  Because of the 0% financing it means the monthly payments are much less.

End result: Typically clients will see savings in their first year!

All three options can end up with a profitable outcome over the life of the system as long as the system was designed to optimize production with respect to cost.  Some options just end up taking a little longer to reap the rewards than others.

To learn more reasons to choose solar, click here.