Solar PV and Ontario's MicroFIT (or, Things Your PV Installer Should Be Telling You)

[Rob Beckers]

Ontario's Feed-In-Tariff (http://microfit.powerauthority.on.ca/pdf/microFIT_pamphlet.pdf) (FIT for short) pays for solar electricity that is fed into the grid. There are different price points, based on the size of the solar array. For this post I want to focus on MicroFIT (http://microfit.powerauthority.on.ca/), which is defined by a 10kW limit, and it pays $0.802 for every kilo-Watt-hour that goes into the grid, over a 20-year contract period. This is the size that's most interesting for the average home-owner, and this seems also where most disinformation and outright false information is distributed by various parties (that generally intend to sell you their PV solution). The purpose of this thread is to set a few things straight, and to provide a place for those with questions to ask. Hopefully there will even be answers! :idea:

kilo-Watt versus kilo-Watt-hours
Since I keep running into confusion when talking to prospective customers about this, let's clear this up first. The short answer is that kilo-Watt (or kW, "kilo" means thousand, so it is a thousand Watt) stands for power, and kilo-Watt-hour (or kWh) measures energy. This probably does not quite explain it for most, so an example: Your toaster oven is maybe 1 kW in power, and power here tells you how fast it can heat something. How much energy, in kWh, it uses depends on how long it is switched on. One hour, will use 1 times 1 kW = 1 kWh. Two hours would use up 2 times 1kW = 2 kWh. That is how much electricity your meter will register, and the amount you will pay for. Consequently, a little power (kW) over a long time can be a lot of energy (kWh), while a lot of power over a short time may work out to just a little energy. The Ontario Power Authority pays for energy, not power. They pay for kWh's.

For the car enthusiasts it may help to think about kW as horsepower (in fact, it is, every 1 horsepower is exactly equal to 0.746 kW (http://convertit.com/Go/ConvertIt/Measurement/Converter.ASP)). It tells you something about the acceleration, how fast it can go. Energy, or kWh, on the other hand is more like gasoline. You can drive a sports car (lots of horsepower and kW) for a little distance and use just a little gas (kWh), or you can drive a Yugo (little kW) across the globe and use lots of gas (kWh). This is strictly theoretical of course, a Yugo would never make it around the globe in one piece... :wacko:

Solar PV arrays are defined in their size by power, in kW. How much energy, in kWh, they produce depends on how much sun they catch and for how long they do this.

How Much Energy Can I Expect From a PV Array?
The above segways nicely into the question of what to expect from solar. Since it is kWh (energy) that the OPA pays for, you need to have a good idea of how many kWh your prospective solar array will produce.

This depends on how much sun your location receives. Science has created a nice and easy way to measure this, by adding up all the sun from morning to evening into a single number that represents the amount of solar energy falling upon every square meter of the ground, at a standardized power of 1kW per square meter. It's called "insolation (http://en.wikipedia.org/wiki/Insolation)" and it is counted in hours of standardized sun per day. If your location has an insolation of 3 hours for the day, it means all the energy added up from morning to evening amounts to the same as 3 hours of sun coming in with an intensity of 1kW at every square meter.

Most PV sales people will still agree at this point, since the insolation numbers (https://glfc.cfsnet.nfis.org/mapserver/pv/pvmapper.phtml?MapSize=800%2C600&ViewRegion=Quick+Zoom&minx=-312516.666667&miny=5830950.000000&maxx=1944416.666667&maxy=7523650.000000&imagewidth=800&imageheight=600&CMD=ZOOM_IN&CMD=ZOOM_IN&CHKBOX%5B4240%5D=4240&CHKBOX%5B2057%5D=2057&CHKBOX%5B2701%5D=2701&CHKBOX%5B2700%5D=2700&CHKBOX%5B92163%5D=92163&units=1&tilt=1&period=13&title=PV+potential+and+insolation_&title_e=PV+potential+and+insolation_&title_f=Potentiel+photovolta%EFque+et+ensoleilleme nt&NEK=e&LAYERS=2700%2C2701%2C2057%2C4240&RLAYER=92163) for a location are measured by meteo offices and the like. There are several sources though, with slightly different numbers. I myself use the number 4.17 as the average annual sun-hours for the Ottawa area per day (https://glfc.cfsnet.nfis.org/mapserver/pv/municip.php?n=1408&NEK=e) (scroll down to the table with "kWh/m^2"). Some sources will show slightly higher numbers, but it is good to be conservative (and realistic). Most of southern Ontario will be very similar to this number, with the area around the great lakes somewhat lower due to the cloud cover that the area enjoys more often than the Ottawa valley.

Note that the insolation number of 4.17 is the annual average: It means that all the solar energy falling upon a square meter is added up for an average year, and translated to a single number. Of course, in reality there will be more sun-hours than 4.17 in summer, and less in winter, and some years will see more per average day. As it says, this is simply a long-term annual average per day. Since the MicroFIT contract is for 20 years this works well for us. Over that long a time period the annual average per day is what counts.

Solar panels (or PV modules as they are officially called) have a rated power. Typical would be a 200 Watt module, or 0.2kW. This means it will generate 200 Watt of power when it is hit with sunlight at an intensity of 1kW per square meter. Ha! How convenient! Insolation tells us how many hours per day this happens on average, with exactly that same 1kW per square meter intensity! To turn this into energy we can simply multiply the power rating with the number of sun-hours for the location, and we get the average solar energy production per day. For a 0.2kW panel, and 4.17 sun-hours per day, this makes 0.2 * 4.17 = 0.834 kWh per average day. The year has 365.25 days on average (don't forget the leap years!), so that makes for an annual production of 365.25 * 0.834 = 304.6 kWh for our 200 Watt PV module.

Since it is easier to think about a kW of solar and its energy production we simply multiply that by five (since 5 * 200 Watt = 1000 Watt = 1kW), or 1523 kWh per average year, per kW of solar panels.

Now the waters get muddy, because the energy production numbers above assume ideal conditions with zero losses. In practice that doesn't happen: As a PV module gets warmer it will produce less power (and energy), there are wiring losses, inverter losses, losses due to dust on the modules, and the incident angle of the sun bouncing off the glass. A solid, if somewhat conservative number, is to assume 25% in losses, so 75% of energy is left, or 0.75 * 1523 = 1142 kWh per kW of PV per year (for the Ottawa area) (http://switchkingston.ca/wiki/doku.php?id=microfit:ontario_insolation).

When the modules are brand new they will likely produce a bit more, while at the end of the 20-year contract period it will likely be a little bit less. Overall, it should work out to just about this amount annually, or 20 * 1142 = 22,840 kWh of energy over the contract period.

Many, if not most, PV installers will dazzle you with far higher PV production numbers than that 1142 kWh per kW of PV. Do not believe them! They are simply 'forgetting' about losses, or guestimating them to be much lower. If someone claims 1200 kWh, sure, that's close enough, as long as they then also take aging of modules into account (since they are starting with the upper limit). A common number for aging is to derate power by 0.5% per year for regular silicon PV modules. If they claim more than 1200 I would suggest you shop elsewhere, since there is no telling what else they will misrepresent.

Please keep in mind that a solar panel will only live up to its full potential if it is mounted facing due south, at an angle that is optimal for the location (around 35 - 40 degrees of tilt for the Ottawa area). Any deviation of this will result in less energy production.

So How Much Money Does 1kW of PV Produce?
This one is easy; once you know how many kWh a solar array of 1kW produces, we also know how much money that makes. The OPA will pay $0.802 for each kWh, and we will on average make 1142 kWh with 1kW of PV modules. That makes 0.802 * 1142 = $916 per year, for each kW of solar modules.

Over the 20-year contract period this works out to 20 * 916 = $18,320 per kW of solar panels.

How Much Should 1 kW of PV Modules Cost, Installed?
This is somewhat of a tricky question as there are many variables. To start with, the location matters. Here in Ottawa we have to get a building permit for roof-mounted solar, and those permits are expensive! The City also requires engineered drawings (though that is currently under discussion, so they may do away with it in the future). Engineers are expensive. Other locations may not have these requirements. Then there is the meter fee charged by the local utility, around $1,500 for my location.

On the materials side there are differences too: I can buy PV modules for around $2 per Watt (no-name, no history), or for $5 per Watt (that would be Sanyo, they make the top-of-the-line in quality and price). It is important to ask your prospective PV installer what brand modules he is going to use, and to make sure they are of a decent brand, with a number of years of history (so they have fixed whatever startup issues they had). All the brands, even the no-name ones, offer 25-year warranties. Those warranties are of course only worth something as long as the company is around and guess what happens if one of the lesser 'brands' finds out all their modules leak 5 years down the road?

Inverters, that convert the DC power coming from the PV modules into grid-quality AC, are pretty similar from brand to brand. There are differences though, and I prefer the better brands. Twenty years is a long time for an inverter to do its job.

The roof racking and how it is installed are another factor in pricing. The materials should be aluminum and stainless steel. Regular steel (galvanized or otherwise) should raise eyebrows, since it will be hard to keep it free of rust over a 20-year period (even if it survives structurally). Decent roof racking is not cheap. I still see companies, even respectable ones, use galvanized strut (much like Unistrut) for roof racking. There was a time when this was acceptable, it is no longer.

Then there is the matter of how it is installed: Believe it or not, but the 'standard' industry practice is to drill a hole through the roof shingles, squirt a bit of sealant in there (and you hope they use the right type!), then bolt an L-foot through the roof into the truss or rafter. Those bolts should be stainless steel lag-bolts of sufficient length and diameter, not deck-screws or anything like that (yeah, I've seen those being used). This may work, then again, this may leak a few years down the road. If you ask any roofer if it is a good idea to drill a hole through the roof, and not use flashing to close it, they will look at you as if you have gone soft in the head! So, even though it is rare, I believe that flashing should be used to install the L-feet for roof mounted solar arrays. Alas, flashing is expensive (it nearly doubles the cost of the roof racking overall, adding quite a bit to the installed cost), and it takes time to install. There are two brands that are suitable for PV, one is FlatJack (http://www.ttisolar.com/products/flatjack.html), the other QuickMount (http://www.quickmountpv.com/). The FlatJacks are ICC certified, while QuickMount is not, but either one should do the job (and both are a huge step up from simple caulking).

With all that, it should come as no surprise that the installed PV prices are all over the map. From practical experience I can tell you that with the use of quality materials something around $8 per installed Watt would be reasonable (that leaves a modest profit margin for the installer, he won't be getting rich, but it would be worth his while). This also depends very much on the size of the PV array. The fixed costs make it hard to be cost-effective for arrays under 2kW in size (per Watt prices would fly up), while for a 10 kW array it could be a little under $8 per Watt.

If an installer is much above that $8 per Watt for a reasonable size array, say 4kW, it simply means they are making a whole lot more profit at your expense. If they are far below it that should raise more red flags; they are probably planning on doing a half-assed job with many items not included in the price, and sub-standard materials.

These are "all in" installed prices, including PST, excluding GST. Many installers play games here too. They either won't include tax, not even PST (though the PST rules say it should be included in the price, by virtue of the installer paying PST on all the components that are used). Some won't include permits or engineering fees, some won't include the meter fee. So, be sure to ask how much it will be at the end of the day, including any expenses you are supposed to pay out of your pocket!

What About Payback Time, and Return-On-Investment?
The important part of the FIT and MicroFIT contracts is of course how much there is in it for you, after all the expenses are taken into account. Unfortunately this is another area where many PV installers play games.

Let's start with reasonable numbers. Say, a 4kW PV array at an installed price of $8.75 per Watt or $35,000, and a 20-year revenue of 4* 18,320 = $73,280. To earn back the investment would take 35,000/73,280 * 20 = 9.6 years. This is also referred to as "simple payback".

Profit over 20 years would be 73,280 - 35,000 = $38,280 for this 4kW array. That makes the return-on-investment (or ROI) over that time period 38,280/32,000 / 20 = 0.055, or 5.5%. The ROI is much like the APY as used by the banks, this is what you can expect to 'earn' on your investment annually.

The above is a rather simplistic financial model. More complex models are available (http://switchkingston.ca/wiki/doku.php?id=microfit:calculator). If you can't get GST back, that would become part of your cost too. As far as Revenue Canada is concerned you just became a small business, making electricity (http://switchkingston.ca/wiki/doku.php?id=microfit:taxable_revenue), and that has some advantages. You can deduct reasonable expenses, such as an annual fee for maintenance and replacement of equipment (it is not unreasonable to assume you have to replace the inverter every 10 years). You can also expense the cost of installation through the capital-cost-allowance (http://switchkingston.ca/wiki/doku.php?id=microfit:depreciation) mechanism. The other side of that coin is that any money from MicroFIT is considered taxable income. Overall, it should be possible to offset income and expenses for at least 10 years of the contract, and not pay income tax over the generated revenue during that time.

The moral of the above is that for the average home-owner a reasonable, and realistic ROI is around 5% (or to put it differently, in 20 years you double the money you put into your MicroFIT system). It should be clear that this number depends very much on the installed cost per Watt, and that in turn greatly depends on the size of your PV array. Smaller arrays are more expensive per Watt, and have a lower ROI (and vice-versa).

If you look around at PV installer's Web site they almost all promise double-digit ROI numbers. Clearly, they are smoking something good (and I want some of that too!). :weird: Unfortunately, reality is nowhere near as good as their promises. The way they get there is by ignoring the money you invested into the PV array. They only look at returns (as you would for a bank account, but with a bank account you get the principal that you invested back at the end of the ride, while for PV you have to earn that back first!). Around 5% is as good as it gets, and really, that is not bad at all! Consider that at the time I'm writing this the APY on savings accounts is under 1%, and GICs are not much better.

Also consider that at the end of the 20-year contract period you still have a PV array on your roof that will be producing lots of electricity! :cool: At that time you can change over to net-metering, and offset your own electricity use with (now) free power from the sun, saving you more money. Nobody really knows how long PV modules 'live' for. Many of the first ones to be made are still around, and producing fine. There is no reason why a quality PV module will stop working after 20 years, they should work for much longer.

What Is This "Domestic Content" I Keep Hearing About?
I am glad you asked! In their infinite wisdom the Ontario Legislature decided to put conditions on the PV arrays that quality for FIT and MicroFIT money. A percentage of the parts have to be made in Ontario, thus stimulating business and employment at home. Rather than just counting parts or money, the OPA assigned percentages to broad categories (http://microfit.powerauthority.on.ca/pdf/microFIT-Domestic-Content.pdf), such as "racking", "inverters", and "PV modules". For 2010 the percentage is 40%, for 2011 and beyond it is going to be 60%.

Be sure to ask for proof from your PV installer that shows black-on-white that their installation complies with the domestic content rules! The OPA has the option to inspect your installation, and if it is found to be non-compliant you will be up the creek without a paddle (so to speak).

There is one more thing you should know, that has to do with 2011 and beyond. With the required percentage moving to 60% that means the installer has to use Ontario made PV modules. At this time there are few Ontario brands, and almost all are glorified assembly operations with almost no track record, and essentially no-name. Sure, they all give 25-year warranties, but do you want to be their beta-tester to see if their modules last 20 years? Hopefully by 2011 some real brands will jump in; Samsung has said they will open a plant here.

Meanwhile, if you are seriously considering taking advantage of the MicroFIT opportunity I would suggest you go ahead quickly. During 2010 it is still possible to use real brand-name PV modules of good quality. Since it takes the OPA about 2 to 3 months to process applications (at this time), that really means you should be applying this spring of 2010, so your PV array is certain to be installed and working before the weather turns bad in fall.

But What About All My Other Questions?!
Well folks, my fingers are turning blue from typing and this is about all I can come up with at this time. I'm sure there are more questions, and I would very much encourage you to post them in this thread (http://www.greenpowertalk.org/newreply.php?do=newreply&noquote=1&p=13933). Me or someone else will hopefully answer them, so we'll compile a nice list of FAQ-type information regarding MicroFIT.

Last but not least, I'm including a graph below that shows cost, payback time, and ROI for PV arrays of various sizes under MicroFIT. The cost is assumed to be 'reasonable' (it is what my business uses, and of course I consider this utterly reasonable! ;) ). Others may have slightly different numbers, what is important is that it shows the quickly increasing cost of small installations (something to consider), and if others have radically different numbers (especially those double-digit ROI numbers) it may be time to run instead of walk...

Hopefully you found this information to be useful!

-RoB-

[Dan Lenox]

Rob,

WOW - what an evaluation! And ending up with realistic numbers that the basically any lay-person can understand.

Useful - heaven all mighty - you have practically laid it out at our feet in easy to understand terminology/figures and not to boot cost evaluation and return on investment (ROI) figures!

All I can say is that if more RE vendors/installers were as up front as this then the average consumer could easily look at the data/figures and know what they are working with and your analysis provides the justification for converting (or not) to RE systems.

The only question I have is in the above graph it shows ROI as a percentage - of what? If the ROI % is 6% and the payback period is 9 yrs I don't quite get the relationship.

Thank-you!

Dan Lenox

[Joe Blake]

Bewdy Rob!!:D

Obviously here in Downunderland the figures (and compass directions) will differ, but you seem to have covered pretty much everything that a "noobie" would need to know.

Perhaps in your next chapter you may wish to cover the difference between "on-grid" and "off-grid" systems. And how you don't (at least in Australia) get ANY power* from an on-grid system if the grid goes down, because of automatic isolation of the domestic power source.

That actually caught me out, because I'd been using batteries on my "small" system, for so long I'd not even noticed when the grid went down, unless it was at night for a long time. I couldn't initially understand what my supplier meant when he said I'd lose all my power during a blackout!!

Joe

*And obviously with an off-grid system you may not get any money back at all. Other than what you don't spend on power.

J

[Ric Murphy]

Great job Rob...Thanks very much for taking the time. I've noticed a lot of new installations have been started locally. I haven't seen any completed ones yet though. They all seem to be the exact same style ground mount racking system. I'm curious to know who is the supplier & installer. They all use a 6' (approx) dia metal culvert type base (cement filled I assume) with I would guess a 10" dia post to support the racking and panels. I've only seen one with the panels actually attached but it was tilted away from the sun so have to assume it's not on line yet. I must have seen about 10 others in various states of completion. Almost all were on farmland. There's a local electrical contractor (mostly commercial/industrial) thats seems to have jumped on the bandwagon and is advertising heavily. When I drove by their shop the other day I noticed a sign out front that said "Earn up to $14,000 anually with solar". That exceeds any calculations I've done for my location but may be reasonable for a 2 axis tracker.
Ric

[Rob Beckers]

Thanks for the kind words!
I was getting fed up with the nonsense published by PV installers that seems to be the norm. Almost all of them claim 12%, even 15%, ROI numbers, which is utter nonsense. I've spoken to two of them that I happen to know; their excuse is "everyone else is doing this, so I have to as well". They know d$%! well that their numbers are bogus!

Any time a government offers good incentives for something it brings many rather dubious characters out of the woodwork, swindling people, and spoiling things for those that try to promote RE and do an honest job. The net-result is as happened so many times in the past, many will claim "it doesn't work" (with some justification from their perspective) and set RE back another decade or two.

I apologize that the content of this thread is really oriented to the MicroFIT program in Ontario. It's not much use elsewhere, nor off-grid. My hope is that search engines will see enough keyword hits that it will bring those looking for PV in Ontario to this site.

-RoB-

[Rob Beckers]

The only question I have is in the above graph it shows ROI as a percentage - of what? If the ROI % is 6% and the payback period is 9 yrs I don't quite get the relationship.


It's meant as something similar to APY as published by banks: It is the annual percentage yield of the money invested in the PV array. The wrinkle (and often 'forgotten' by PV installers when talking to customers) is that unlike the bank you don't get the money that was invested back at the end of the ride, it has to be earned back over the years.

For example: You earn $40,000 in FIT income over 20 years. The PV Array cost $18,000. Profit would be 40 - 18 = $22,000 over 20 years. In relation to the investment that is a total profit over 20 years of $22,000 / $18,000 = 1.22 = 122%. This works out to 122 / 20 = 6.1% yield per year.

-RoB-

[Peter Klaassen]

This solar website has a map of insolation values for Canada. http://canmetenergy-canmetenergie.nrcan-rncan.gc.ca/eng/renewables/standalone_pv/publications/2006046.html

Ottawa and SE Ontario aren't too badly off for solar. I have a tracking array (1.35 kW) that has been making about 9 kWh on a good spring day. I have an off grid system, so the batteries limit what can be made if I don't add a live load (dishwasher/laundry) at the end of the day.

I was looking at the Micro-FIT but there are some other costs that add in- the Micro FIT pays you on a separate account than your electricity bill. The actual power you use is only about half the bill for the average house. Delivery fees, debt reduction charges, GST and soon HST will be the rest of the bill. Are these also part of the Micro- FIT bill? Is there someone on the Micro-FIT program that could lay out their bill for our edification?

pushing solar electrons!
P Klaassen

[Rob Beckers]

Hi Peter,

Things are still a bit murky as to additional operational cost for MicroFIT. What is clear is that there will be an $8 per month "meter fee" for the additional meter. Both Hydro-One and OttawaHydro are using that rate to the best of my knowledge. I don't think that any of the additional charges (distribution fee, debt-recovery fee etc.) apply. With MicroFIT you are not a "user" of electricity, but a small "producer". I'm waiting to hear back from someone I know that has his conditional offer in from the OPA, and is about to install his PV array.

-RoB-

[John Szegda]

Nice job Professor. What part of the world did they determine 1KW per Meter was standard.

John

[Rob Beckers]

What part of the world did they determine 1KW per Meter was standard.

John, I'm not following. What do you mean?

-RoB-

[Rob Beckers]

There are a few more egregious practices that I've recently come across, perpetrated by reputable PV installation businesses no less, in my area (Ottawa and surroundings). You would think that they don't need to do this, since they have plenty of business anyway. Maybe they should start putting their customers first, rather than borderline swindling them.

Roof-top Racking
It came to my attention that one of the larger installation companies in town uses galvanized steel strut (basically an Ontario-made version of Unistrut) as their roof-top racking material. That is good for them, as it saves literally thousands of dollars in expensive aluminum and stainless steel PV racking, but not so good for their customers. The galvanized steel will hold up fine structurally over the 20-year life of the MicroFIT contract, it will get very rusty at the end of that time period though. If their customers are paying a premium (and believe me, they are!) for a professional PV installation they have a right to real PV racking on their roofs. That consists of aluminum and stainless steel parts, not galvanized steel, and will look much the same at the end of the 20-year contract as the day it was installed.

Since they do not use any galvanic separation between the aluminum of the PV module frames and the steel strut there will also be great potential for corrosion of the aluminum PV frames. Not something you want to happen to your expensive panels!

To add insult to injury, that same company also uses simple nylon spacers to 'elevate' the steel strut half an inch above the roof shingles. That puts the PV modules just about an inch above the roof, and much, much too close for good ventilation. Those panels will get very hot in summer, and energy production will seriously suffer. PV modules should have a 4" or better gap between them and the roof, so air can circulate under them and cool them (the chimney effect). Energy production for most PV modules will drop by 0.5% for every degree centigrade increase in temperature.

How To Get An Infinite Return-On-Investment
(or, "How you too can get 5000% ROI on your solar panels!)
At a recent OPA MicroFIT seminar here in Ottawa I had a chance to catch up with a 'colleague', who is also in the PV installation business. As with all the companies in town, he too peddles 12% - 14% ROI on roof-top PV, and I asked him if he still believed in that. He assured me that it not only was 'real' (yeah, right, see my calculations in the first post for real numbers, anyone can do those calculations and verify them), it would get even better if financing was involved. He is both right and wrong, and since he actually has an MBA he should have known better (in fact, his knowledge of finance puts him solidly in the 'wrong' category on this one). Here is how.

Return-on-investment is defined as the percentage gain, usually annually, on your investment. You take the revenue, deduct all expenses, and divide it by your investment. To get an annual number you do that calculation over the entire 20-year contact period and divide by 20. Real numbers for MicroFIT PV, if you invest your own money, are around the 5% or 6% mark, depending on what you include in the cost category.

Once financing enters into the picture the ROI numbers quickly become meaningless, and they should be used with care (if at all). For example, I get the bank to pay for my $80,000 rooftop PV installation, and being the cheap Dutchman that I am I invest $1 of my own money. At the end of the 20-year contract term I have paid off the bank, and in fact made a little money since revenue exceeded the loan payments, say $1,000. So what is my ROI?

Profit after expenses is $1,000, my investment is $1, so that makes for 1000 / 1 = 1000 / 20 = 50, or an ROI of 5,000% annually! Am I a great investor or what!!! :nuts:

Of course, at the end of the day it is dollar profit that really counts, if profit is what you are looking for. When financing gets involved, most of the revenue will end up paying for the loan, and making profit for the bank. If all you want is to contribute to the production of green-house-free energy, and get a paid-for PV array at the end of the ride, than that is fine. Nothing wrong with it. Just don't count yourself rich with bogus ROI numbers.

The return-on-investment concept has merit, especially for commercial projects where everyone understands very well what is being represented. In the PV installation business it is used to represent something much like the APY numbers banks publish for savings and that is where the comparison falls flat when financing enters the picture.

-RoB-

[Julian Egelstaff]

This is a great summary, I will point a few people at this.

--Julian
__________________
I'm Solar Powered in Toronto (http://www.yourturn.ca/solar/)

[Dan Powell]

I will as well. I am totally new to all this (solar power in general and the mocroFIT program in particular).

I'm just starting to take a look at all this to see if it makes sense for me to become involved as a homeowner.

Thank you.

[Ralph Day]

Welcome Dan

Sense? There is no sense. Check some of the other threads here about what has happened to the program in the past 2 weeks. Unless you have a letter of offer you're out of luck.

If you have an appropriately sloped and south facing roof, yes, the 80.2 cents per kwhr still applies. Ground mounting has been unfairly penalized by the OPA (OTL more like it)

Ralph

[Dan Powell]

Welcome Dan

Sense? There is no sense. Check some of the other threads here about what has happened to the program in the past 2 weeks. Unless you have a letter of offer you're out of luck.

If you have an appropriately sloped and south facing roof, yes, the 80.2 cents per kwhr still applies. Ground mounting has been unfairly penalized by the OPA (OTL more like it)

Ralph

Hi Ralph,
Yes, it would be a south facing roof mount. I'm having the initial on line assessment done from OurPower folks as a start to see at least from a high level perspective if it makes sense for our home.

Dan

[Stuart Friedrich]

Rob,

I was browsing the net looking for comments on the new rate proposed for ground mount solar projects and came across this forum and thread. Looks like a great forum with a great host!

I have a 5kW system that I installed myself on the roof of my home about 4.5 years ago. I now have a microFIT contract, but previously I had net metering and then RESOP contracts, so I have been through a lot of paperwork. My primary interest in installing the system was to help support new sustainable generation technology, and was not really too concerned about how long the system would take to pay off.

I agree with all the numbers you quote on projected energy production and income, and also agree that since the $0.80 rates were announced that a lot of people with dollar signs in their eyes have been doing the talking, rather than promoting the benefits of solar energy.

Now that the $0.80 rates will only apply to rooftop installations, I think there will be more people looking at their roofs and wondering if theirs is suitable. One thing I would caution is to not discourage people from installing systems on less than perfect roofs. Back when I was researching my system I used a solar calculator that was available to determine how much the roof orientation and angle affected generation. I was surprised that generation is not as sensitive to these factors as what many people may think. My roof is pointed East-South-East (112deg) and the roof pitch is 24deg. Based on the calculator I used at the time of installation and newer calculators available today (like PVWatts) this non-optimal roof generates only about 10% less than a perfectly oriented and angled roof. The data aquisition system that I have hooked up to my PV system confirms these values. If I were promoting PV systems I would only discourage installations on roofs that were pointed North of East or West (i.e. less than 90deg or more than 270deg). As people sometimes say, don't let perfection be the enemy of good enough. Just inform people that they will be generating X% of a theoretically perfect roof. I would suspect that shading will be more of a factor for the suitability of a roof installation than orientation and angle.

Stuart

[Rob Beckers]

Hi Stuart,

Welcome at the Green Power Talk forum!

You are of course totally correct about perfection being the enemy of good enough, and there are many roofs that have some shading issues, not quite the perfect orientation, but still would work perfectly adequate. I've been doing dozens of solar site surveys here in the area, and use a Solmetric SunEye 210 (http://www.solmetric.com/buy210.html) to quickly get an accurate number that includes those effects (good tools cost money, and at $2K this one is not cheap!). My survey report that I send to the homeowner always includes a percentage, showing how much their roof will reasonably produce in comparison with an "ideal roof". It also has the income, payback time, and ROI for their roof, taking all those factors into account.

The OPA stated that they believe 10 years to be a reasonable payback time; many, if not most, roofs fall somewhere around that mark. Few roofs are ideally located with zero shading; they would get 8 years payback time with my installation prices (and not counting all other expenses such as maintenance, finance cost etc.). Most are smaller installations, have some shading, or an angle a bit off from south; they'll fall very close to the 10 year mark. That should show the current 80 cents per kWh is really within reason.

Unfortunately the 58 cents proposed for ground mounted will take those projects to 13 or 14 years payback time, or more (if long cables are needed, or much ground work). For many that is too long, especially when other costs are taken into account (financing being the big one).

-RoB-

[Vasile Brindus]

Hi, Rob!

Thanks for the comprehensive FAQ you've put together. It's very useful, I've already read it a few times and learned a lot!

I did a lot of number-crunching with the spreadsheet provided by SWITCH Kingston, and the results are unexpected, at least for me. Nobody looks carefully that far, but I was interested what happens with the system after 20 years. Your opinion is that "... at the end of the 20-year contract period you still have a PV array on your roof that will be producing lots of electricity!". That's fair, but the numbers show you may not benefit too much off it.

Considering a 3% yearly increase in electricity price, the current 9.3c will get to 16.8c after 20 years. Of course, this is if no catastrophic event happens on the electricity market. Now, my 2 kW system will output 2171 kWh in that year, a value of $365. All dandy, but at the same time the service fee will increase (2%/year, in step with inflation) from $81 today to $132. The insurance premium, which is now $134, will rise to $220.

If you do the math, your income after expenses is $13. While every dollar is welcome to my pocket :laugh:, this is not an amount worth considering the trouble. Oh, and this is $13 in 2030's money, meaning probably $10 today (not that it would make any difference). Even if you cancel the insurance at that time (would you, considering the holes and the additional weight on the roof?), it's still only $233/year.

And if you need a panel replacement or even a minor maintainance to your system from then on (it's not absurd, after 20 years on the roof), it may be cheaper to just switch it off.

My points:
1. The value given by the system after 20 years shouldn't be considered as an argument, since it's almost nil. So a PV system should be considered as a a 20-years-limited-life "appliance". Whatever money you earn from it, it's only in the first 20 years.
2. We can see the real value the microFIT program brings: without it, a 2kW PV system is not self-sustainable, even if it were free!

Of course, one can argue that the electricity price will not grow constantly with 3% for 20 years, and I agree. But then we are in the gambling domain, we may also well not need electricity then, if we'll use torches for lighting :-)

Can anyone see any flaw in my reasoning or math? Am I right, or just missing something important?

Regards,
Vasile

[Wilco Vercoelen]

The OPA has posted their rationale on 58.8 cents here: http://microfit.powerauthority.on.ca/Program-updates/rationale.php

[Julian Egelstaff]

The OPA has posted their rationale on 58.8 cents here: http://microfit.powerauthority.on.ca/Program-updates/rationale.php

So the $60,000 question is...is $60,000 a reasonable cost for a 10kW ground mounted system with no tracking? I've seen prices around $75,000 quoted for 10kW rooftop systems. Is there really that much difference with a ground mounted system? What do people think? Does the OPA's argument hold water?

--Julian

[Julian Egelstaff]

Hi, Rob!
Can anyone see any flaw in my reasoning or math? Am I right, or just missing something important?


The key factor is how much energy your system will produce. It all depends on how good the orientation to the sun is, how much shade, etc. So it's not true to say that a system without microfit would never pay for itself. It depends how good a location it is.

I don't think your 20 year forecast of service costs and insurance costs is reliable. The fact is, that if you replace the inverter around year 15, you may have zero maintenance costs until after year 25 or even year 30. There are plenty of solar power systems around the world still going strong for over 30 years. If you have to replace your inverter again around year 27, by then it might cost you under $1000. No one knows. So the annual maintenance costs are really a guess, no one knows for sure, but they're almost certainly lower than what you have listed. If your panels are under a 25 or 30 year warranty, then you have at least another five years before you have to worry about panel failure.

Insurance, is also not so simple. In my case, our insurance company didn't increase our premiums at all. For some people, their insurance company won't insure them anymore if they put a solar power system on their house. So it's really hard to put a specific price on that. You could have changed insurers 20 years from now and have zero insurance cost specifically for the solar power system.

Lastly, looking at straight electricity prices in 20 years is not the complete story. If you reconfigure the system after microfit so that you go to a net metering arrangement, that could save you more money, since what you pay for electricity is the price per kilowatt, plus the delivery charge, plus all kinds of other costs. If you offset your own electricity use, that could be worth more money than selling the electricity back to the utility and then buying it again. So 16 cents is probably too low for your per kilowatt return. It's going to be more like 35 or 40 cents I would guess. We pay over 15 cents a kilowatt right now if you include all the other charges.

--Julian

[Vasile Brindus]

Hi, Julian!

The key factor is how much energy your system will produce. It all depends on how good the orientation to the sun is, how much shade, etc.


I used ideal conditions for Toronto: 1200kWh/kWp/year. Of course, shading will get you even lower :-)

So it's not true to say that a system without microfit would never pay for itself. It depends how good a location it is.


Let's do the same calculations for today, in the net metering scenario, with certain numbers:
$306 = 1200 kwh/kWp * 2 kW * $0.1275/kWh ($.1275 is the max peak-time rate as per Toronto Hydro, today, including everything but the Customer Charge). Please note that normally not all production is at peak time, so this is a little higher than real life.
$81 = connection fee, 12 * $5.95 * HST
$136= insurance premium increase, as per yesterday's quote that I got for my house
Total: 306-81-136=$89/year

So a new 2kW system, at maximum efficiency, with no capital costs, is barely self-sustainable today. Even with no insurance, it still earns only $225/year! And, remember, this is an ideal location, no shading, so this numbers are a maximum. Add a little shade or some offset form ideal conditions, and you may get in red.

It looks that the most important thing here is the system size. A larger system is a lot better, but 2 kW is my specific case and I presume is typical for small town roofs (but I may be wrong on this one).

So you are right, I should better qualify my conclusion: a 2kw PV system is today barely self-sustainable without microFIT, even in the absence of upfront capital costs. Will it be self-sustainable when it's 20 years old? My guess is that probably not, but you may think otherwise. Anyway, if the electricity price doesn't have some sharp increase until then, the system profitability at that time will be on the edge.


If your panels are under a 25 or 30 year warranty, then you have at least another five years before you have to worry about panel failure.


Agree, it is under warranty, but you'll still have to pay for the labor, don't you? A $200 service call eats the earnings for 1 or 2 years...


Insurance, is also not so simple. In my case, our insurance company didn't increase our premiums at all. For some people, their insurance company won't insure them anymore if they put a solar power system on their house. So it's really hard to put a specific price on that. You could have changed insurers 20 years from now and have zero insurance cost specifically for the solar power system.


It's hard to believe a zero cost for the panels insurance... there is no free lunch on this world, especially served by the insurance companies:laugh: ! The panels on the roof add some risks (water damage, wind damage, fire, etc). So it may not be expressly quoted, but will be certainly buried somewhere in the quote. Maybe not this year, but they will catch up pretty soon.

Right now, a lot of insurers *probably* don't know what to quote for the panels. That's why it takes them a long time to quote an amount. But wait until some claims appear, and the actuaries will crunch their numbers and come up with a price. Actually, I was very surprised to get an almost instant quote yesterday: they asked me the power and the number of panels, and quoted the increase. So I suspect their software was already setup for this, I wasn't the first to ask...

So 16 cents is probably too low for your per kilowatt return. It's going to be more like 35 or 40 cents I would guess. We pay over 15 cents a kilowatt right now if you include all the other charges.
The current max price at peak-time at Toronto Hydro is $0.1275, including everything but the Customer Charge, which you pay even if your consumption is 0. With a 3% increase per year, this will get to $0.23 in 20 years. Of course, nobody can tell today if this price is right or wrong, it's just a wild guess.

Again, I'm not trying to rain on anybody's parade. I'm considering installing this 2kW system on my roof, and looking if it makes financial sense or not. I'm writing it here to validate/invalidate my reasoning. My concern is that the PV at such small scale is a losing proposition, and the govt is trying to make it look better... for a while.

Regards,
Vasile

[Julian Egelstaff]

My recollection of our hydro bills is that about half the bill is for things other than the cost of electricity, so 12 cents seems low to me, since that's less than double the average cost per kilowatt under the time of use rates. But it doesn't really matter....double it to 24 cents and you're still right, a solar power system will not pay for itself ever at that level. You need a FIT program like microFIT.....until the capital costs come way down.

On the flip side, our cost per kilowatt in Ontario is artificially low because of all the subsidies and other stupid things that went on with the old Ontario Hydro, and still continue somewhat today.

Fortunately, the government is finally finding some way to pay for renewable energy, and thanks to that, in 20 years, you won't have the capital cost to contend with because microFIT will already have paid it. With any good fortune, the cost of all this stuff will have come down by a factor of four or five by then anyway, but regardless, your system will be worth something, but exactly what....impossible to say. Certainly not a gold mine.

I would hope that by that time, you could economically upgrade the system to panels and an inverter that are double 2kW, or more. The racking and wiring is presumably still going to be good. Just make sure they use the proper wiring for a higher wattage system. It is possible to wire small systems with cables that can't handle much more, but if you ever do want to upgrade the system, that means you have to replace the cables, which is not a good thing. So get the good stuff from the beginning. It might be a slightly higher cost, but it should be worth it down the line.

--Julian

[Dan Powell]

WARNING: I am totally nieve on solar electricity generation :confused:so I'm looking for some honest comments here and appreciate your patience with me on this. :wondering:

As I see it, for a microFIT solar rooftop installation, one simplified financial equation is:

(A)Expected Revenue over 20 years - (B)Installation Costs - (C)Annual Maintenance, Insurance & Financing Fees = (D)Net Revenue

I'm a bottom line guy. I don't really care how I get there. Give me locked in lower installation costs with a lower revenue, that's OK, as long at the Net Revenue is there.

The contract with the installation vendor fixes 'B'.

It is not hard to estimate with confidence yearly insurance, interest on the bank loan for the financing, monthly account fees with the local electric utility etc., so 'C' can be IMO confidently estimated.

As for 'A', Expected Revenue over 20 years = rate X output over 20 years. For a microFIT contract, the rate is fixed @ 80.0 cents. So, nievely, the only significant wildcard is the 'output'.

As I have learned here the outputn while not rocket science, should be estimatable with confidence (the science of the watts each installed solar panel will generate, slope, orientation, shade, annnual reduction in panel performance, etc.). While I do not pretend to understand such things, the vendor trying to sell me the solar contract must.

Here's my question (sorry for the rambling). Why will vendors not guarantee even a minimum of output over a 5 year period (to take into account annual fluxuations in cloud cover, etc.)?

As someone who does not understand electricity, my concern is risk of the unknown and what I don't know. All a vendor has to do is to guarantee minimum system performance / output and if the ROI and Payback based on that are within my parameters, then I will sign, everything else being equal.

Why do vendors not provide this type of performance / output guarantee?

I received a quote this week from one of OurPower's very experienced and reputable vendors yet his estimated annual production is around 20 to 30% greater than what OurPower indicated I should receive. It is much more than the 1200 kW hours per kW per year which is on the SWITCH excel spread sheet to which Vasile refers in his prior posting (knowing that 1200 is Kingston based whereas Toronto I believe is a little less at around 1160-ish).

As I see it 100% of the risk in this is with the home owner.

Are there any vendors which do provide a 5 year average production / output of their microFIT installations?

Thanks for your insights.

Signed,
Nervous (in committing $30,000+) Dan

[Dave Schwartz]

No one will provide a guarantee on things that are out of their control. No one can provide a guaranteed schedule of sunlight-elevation-hours for any particular location. Some locations are better than others and this is what long term meteorological measurement databases can tell you. For most Canadian locations, see https://glfc.cfsnet.nfis.org/mapserver/pv/index_e.php. The US has similar data accessible through various sources like nrel.org and pvwatts.org. Of course, standard disclaimers will still apply... your mileage may vary, past performance is not a guarantee of future returns, etc.

The manufacturers of the panels do provide an output guarantee based on standard test conditions, usually something like 80% of rated output after 20 years, but it would still be up to you to test to standard test conditions to prove this.

[Dan Powell]

No one will provide a guarantee on things that are out of their control. No one can provide a guaranteed schedule of sunlight-elevation-hours for any particular location. Some locations are better than others and this is what long term meteorological measurement databases can tell you. For most Canadian locations, see https://glfc.cfsnet.nfis.org/mapserver/pv/index_e.php. The US has similar data accessible through various sources like nrel.org and pvwatts.org. Of course, standard disclaimers will still apply... your mileage may vary, past performance is not a guarantee of future returns, etc.

The manufacturers of the panels do provide an output guarantee based on standard test conditions, usually something like 80% of rated output after 20 years, but it would still be up to you to test to standard test conditions to prove this.

And this is why I'm afraid we won't see mass adoption of solar / wind power for residences. Most folks will not drop $20K, $30K, $40K, etc. if they do not have a guarantee on the output.....i.e. they are risk adverse by nature.

Thanks for the input.
Dan

[Dave Schwartz]

I guess I must be unusual then because I've got $27,000 committed to a rooftop PV system (panels and inverter are in, grid hookup happens next week). I have faith in the statistics that on-average, based on the London dataset, that my system will provide a return almost exactly what the OPA targets. From the 16,000 other applications they received, so do a lot of other people. At least they did until the rate cut - but that had nothing to do with the quantity of production, just the income produced by that production.

MicroFIT is about as low risk an investment as you will find that will provide a return in the 10% range. I'm not looking to make a killing (but it will look like it compared to the performance of a lot of other investments over the last few years).

[Dan Powell]

I guess I must be unusual then because I've got $27,000 committed to a rooftop PV system (panels and inverter are in, grid hookup happens next week). I have faith in the statistics that on-average, based on the London dataset, that my system will provide a return almost exactly what the OPA targets. From the 16,000 other applications they received, so do a lot of other people. At least they did until the rate cut - but that had nothing to do with the quantity of production, just the income produced by that production.

I don't see unusual at all, Dave. I see you and most on this board as early adopters. By definition early adopters are more inclined to take risks, sure measured and quantified risks, but risks none the less.

It is most of the population who are not early adopters IMO ... these folks are more risk adverse than early adopters.

Dan

[Rob Beckers]

Hi Dan,

Solar PV is regarded as "low risk" even by banks; they have no trouble extending unsecured loans for the installation of FIT or MicroFIT systems. PV modules and inverters are well-established technologies with literally decades of experience behind them. This is not 'new' technology, but actually quite old. Module warranties are usually 25 years (based on output). Solar radiation for a location is very predictable, not year-to-year, but certainly over a 20-year time frame. Insurance covers the homeowner for catastrophic loss, due to events like very large hail, tornadoes and such (modules are actually designed to withstand sizable hail without damage).

The area where risk is left, is in the materials used and quality of the installation. There are some very dubious PV 'brands' out there, and quite a few installers are either clueless or knowingly use materials and techniques that will not survive the 30+ years that PV modules live for. It is not too hard for a homeowner to do due diligence in that regard, by making sure well-known brands are used, and by asking for references. I started this thread just for that reason; to give homeowners some of the questions to ask, so they can find a good installer. With that, a FIT or MicroFIT investment is about as low risk as it gets IMO, short of putting your money in a GIC at a few percent.

-RoB-

[Dan Powell]

Hi Rob,

Education and awareness is important for any type of mass application; I totally agree.

If, and I have no reason not to believe you or others on this board, the output / performance is low risk, then why would installers not be willing to give a guarantee over say 5 or 10 years of at least 85% of their quote to help assure the non-early adopters of performance?

I think that would go a long way for the majority who do not understand such things arnd are used to simply buying a big $ ticket product which comes with a performance warranty from the seller, for example cars and trucks. Most people don't understand how they work....all they understand is that they press on the gas peddle and the car goes, they press on the break and it stops, they turn the steering wheel and it turns.....they don't understand all the inner workings and don't feel they have to. They get a 3 or an extended 5 year warranty from the manufacturer to help reduce the risk of non-performance.

I don't see microFIT or any type of solar installations any different. Both are big ticket items for the homeowner. When people buy cars it is usually because they have to do so; i.e. they need transportation. Homeowners do not need to install solar panels, microFIT or otherwise. They will still get electricity either way from the utility grid. Solar panels install are completely discretionary in urban areas so I would think the masses are less risk tolerant.

The installer says the performance will be 'X' annually, then why not guaranty it over 5 to 10 years to remove the risk of non-performance for those who don't understand and have no patience to understand how it all works? Where is the downside for the installer if their figures used to sell to the homeowners are accurate and reasonable?

Thanks for the input.
Dan

[Dan Lenox]

Why will vendors not guarantee even a minimum of output over a 5 year period (to take into account annual fluxuations in cloud cover, etc.)?

<snip

As I see it 100% of the risk in this is with the home owner.


So you are looking for a guarantee on on how many days of sunshine that you will get???

Do your homework, find out what the average is in your area, that's the best number(s) to work with to see if it works for you.

After all while it is you that bears the risk - it is also you that reaps any *profit* from your setup and not your vendors, if you did revenue sharing with them then they may be more likely to give guarantees...

Dan Lenox

[Vasile Brindus]

So you are looking for a guarantee on on how many days of sunshine that you will get???


Hi, Dan!

Nobody asks for Mother Nature guaranties! But there are contractors out there which knowingly inflate the numbers to make their systems look better and get the business. So they quote a X kW system with financials based on Y kWh/year, and after a couple of years Y is nowhere to see! What can Average Joe do in this case? Absolutely nothing. Would an "output PV system warranty" help? Certainly!

I'll risk saying that most people writing here are NOT Average Joes, at least because they take enough time to educate themselves about the issue. (Thanks, again, Rob, for the first post!)

You're talking about due diligence, and that's fair. But part of it is to search the past work of the instalers. Unfortunately, because the business only took off less than a year ago, most of the companies are new in the field. How to select the good from the bad? There are no horror stories about botched installations yet...

So getting a "whole PV system output warranty" doesn't seem to me something unreasonable to ask for. After all, few of us ask for specific system details, but we make our decisions at least in part based on the yearly production value.

As for the "guarantee on how many days of sunshine" there will be, I'm almost sure Environment Canada or other government agency collects sun power data to correct for worse-than-average years.


Now I have my own question regarding the warranty. We all know the panel manufacturer warranty: 80-90% output in 20-25 years that everybody talks about. But I had yet to find the details of how this works (still looking). Even reputable contractors don't know anything other than quoting the manufacturer's statements. I heard "suppositions" that you may need to get the panel out of the system and send it to the manufacturer to be checked, or at least to get manufacturer's representative to check it on site (for a fee, of course, if the panel it's not defective). But a $200 service call is more than the value of the electricity a 200W panel produces in a whole year! Does anybody know anything more about this?

Regards,
Vasile

[Rob Beckers]

Dan (Powell): I'm not sure why installers do not give energy output warranties in the solar PV business. Part of it is likely tradition, it was never done in the past so why would they start now. Part of it is that installers are as as risk-adverse as everyone else and do not want to hand out warranties when those are not needed (none of my customers has ever asked me for this). Many of the installers tend to be small businesses, my business falls in that category, and don't want to spend the thousands of dollars on a lawyer to create a good warranty text. As Dan Lenox put it well: You're the one reaping the benefits from PV in the form of income so why would the installer bear all the risk. Even if I were to give out such a warranty, I would want to make very sure that I don't end up paying for events outside of my control (such as Yellowstone erupting and lowering solar radiation for years to come). I would also have to seriously low-ball production, which means my business suddenly looks much less interesting compared to the competition where they promise many more kWhs (without a warranty).

At the end of the day, it is not too difficult for a homeowner to do some home work and inform themselves how PV works, and how much energy production can be reasonably expected. Even without what I wrote in this thread, all those links I refer to would show up in a Google search. Talk to a few installers and have them explain where their numbers come from; very soon you'll have a very good understanding on what is reasonable and what is bovine excrement. PV is not rocket science.

Vasile, here is the warranty document from Suntech. This is for the PV modules that I install and sell. My interpretation is that in case the module falls under 80% power output within 25 years they will replace it.

888

-RoB-

[Vasile Brindus]

Hi, Rob!

Thanks for the PDF.

Now back to the issue. I understand the tradition argument. I presume "tradition" probably means mainly off-grid cottage installations, where the owner is happy to get almost any electricity (please correct me if I'm wrong). OTOH, microFIT is different because the incentive is not comfort, but the promise of some financial gain. Almost every installer mentions what a good and safe investment the PV panels are! So this status-quo regarding the warranty can easily change after a few reports of botched installs appear in the media.

I also understand your position as a small business owner, and if I were in your shoes, I would also try to avoid as much risk and expenses as possible. The issue here is that Dan spoke as a regular Joe, who makes the decision and pays for a system performing in some parameters range (i.e. power output). It was not about asking the installer to take the risk for the weather or eruptions or the Sun dying, but just to take the responsibility of the work done, mainly design and installation. In fact, Environment Canada already collects solar data for a long time, so the system output can probably be corrected or at least explained for the unusual "dark" years.

As for the panel manufacturer warranty, it's a good selling point, but the costs of even detecting an output loss on the panel level are so high that it's unpractical - unless one uses micro-inverters, or the problem is so big that it can be detected at the string level. In the end, my argument is that I'm not paying for some panels, inverter(s) and cabling, but for a PV system. But it's a moot point anyway :-)

Not trying to be unreasonable, just making the point that due to the young age of most of the PV industry here, there are some not-so-obvious risks for the adopters. After all, as you said, any warranty is as good as the company backing it! And a company that starts by misrepresenting the facts will certainly not be around long enough for us to claim the warranty.

Regards,
Vasile

[Dave Schwartz]

... It was not about asking the installer to take the risk for the weather or eruptions or the Sun dying, but just to take the responsibility of the work done, mainly design and installation. ...



I'm sure Rob and any other system integrator, whether or not they subcontract, would agree that providing a 'workmanship' warranty IS standard business practice. My contractor did provide one of those in the contract I signed and anyone who receives a contract which doesn't have that should run very fast in the other direction. If a system performance issue arises (which, between the inverter and generation meter, there should be should be enough information to detect) the contractor would have the responsibility during the 'workmanship' warranty period to prove that their workmanship is not the cause of the performance issue.

[Rob Beckers]

Hi Dave,

Yes, we do have such a clause in our contracts. It specifies that if things don't work as they should, we'll fix it free of charge, for a period of 1 year. Even if things break after that we'll fix it; our good name is worth more than a few dollars from labour. The time limit is there for legal reason more than anything. The contract also specifies that product warranties are with the manufacturers. If I had to replace an inverter at my own expense (or something like it) it would very quickly eat up my profit margin. What the contract does not specify is performance in terms of kWh's or MicroFIT income. To me all these seem common sense, and reasonable, conditions. Others may disagree of course.

-RoB-

[Dan Powell]

This is a great thread and I am learning a lot.

I don't agree with everything that has been put forward to my Q's relating to installers and supporting their system performance / output numbers, but I am learning a lot.

Another aspect on installer pricing if I may.

I have received one quote where the price was only locked in for 20 days, unless I paid the 30% or so 1st installment.

So, basically, I have to be in the position many farmers have, as I understand it, put themselves in; namely, signing a legally biding contract with an installer, having part or all of the solar installation installed ... all before they have even received a conditional contract. Now that the rules for ground mounting installations are changing microFIT rate wise, they are complaining because their financial payback & ROI are all messed up.

I do not want to be in that situation. I can't really afford to be.

I do not want to legally commit or pay dime one to any installer, no matter how good their reputation may be and how long they have been 'in the business', before I receive a conditional microFIT contract so I know for 100% certainty the rate I will receive. This is an aweful lot of work to simply receive 5%+ ROI over 20 years. If the microFIT rate drops for roof top installations, I'm up the preverbial creek as they say. :eek:

My questions are:

1. For those who are installers, what is your practice in this regard? Do you have similar short term pricing, basically forcing the hand of the homeowner as I have described above? This will help me (and others) understand the industry practice in this regard.

If you do not force your customers to pay any money and / or legally commit to a contract before the conditional microFIT contract is awarded, yet agree to keep your quoted price fixed until the conditional microFIT contract is awarded, and are in the Toronto area please contact me via private message ... you may have a new customer waiting. :amazed:

2. For those folks who are the customer / homeowner, what was your experience with your installer in this regard? Did they provide similar type of 20 day price guarantee or did they guarantee the price until X days after you received your conditional contract before you had to legally commit to them and start paying money to them?

Similarly, if you are located in the Toronto area and your installer fixed your price without forcing you to pay any money to them or become legally binding to them until X days after you received the conditional microFIT contract, please sent me a private message on who your installer was as they may have a new customer waiting. :)

Thank you,
Dan

[Dave Schwartz]

The quote I got did not have a stated expiration date because it was pretty clear in the way we were working together that I would either accept it immediately or cancel completely (and forfeit the site evaluation fee). I had already done so much homework and knew what price would be acceptable in order to make the project work that there wasn't a whole lot of thinking to be done.

I think the supply situation is in so much flux that you are not going to get much of a locked-in price period. In my case, and probably most cases still, the issue was the panels which were priced to them depending on the US dollar exchange rate. When the quote was drawn up, the Cdn dollar was above 98 cents. By the time it was sent, the dollar was at 94 cents and their supplier told them that they had one day to order panels at the price they had used in quoting because the price was going up $45 each (which would have increased the price ~$700) the day after. The situation is apparently similar with racking systems... prices are varying all over the place because of availability issues.

20 days is probably pretty good.

[Dan Powell]

Thanks very much, Dave, for sharing your experience.

I'm usually a pretty confident person but when it comes to something I don't know and early adapter situations I tend to go overly conservative, sometimes to my own detriment and othertimes not.

Dan

[Julian Egelstaff]

I feel I have to chime in just to say that it's really incorrect to characterize this as an early adopter situation. This is a well established, proven technology, to the point where there are extremely reliable estimating techniques for what the power production for a system will be.

"Early adopter" is a term for brand new technologies or products. Mono and polycrystalline PV panels are not new. So if you stick to established brands like Rob says, then you've pretty much eliminated anything remotely like early adopter risk.

I suspect you're spooked primarily by the differences in claimed output between the different production figures you've got from different sources and installers. That is an unfortunate and confusing part of this whole business. But if you do your homework, you can learn what they really mean and what is realistic.

If you want a guaranteed return, buy a GIC. If you want the lowest risk 10% return (or better) that you can find, install a microFIT system.

--Julian

[Rob Beckers]

Dan, nothing wrong with waiting until you have a conditional offer before you proceed with signing a contract with an installer. I'm not sure what the issue is you're getting at; if an installer says their quote is valid for 20 days you can just tell them you're not signing anything until you have a conditional offer.

As to changing prices: No, things are actually pretty stable right now in terms of the largest expense, the PV modules. Prices aren't changing much lately, there's healthy competition between brands/suppliers, and besides the occasional shortage of some specialty modules (the Sanyos come to mind) there's plenty of supply.

As for my own business, my plan was and is to have a fixed price per Watt (though that price varies with the size of the install), and have that price in effect for all 2010 installations. I did end up changing prices once, when we moved to HST: I lowered them, since I no longer pay PST over supplies.

I do hear some wild tales about the Toronto PV installers, something about a price war going on there. Someone mentioned $5 (or just above) per Watt installed. I can't work for that, no profit in it, and neither should anyone over there. It means corners are being cut, and I would be cautious (make sure installers specify exactly what materials/brands they are using and verify those are solid).

-RoB-

[Dan Powell]

Dan, nothing wrong with waiting until you have a conditional offer before you proceed with signing a contract with an installer. I'm not sure what the issue is you're getting at; if an installer says their quote is valid for 20 days you can just tell them you're not signing anything until you have a conditional offer.

-RoB-

Thanks for the feedback, Rob.

My issue is this. Let's say I apply for the conditional microFIT contract and have to wait the 3 months it seems to be taking. Now I go back to the installer and say I'm ready to make that deposit. The installer now comes to me and now is saying that the cost has increased by say 15% (just pulling a number out of the air). It is now the end of October. I have two options. Pay the new 15% higher price or get another installer to give me a quote. Of course, this will not happen the next day as they are all up to their eyeballs getting the mass of installs installed before 31-DEC-10.

So it takes say 2 weeks before I can get anyone over. I receive their quote and now have to re-apply because it is a different installer or because this new installer says the kW size will be different from the 1st vendor, what ever.

Three months go by again and now its into February some time and ....

Does that help my quandry with submitting a microFIT application without having a locked in price?

Thanks,
Dan

[Dave Schwartz]

If you have any intention to install a system, get your application in NOW. It costs you nothing and you do not specify any installer name on the app. The app is about you, not them. The only other information you need is who your local distribution company is and what your existing account number with them is. When I initially submitted my app, I said it would be around 3kW but the evaluation came in saying that closer to 4 was possible and affordable. I emailed the OPA to ask if I could amend that and they said that as long as the output on the commissioning report was still 'micro' (i.e. <10kW) that there would be no problem. So apply for the largest you think you could possibly afford and/or have space for - you are not absolutely committing to exactly that size (or even committing to install at all).

I don't think you will have a problem getting a quote and an install in a much shorter time than your application processing will take, given the OPA's admitted backlog and revised 'goal'. My rooftop app was submitted April 21, approved June 2. It took almost a month after that to get the building permit, which you may not need, and then only a further 2 weeks until installation. It will have been another two weeks until tomorrow's connection. Of course, your mileage may vary, especially since a new app submitted now will not likely be approved until the beginning of October - but that still leaves 3 months before the next known rule change (60% domestic content).

[Dan Powell]

Thank you for your experiences, Dave.

I did go ahead last night and submit the application. The field help for the Description field indicates to enter the name of the installation vendor (among other details). I originally had the likely installation vendor's name in there but removed it just before I submitted it. We'll see how long it takes.

Dan

[Vasile Brindus]

Hi, Julian!


On the flip side, our cost per kilowatt in Ontario is artificially low because of all the subsidies and other stupid things that went on with the old Ontario Hydro, and still continue somewhat today.


This may be a little off-topic, but you did make me search :wondering:. The energy marketers offer 5-year contracts for 7.5c/kWh. So if there are subsidies, they must be somewhere at the power plant level. According to one study (http://www.gpo.ca/sites/gpo.ca/files/ONT_CLEAN_AIR_ALLIANCE_taxshift.pdf) done 2 years ago, the hidden subsidies are around 35%. So the current peak electricity price should be 13.5c, plus 3c more for the "others" on the bill, totaling at 16-17c/kWh. A little better for your panels in 20 years...

Unfortunately, the spreadsheet I'm using is protected so I cannot update the electricity price, but a back-of-the-napkin calculation shows a profit of $200-250/year, after 20 years. However, the model doesn't consider the costs of removing and reinstalling the panels when you reshingle your roof (in 25 years?). I got wild variations for this cost, ranging from $300 to $1500.

I fully agree that if your system is larger the numbers begin to look better and better. For Example, for a 10 kW system, you may have a profit of $1000 in year 21. Too bad my roof can only accept a 2.4 kW system :-(

[Julian Egelstaff]

Thanks for the info. Also, don't forget to include the Ontario Hydro Debt Retirement Charge. That is literally part of the cost of our entire electrical system. It irritates me to no end that OPG and Hydro One didn't have to carry this themselves, though obviously the costs would be borne by consumers in the end anyway. But the thing is, because those organizations don't have to carry the debt, they have a ton more financial flexibility. Hydro was broken up by the government, but it was absolved of all sins too at the same time. Hardly fair. If the cost of Darlington is still being paid off, then the organization that owns Darlington and makes money from it, should be the one paying off the debt, not us, even if it ends up that we're really paying through higher rates, it would all be a lot more transparent and realistic, and represent better the true cost of this electricity.

And there's nothing like representing the true cost, to make renewables look like the not-half-bad deal they really are.

--Julian

[Dave Schwartz]

Hi Dan,

The only description I had in my application was "roof-top solar" and it didn't seem to hurt the processing... submitted April 21, conditional offer June 2. But maybe that wording put it clearly into the pile of 'approve now' applications and not the 'ground-mount' or 'not clear that it is not ground mount' piles that went into limbo.

[Vasile Brindus]

Does anybody know how the microFIT payments work in relation to HST? I have 3 scenarios:

1. microFIT contract in Regular Joe's name. This is probably (?) the way most of the people have it. Can anybody look at their bill and see if the price is just $0.802 and no HST added?

2. microFIT contract in a company's name, with a GST/HST number. In this case, I would expect that the power bill will have HST added, so the price will be $802+HST/kWh. Can anybody confirm this?

3. microFIT contract in Regular Joe's name, but he applies for HST number (I understand this is possible). I expect this to work identically to scenario #2.

Can anybody share his experience with any of the above cases?

Regards,
Vasile

[Ralph Day]

I have the same questions..and I have a contract! On line June 29 and won't have the meter "read" for revenue until Aug 23rd. Grrr.

I suspect that HST will be put on all payments, and the contractor is responsible for remitting that to the federal government. If you don't, watch out for the HST police.

A note, if you are a voluntary registrant (as I am) you will collect and remit HST to the govt, and you are able to claim any GST/HST incurred as an expense in your project, meaning you will receive a rebate of said taxes after your first remittance. Remit once per year. I think you have to have voluntarily registered before/during your construction phase, or at least before your first knock on the door from the HST police. Clear as mud.

Looking forward to first payment...revenue meter now at 2.7Mw.

Ralph

[Julian Egelstaff]

I believe the microFIT application included a space for GST number if you had one. In that case, I expect they'd charge it.

In our case, as individuals, we don't have such a number. Our microFIT payments have a line for GST, and it is simply $0.

The rules used to be that if you earned less than $30,000 revenue from whatever activity it was that you were doing, then you didn't need to charge GST. I'm sure there's still some provision like that with the GST/HST, so microFIT owners won't have to deal with this.

--Julian

[Dave Schwartz]

Since your microFIT payments are business income, whether you have to register for GST/HST depends on your total business revenue and the type of business you are in. My reference is this (http://www.cra-arc.gc.ca/E/pub/gp/rc4022/rc4022-e.html) CRA document.

Specifically, it says:

You have to register for the GST/HST if:

* you provide taxable supplies in Canada; and
* you are not a small supplier.

You do not have to register if:

* you are a small supplier (that does not carry on a taxi business);
* your only commercial activity is the sale of real property, other than in the course of a business . Although you do not have to register for the GST/HST in this case, your sale of real property may still be taxable and you may have to charge and collect the tax. For more information, see “Real property”; or
* you are a non-resident who does not carry on business in Canada (see Guide RC4027, Doing Business in Canada - GST/HST Information for Non-Residents).

Where a "small supplier" is defined as:

Small supplier - refers to a person whose revenue from worldwide taxable supplies was equal to or less than $30,000 ($50,000 for public service bodies) in a calendar quarter and over the last four consecutive calendar quarters.


So, as long as your business income is less than $30,000 (and it would not be possible to get anywhere remotely close to $30,000 in either a quarter or a year from a single microFIT system) and none of it is from driving a taxi, you do not have to register. This is essentially what the question on the microFIT application about GST means: are you GST registered so that the OPA pays you GST on the payments to you which you then forward on to the feds. Essentially, its not going to mean more money in your pocket - just more paperwork.

And don't even think about keeping the GST. An acquaintance was a taxi owner (one of the presumed crooks) and they got him for withholding GST - his life was ruined. In this case, the OPA will be reporting the GST payment to you to the CRA so the CRA's computers will be expecting a corresponding remittance from you.

Of course, I'm not a lawyer or accountant, so my advice is worth what you paid for it.

[Vasile Brindus]

In our case, as individuals, we don't have such a number. Our microFIT payments have a line for GST, and it is simply $0.

The rules used to be that if you earned less than $30,000 revenue from whatever activity it was that you were doing, then you didn't need to charge GST. I'm sure there's still some provision like that with the GST/HST, so microFIT owners won't have to deal with this.


Thanks, Julian! If it's not too much trouble/paperwork :) involved, I want to deal with HST although I get a lot less than $30,000/year from my panels. As far as I understand it, my main advantage is that I may be able to deduct the HST from the installation (a sizable chunk), so the installation ends 13% cheaper. After that, I will collect HST from OPA and transfer it to the government, and I will pocket only the $.802/kWh. So no other disadvantage other than filing the HST forms from time to time. I will certainly talk to an accountant, but I thought there may be somebody around who already does this and can confirm the validity.

Regards,
Vasile

[Dave Schwartz]

You are already allowed to deduct the accelerated capital cost allowance against the income. Essentially the income is written down to zero until the sum of the received income has reached your initial capital cost (i.e. payback has been achieved). The CRA's allowable CCA rate for renewable energy projects (50%/year) is way more than is needed but you can only use it to offset the actual business income from the system - you have to keep carrying it over until its all used up (in year 11 if the OPA is right about payback).

I believe you would only be allowed to keep part of the OPA's GST payment to reimburse your documented GST payments on ongoing operating expenses - that's what the whole pass-through nature of a VAT is all about. Since the fuel is free, unless you have operating expenses such as tracker mechanical maintenance or snow clearing by a contractor I don't see much opportunity to do that.

[Vasile Brindus]

I believe you would only be allowed to keep part of the OPA's GST payment to reimburse your documented GST payments on ongoing operating expenses - that's what the whole pass-through nature of a VAT is all about. Since the fuel is free, unless you have operating expenses such as tracker mechanical maintenance or snow clearing by a contractor I don't see much opportunity to do that.

Hi, Dave!

I'm familiar with the way VAT works in Europe, and as far as I can tell HST uses the same "pass-through" mechanism. Indeed, there is no benefit in collecting HST on OPA payments, unless you have expenses including HST - and hopefully we will not have expenses at all :). OTOH, the initial installation most likely includes HST. For a 20k install, that's $2600. What I hope is to get this amount back from the government, to pay back the loan quicker (or to get a smaller loan). Here's where my interest is.

Regards,
Vasile

[Dave Schwartz]

I think you will get your initial HST back but as a part of your Class 43.1 (http://oee.nrcan.gc.ca/industrial/financial-assistance/tax-incentives.cfm?attr=24) capital cost allowance. At least that's what I plan to do: use my complete out-of-pocket expenses in installing the system including taxes and fees as my capital cost base. If they don't like that as a capital cost base, they'll have a few years to tell me before it would cause my undepreciated capital cost carry forward to drop to zero before I think it should. The CRA guide that talks about this is T4002 (http://www.cra-arc.gc.ca/E/pub/tg/t4002/t4002-e.html).

See, the tax you paid on installing the system was a capital cost - it was related to a long-term property and not to an ongoing, expensable cost which is what the OPA's HST remittance will be. Two different things.

I actually emailed the 'Tom Jewett' referenced on the page about the Class 43.1 CCA and I think I have the response somewhere that I could post. It wasn't too informative. It would be ideal if CRA would produce a guide specifically for microFIT participants.

[Vasile Brindus]

Yes, it's definitely a detail issue: getting all the HST back at once (so quicker than the CCA allows) or in installments, as per CCA. Back in Europe, we could get all the VAT back pretty quickly. Agree, there should be a guide regarding this. But probably the feds don't care enough about this specific instance.

Some details:
- you seem to be right that the installation itself is considered "capital property" since you can get CCA for it. But according to "Claiming ITCs for capital property" (http://www.cra-arc.gc.ca/E/pub/gp/rc4022/rc4022-e.html#P740_61775) section, you can claim ITC (Input Tax Credit) for capital property.
- you can register voluntarily (http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/rgstrng/vlntry-eng.html) for HST; good thing, you can un-register after a year, if you want to, but there may be tax implications ("Capital property held at the time of deregistration" section)
- reporting is done annually (http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/rgstrng/rprtng-eng.html), but you can opt for monthly or quarterly reports
- the refunds are pretty quick, less than 1 month after the return.

Time to find a good accountant :)

Regards,
Vasile

[Vasile Brindus]

Just found about this "free seminar" (http://sunelec.com/index.php?main_page=forum) in Toronto. If you can stand the obvious sales pitch, there may be some useful info in it.

Vasile

[Michel de Breyne]

FYI, OPA has just announced the results to the 30 day consultation period. It's good news for some and not quite as bad news for others.

- applications for ground-mount made before July 2nd will be grandfathered at $0.802 (not just approved or conditional offers). Also those pending applications will get until May 2011 before having to meet new provincial content
- applications for ground-mount as of July 2nd will get $0.642
- business that lease land and rooftops no longer allowed to participate in microFIT (not exactly sure how that will work or be enforced since you can apply under a different name and you can assign contracts).

http://www.powerauthority.on.ca/Page.asp?PageID=122&ContentID=7298

[Dave Schwartz]

I actually emailed the 'Tom Jewett' referenced on the page about the Class 43.1 CCA and I think I have the response somewhere that I could post. It wasn't too informative. It would be ideal if CRA would produce a guide specifically for microFIT participants.

Two things:

1) CRA has produced a microFIT FAQ (http://www.cra-arc.gc.ca/tx/bsnss/thrtpcs/nt-ft/q1-eng.html). The date is June 17, so it was way after I stopped looking.

2) Here's the email from Tom Jewett:
Hi Dave,


This office at Natural Resources Canada answers technical questions related to Class 43.1 and Class 43.2. Class 43.1 and Class 43.2 are Capital Cost Allowance (CCA) classes in the Canadian Income Tax Regulations that allow for accelerated write-off (at 30 and 50 % respectively on a declining balance basis) of the costs of certain assets used in energy efficiency and renewable energy projects. Among other things, Classes 43.1 and 43.2 include photovoltaic systems. Class 43.2 applies to equipment acquired after February 22, 2005 and before 2020.

We do not have an information package per se for microFit installations as microFit is a Province of Ontario program. We do however have a Class 43.1/Class 43.2 Technical Guide that describes the equipment that qualifies for Class 43.1 or Class 43.2 from a technical perspective. I have attached a copy of this Guide in PDF format for your information. For further information on Government of Canada energy programs, I suggest you visit the following website, if you have not already: www.ecoaction.gc.ca

The following is the standard covering email included with each copy of the Technical Guide:

************************************************** ************************************************** ******************************************

Further to your request by email on April 22, 2010, please find attached a PDF copy of the 1998 edition of the Class 43.1 Technical Guide and Technical Guide to Canadian Renewable and Conservation Expenses (CRCE). This document includes an erratum that describes changes and proposed changes since 1998 in the Income Tax Regulations relating to Class 43.1. The erratum has not yet been updated to reflect proposed changes to Class 43.1 and Class 43.2 announced in Budget 2008 and Budget 2010. No changes to Class 43.1 and Class 43.2 were proposed in Budget 2009.

This document is also available in hard copy. If you also would like to obtain a hard copy, please let me know by return email and I'll arrange to have a copy mailed to you at the address provided.

The Class 43.1/43.2 and CRCE Secretariat at Natural Resources Canada is the scientific and engineering authority for Class 43.1, Class 43.2 and CRCE. If you have further questions of a scientific and engineering nature, please don't hesitate to contact me by return email or by telephone at the number below.

If you require further information related to the business requirements to qualify for Class 43.1/43.2 and CRCE, please contact Canada Revenue Agency at the following coordinates:

General Enquiries,

Income Tax Rulings Directorate
320 Queen Street 16th Floor, Tower A
Place de Ville
Ottawa, ON K1A 0L5

Tel.: 613-957-8953
Fax: 613-957-2088

Regards,



PS: A number of changes to the Class 43.1 and Class 43.2 Regulations were proposed in Budget 2008. Draft regulations to implement these changes were released in the Notice of Ways and Means Motion to amend the Income Tax Act that was included in Budget Plan 2008. To view these draft regulations, please have a look at Annex 4 to Budget Plan 2008 at the following link:

http://www.budget.gc.ca/2008/plan/ann4a-eng.html#business

PPS: Some changes to Class 43.1/43.1 and CRCE were proposed in Budget 2010. To view the proposed changes, please have a look at Annex 5 to the 2010 Budget Plan (under Business Income Tax Measures) available at the following link:

http://www.budget.gc.ca/2010/plan/toc-tdm-eng.html




Tom
T. J. Jewett
Industrial Applications Officer / Agent, Applications industrielles
Government of Canada / Gouvernement du Canada
Natural Resources Canada / Ressources naturelles Canada
CanmetENERGY / CanmetÉNERGIE
Building 3, Room 204 / Édifice 3, bureau 204
1 Haanel Drive, Nepean, Ontario K1A 1M1 / 1 Promenade Haanel, Nepean, Ontario K1A 1M1
Telephone / téléphone: (613) 995-3361/(613) 996-0890
Facsimile / télécopieur: (613) 995-7868

And here's the brochure that was attached (zipped, it just squeaks in under the upload size limit):

889

[Dan Powell]

FYI, OPA has just announced the results to the 30 day consultation period. It's good news for some and not quite as bad news for others.

- applications for ground-mount made before July 2nd will be grandfathered at $0.802 (not just approved or conditional offers). Also those pending applications will get until May 2011 before having to meet new provincial content
- applications for ground-mount as of July 2nd will get $0.642
- business that lease land and rooftops no longer allowed to participate in microFIT (not exactly sure how that will work or be enforced since you can apply under a different name and you can assign contracts).

http://www.powerauthority.on.ca/Page.asp?PageID=122&ContentID=7298

I can't figure out why those particular applications have another 5 months for the 40% Ontario content? Why not roof top mounted? Why not both types of solar PV installs whch are caught up in the application backlog?

Appreciate any clarity on this.

Thanks.
Dan

[Ralph Day]

Hey Dan,

Wait 5 days and the OPA will "clarify" their positions, nuk nuk nuk. :confused::sad::wondering::worried:

Ralph

[Vasile Brindus]

I can't figure out why those particular applications have another 5 months for the 40% Ontario content? Why not roof top mounted? Why not both types of solar PV installs whch are caught up in the application backlog?


Hi, Dan!

It's just a supposition, but this seems to confirm that OPA stopped processing ground-mounted applications long before they announced the new prices, probably for 4 months. Add the month for the public consultations, and you see that those people were delayed by 5 months, so it's just fair to give them that time back. OTOH, if the roof mounted applications were processed all this time, there is no reason to provide them the same extension.

Regards,
Vasile

[Vasile Brindus]

Two things:
1) CRA has produced a microFIT FAQ (http://www.cra-arc.gc.ca/tx/bsnss/thrtpcs/nt-ft/q1-eng.html). The date is June 17, so it was way after I stopped looking.


Thanks, Dave. I have to eat crow :), they cared enough to prepare the FAQ.

Regards,
Vasile

[Michel de Breyne]

Hi, Dan!

It's just a supposition, but this seems to confirm that OPA stopped processing ground-mounted applications long before they announced the new prices, probably for 4 months. Add the month for the public consultations, and you see that those people were delayed by 5 months, so it's just fair to give them that time back. OTOH, if the roof mounted applications were processed all this time, there is no reason to provide them the same extension.

Regards,
Vasile

Yeah, I think that's right. It's actually worse than that; according to speculations, OPA stopped processing ground-mount applications in mid-January so if you were unlucky enough to have just missed the cut-off, you have already been waiting over 7 months and realistically won't get a conditional offer for another 2-3 months (and likely wouldn't have time to get your system up before the cut off) so it's only right that they grant 5 months more to get the system up and running. They've stated that they continued processing the roof-mounted applications so there's no reason to give the extension for that.

[Dan Powell]

Yeah, I think that's right. It's actually worse than that; according to speculations, OPA stopped processing ground-mount applications in mid-January so if you were unlucky enough to have just missed the cut-off, you have already been waiting over 7 months and realistically won't get a conditional offer for another 2-3 months (and likely wouldn't have time to get your system up before the cut off) so it's only right that they grant 5 months more to get the system up and running. They've stated that they continued processing the roof-mounted applications so there's no reason to give the extension for that.

Does it take more time to install a ground mount solar PV system vs a roof mount solar PV system? :wondering:

I know nothing about the installation of either. I'm just curious on rationalizing (yes, I know :rolleyes: ) why the May 2011 installation deadline for such ground mount applications. Since I have not yet received my conditional contract for my roof mount application, I can just see the focus on clearing the backlog of all solar PV microFIT applications based on submittion date.

Sure, they indicate all applications received by such and such date will be reviewed and conditional contracts where applicable sent out by the end of September. If this is the case, I just don't understand, unless ground mount microFIT solar PV installations take a lot more time than roof mount, why the May 2011 for ground mount with respect to Ontario content and not roof mount solar PV installs as well.

Thanks for the clarity. :unsure:
Dan

[Dave Schwartz]

While I think that ground mount might take a day or two longer under spring/summer/fall conditions, there would be certain difficulties in the winter. In some parts of the province, the ground may begin to be covered by a layer of crystallized water called snow starting in early November. Then, said ground will start to freeze from the top down and become difficult to work. Both of these could interfere with activities such as clearing, leveling and foundation installation. Once the ground freezes, it will be April until the ice is gone (I remember installing a birdhouse pole in late April in SW Ontario when all the snow was gone... about a foot down, I hit ice and it took at least a magnitude more more effort to get through that).

With a roof mount in winter, you can just shovel it off and reveal the flat mounting surface and the rafters you screw into won't be icelogged (waterlogged, but frozen). Might not be exactly comfortable but not a whole lot more difficult.

[Dan Powell]

While I think that ground mount might take a day or two longer under spring/summer/fall conditions, there would be certain difficulties in the winter. In some parts of the province, the ground may begin to be covered by a layer of crystallized water called snow starting in early November. Then, said ground will start to freeze from the top down and become difficult to work. Both of these could interfere with activities such as clearing, leveling and foundation installation. Once the ground freezes, it will be April until the ice is gone (I remember installing a birdhouse pole in late April in SW Ontario when all the snow was gone... about a foot down, I hit ice and it took at least a magnitude more more effort to get through that).

With a roof mount in winter, you can just shovel it off and reveal the flat mounting surface and the rafters you screw into won't be icelogged (waterlogged, but frozen). Might not be exactly comfortable but not a whole lot more difficult.

Good points, Dave, especially for land in the northern part of the Province.

Thanks! :bigsmile:

[Rob Beckers]

Just returned from 3 weeks of absence, and didn't read all the replies to the HST issue in detail (so this may have been said):

In general, a MicroFIT owner will want to register for a business number and collect/remit HST payments. Even when having less than $30,000 in business revenue per year. This because it allows the PV owner to recoup the HST paid on the installation of the PV array, and that is a substantial sum of money!

When asked at a seminar I attended, the OPA said that they need to be informed if you are collecting/remitting HST, in which case they will add HST to the payments sent to you.

There is no cost to obtaining a business number from Revenue Canada, and the quarterly administrative duties are less than 10 minutes of work (if all you have is business income from PV). So, my advice, register and get the HST you pay to the installer back.

As I saw mentioned: If you do decide to collect/remit HST you have to take this very seriously! They do perform audits (I've had one), and penalties are severe. Unless you were planning to relocate to another country anyway, don't even consider cheating on HST. :sad2:

-RoB-

[Vasile Brindus]

In general, a MicroFIT owner will want to register for a business number and collect/remit HST payments. Even when having less than $30,000 in business revenue per year. This because it allows the PV owner to recoup the HST paid on the installation of the PV array, and that is a substantial sum of money!
-RoB-

Thanks, Rob!

Since you seem to have been through this, do you have any idea if we can get back all the HST for the system in the first year? This would significantly improve the cashflow and decrease the interest amount if using a loan.

I realize this is more an accounting issue, but you may happen to know and the question has its place in this thread.

Regards,
Vasile

SearchingForGreen (www.searchingforgreen.ca)

[Ralph Day]

Become a voluntary registrant with the Canada Revenue Agency for collection and remitting HST. When you remit your first year's HST collected you will have a credit which you will be refunded for. ( At least that's how I'm doing it, sure hope that's what will happen). The refund/rebate will come to about $3500 for what went into the system (Mine is GST as the bills were paid before July1 2010).

You need to register before you pay the system bills, otherwise it might be construed as fraudulent (?).

Ralph

[Vasile Brindus]

Become a voluntary registrant with the Canada Revenue Agency for collection and remitting HST. When you remit your first year's HST collected you will have a credit which you will be refunded for. ( At least that's how I'm doing it, sure hope that's what will happen). The refund/rebate will come to about $3500 for what went into the system (Mine is GST as the bills were paid before July1 2010).
Ralph

Hi, Ralph!

Did you happen to know if it's possible to claim all the HST credit in the first year (your $3500)? Or only the part for corresponding to the amount claimed as CCA in that year? I couldn't find any reference about it, one way or another.

Regards,
Vasile

[Ralph Day]

Vasile,
My understanding is you have to claim all the HST in a period, can't put off HST expenses to another claim period. That would put all your system HST costs in with the first remittance period...hence your HST ''refund"on system costs is a one shot deal.

Ralph

[Rob Beckers]

Vasile, yes, you should receive back all of the excess HST paid. As far as I know their least-frequent filing period is quarterly, so you should in fact receive it back roughly a month after the quarter ends in which you paid that HST (minus any HST collected, but that probably doesn't kick in until much later since the various LDCs are very slow in paying for electricity that you sell to them).

Unlike deductions, HST does not require that you have income to 'deduct form'. It's simply you collecting tax (and paying tax) on behalf of the government. Any overpayments (HST paid for business related activities) are refunded immediately.

-RoB-

[Vasile Brindus]

You need to register before you pay the system bills, otherwise it might be construed as fraudulent (?).
Ralph

Hi, Ralph!

Here is a quote from the HST guide: "If you are a new registrant, you can claim an ITC for the GST/HST paid or payable on property such as capital property, real property, and inventory that you had on hand to use in your commercial activities at the time you became a registrant."

So it may be possible to get the HST back even if you didn't register for HST prior to getting the system installed. However, other than changing one's mind or not considering HST implications in the first place, I don't see the reason not to apply for HST first, as you correctly suggest.

Regards,
Vasile

[Ralph Day]

Hi Vasile,
That phrase "had on hand" might be a sticky one. Usually the installer might have materials '' on hand "but how many of us have tens of thousands of dollars worth of stuff on hand? Worth a shot if someone didn't register before installing their system...but why take a risk? As easy as it is to voluntarily register, it's just as easy to de-register after your first or second (yearly in my case) submission/remission of HST.

Ralph

[Justin Sods]

Hello, I have been following the forum for a while but this is my first post. I think I can clarify some of your concerns on HST.

1) Usual Filing for small Un-incorporated business is annually. After a certain threshold in annual sales (100k or 250k, i think), they will ask you to submit quarterly. I am 90% certain you can elect to claim more frequently if you like.

2) While technically you can de-register from HST, they will make you pay HST on any capital property still owned, IE PV Panels. So all you are doing is getting an interest-free loan for 2 years, which in itself isn't bad, but is it worth the hassle?
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/bspsbch/itc-cti/clsng/cptltclsng-eng.html

[Dave Schwartz]

Can any industry insider comment on if this story (http://www.renewableenergyworld.com/rea/blog/post/2010/09/will-a-shortage-of-solar-panels-derail-our-green-energy-revolution?cmpid=rss) is true and means that its pointless to start a new system using non-Ontario panels because you'd never get it online before domestic content rules change in January?

[Rob Beckers]

Can any industry insider comment on if this story (http://www.renewableenergyworld.com/rea/blog/post/2010/09/will-a-shortage-of-solar-panels-derail-our-green-energy-revolution?cmpid=rss) is true and means that its pointless to start a new system using non-Ontario panels because you'd never get it online before domestic content rules change in January?

Dave, I'd say the story is fundamentally correct, but exaggerates things a little bit. As of today, some of my suppliers have 6 to 8 week lead-times for PV modules (Suntech is one of those), while others still have enough stock to deliver immediately. There's no doubt though that supplies are getting shorter, and the market is shifting from being a buyer's market (prices going down) to a seller's market (with rising prices in the future). By the way, it's not just PV modules, for some reason inverters are in short supply suddenly too! My business is an inverter wholesaler, and we now have to stand in line to get a few pallets from the factory. Power-One is booked until the end of the first quarter of next year in production!

Anyway, if you need panels now, contact me offline. There's still plenty to be had, including good name brands, at decent prices. For next year, 2011 when we need Ontario content in the panels, it's a different story. There will likely be short supplies of those for some time to come, and I've been hearing rumors of 25% price increases for those (I really hope they're wrong!).

-RoB-

[Dave Schwartz]

I guess I've seen the light and registered for HST like Rob said - took only about 10 minutes through the CRA website. It makes more sense to get all the tax back now as input tax credits than to include them in your cost base (if you can even do that) and get them back eventually as part of your capital cost allowance. The only issue is that I have to get the OPA application changed to check that box - the OPA help line said to send them an email with my reference number so that they would unlock the app and I could change it. My contract has been issued but I have not gotten any payments yet so hopefully they can get the change through so that my payments through the LDC will include HST (which I will just have to bank until I forward that to the CRA when I file HST at the end of the year).

[Lorena Mitchell]

Hey Dan,
It is not possible for us to do that with all the veribles. Microfit has not been around for 5 yrs either. It is being used as a job creation and energy creation medium so the whole program will not last long either. You have to get in while you can as this will be a 20 yrs contract.

[Tim Simpson]

Microfit program
Has anyone researched to whom the income can be allocated to?
In the case of an investor in the project, but not an owner of the property???
Also, would it be worth assigning children to the deed as part owners to have them claim the income - or do they even have to be on the deed?

:idea:

[Julian Egelstaff]

I'm pretty sure that whoever the party/parties are to the microFIT contract, they would have to declare the income, because the contract says that those are the people receiving the income. You cannot shift it around like tuition credits or something like that.

--Julian

[Ralph Day]

We own our microFIT jointly. The income is designated to whomever our accountant designates it to. You can apply the accelerated depreciation of 50% towards the income in the first year (but you don't need the 50%, it's probably 4 times as much as the income for the first year). The income doesn't have to always be claimed by the same person of the joint ownership either. That helps when one person has considerably less income than the other, or if retirement is on the horizon.

Having an accountant look over the contract and the tax ramifications helped us a great deal. I think that only the persons named on the contract (no minors obviously) are able to claim the income paid via the contract.

Ralph

[Tim Simpson]

Yes you would think that minors could not claim the income, but perhaps in a situation where they rec'd a large $ inheritance from their grandparent. Minors - those under 18 can be registered for HST - and despite not having the knowledge, could have their financial planner make an investment in this type of activitiy it is passive business income. It is a passive income stream involving very minimal personal activity and relatively low maintenance and low expertise. Even a loan to a child - grey line to tax avoidance.
Any accountant's have an opinion?

[Tim Simpson]

Wow Ralf, how do you get the reading on each panel - separate inverters per panel?

[Jp McGraw]

Ref: MicroFitRef System wrong kWh recorded on my March 2023 Statement

1 May 2023: I was reviewing my March 2023 statement from my utility company and noticed the kilowatt hours generated was off by 265 kWh. (Base on the my Enphase Site Daily Energy Production Report for March 2023)

After calling Customer Service, I was informed that they have no control as to the meter reading and I will need to contact Measurement Canada to follow up on the incorrect reading for my meter.

My questions:

The discrepancy is 265.09 kWh. Has anyone gone through this before and what septs did you take?

Thanks...

Jean-Paul McGraw
jeanpaul.mcgraw@gmail.com

[Rob Beckers]

Hi Jean-Paul,

Is this Hydro-One?
I've heard of some cases in the past where they would verify the meter after complaints. When I installed the FIT system on the company roof they actually ran a multi-hour test to make sure the meter was recording correctly (that being a 3-phase with CT-coils it's a little more complicated vs. regular household meters, so I can understand they have this in their commissioning procedure). In short, they certainly have the ability to verify a meter. While it is true that Measurement Canada is the authority that lays down the law on electrical meters I'm pretty sure the utility does not send every single meter over there for calibration, they do this themselves in-house!

A first step could be to see if the numbers on the meter correspond with your production numbers at that moment. Digital meters show how kW going in and out right at that moment, it rotates the display through those numbers. See if they align.

On your end you could install some type of verification system so it's not just "Enphase vs. utility meter". There are fairly economical energy monitors, that would give you a third reading so either Enphase or the electrical meter can be ruled in/out.

Lastly, if the utility continues to refuse looking into this and you're certain you're correct, you can escalate things: There is the Ontario Ombudsman, Ontario Energy Board, and probably a few more if you do some searching...

Good luck!

-RoB-