Aug 232010
 

Operational since early 2010, the huge 800-panel solar rooftop system costs $1.85 million to build. The third part of this case study focuses on financial details. We look at the startup costs, operating costs, income from the high profile Ontario Feed-In Tariff program, and most importantly, the projected payback period.

Owned by LoyaltyOne and located in Mississauga, just outside Toronto, this is the first system that feeds electricity into the provincial power grid to earn income through the Feed-In Tariff program. Let us get into the financial details.

First, let us look at the costs. They consist of the initial startup costs and the ongoing operating costs. For solar rooftop systems, a large portion of the costs are startup costs.

For this system, the startup costs total approximately $1.85 million. These include feasibility studies, design and installation, all equipment, commissioning and testing, local distribution company connection, Ontario Feed-In Tariff application, etc. (For details on the solar panels and electrical inverters, see Part One and Part Two of this case study.)

Similar to most solar systems, the ongoing operating costs are comparatively small. The $3,000 to $5,000 per year operating costs include keeping the solar panels clean and free from snow, routine inspection, and responding to unusual meter signals.

Now let us look at the income from feeding the electricity output into the provincial power grid. The nameplate capacity of this system is 165 kW. This fits into the second tier of the provincial Feed-In Tariff Program price schedule. This means the Ontario Power Authority will pay LoyaltyOne $0.713 for each kWh of electricity fed into the grid.

How much electricity does the system generate? The system consists of a rooftop panel array and a carport panel array. I will simply combine the two for this calculation, but the area split between the two arrays is approximately 90% rooftop and 10% carport. Energy outputs were estimated based on historical climate data. Actual outputs depend on amount of sunlight and other factors. (See Part One and Part Two of this case study for more details).

Combined solar array area: 1,003 m² (or 10,794 ft²)
Energy output per area per day: 0.493 kWh/m²/day (or 0.0458 kWh/ft²/day)
Energy output per day: 1,003 x 0.493 = 495 kWh/day
Energy output per year: 495 x 365 = 180,611 kWh/year
Income from Feed-In Tariff per year: 180,611 x 0.713 = $128,776 per year

The payback period can then be calculated from these figures:

Costs (initial startup): $1.85 million
Costs (ongoing operation): $3,000 to $5,000 per year
Income: $128,776 per year

A simple calculation would work out the payback period to be approximately 15 years. In practice, other factors that affect the payback period are tax treatment such as accelerated depreciation, inflation, interests, etc. I was told that after these factors are taken into account, the payback period is closer to 10 years.

There you have it. How does your solar project compare? If you have recently completed a solar panel installation project for your home, how does the US federal tax incentive on residential solar projects, led by companies such as Verengo Solar Energy, compare to the cost savings businesses and ordinary citizens can receive in Canada? Drop me a line in the comment area below.

The main contractor for the LoyaltyOne system is RESCo Energy. Kevin Monsour, Vice President of Partner Development at RESCo Energy told me the system costs of $1.85 million is higher than others mainly because the building was a new construction without the solar system in mind. This resulted in much structural upgrade.

The system has been operating now for less than a year. It is still too early to tell how the actual performance compares to the estimation. But so far, the electricity yield is quite good and it is performing above projection. If this continues, the payback time could come sooner. After the payback, the system should continue to deliver substantial financial benefits with minimal maintenance. And let’s not forget, there are also substantial benefits to the environment, corporate image, and employee engagement … and these start on day one. Stay tuned for the final part of this case study focusing on the Feed-In Tariff application.

Full Case Study: Part OnePart Two, Part Three, Part Four

Photos courtesy of RESCo Energy.

Derek Wong helps businesses on sustainability strategy and execution. He is a member of the advisory board of Sustainable Business Forum, building the future of healthy enterprises. Reach him by email, LinkedIn, or Twitter.

  5 Responses to “Canada’s Largest Solar Rooftop, Case Study Part Three”

  1. Great blog Derek. Within the next few weeks, Canada’s largest rooftop PV system will reside in Tecumseh, Ontario. Essex energy is roughly 70% complete in its installation of a 500 kW rooftop on the twin pad Tecumseh Arena. When complete, the system will consist of roughly 2200 Canadian Solar Inc. panels and two Satcon 250-kW inverters.

    Shortly afterwards, a 250 kW rooftop atop the Vollmer Culture and Recreation Centre in LaSalle, ON will be completed – expected commissioning is in Q4 2010.

    Further, by the end of Q2 2011, Essex Energy will be commissioning another 500 kW rooftop on the roof of the new Larry Bauer Recreation Centre in Amherstburg, ON.

    The LoyaltyOne project served as the pioneer that made installations like the ones I mention here possible. The lessons learned from RESCo’s work helped many system developers quickly step up in meeting the demand brought forth under the new FIT program – we all owe them a debt of gratitude for helping educate suppliers, integrators, and the public at large in adopting renewable energy initiatives.

  2. Thanks for sharing the latest on Essex Energy’s projects in Tecumseh, LaSalle, and Amherstburg. All very exciting and impressive.

    I believe LoyaltyOne is proud of being a pioneer of solar rooftop and they generously share their experience with the community. A wonderful group.

  3. Megawatt

  4. [...] the next part of this case study, we will look into the financial details of this pioneering project, including [...]

  5. Thanks for the details surrounding this installation. I had seen the panels myself but did not know the costs and payback times. Its interesting that this commercial project payback is in the range of 10-15 years whereas for home installations, the payback is expected to be within 5 years.

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