Personal Finance

ONT ONLY - microFIT solar panel program: 10-14% return for 20 yrs * FAT LADY HAS SUNG

  • Last Updated:
  • Oct 19th, 2017 10:27 am
Deal Addict
Dec 15, 2005
2576 posts
20 upvotes
Hello,

I just heard about this program. Is it still worth it to sign up for this?
Based on the evaluation I got, I can fit 5.8 kwh system and get 31 cents per Kwh.
System is about 20K (HST incl).

Basically I'm breaking even.
But with the additional benefits of getting back the HST and claiming the system on my tax returns, I'm still wondering if it will be worth it.
Plus I'm wondering if it increases the home value as well. At most we'll be in this home for maybe 3-5 years again.

I'm trying to read through all the info in the first post but the changes since this first started seem significant.
So any advice would be appreciated.
My Heatware
Location: Toronto
Newbie
May 11, 2005
91 posts
8 upvotes
Depends on the ROI you want. My personal opinion is that it is not worth it.

In my case, I can have a 10kw system installed for around 24k. So I would have almost double your annual solar income, with only 4k additional cost... Sounds like your roof is not ideal for solar at this time in the program. Maybe try shopping around for better quotes.
Majoram wrote:
May 5th, 2017 12:58 pm
Hello,

I just heard about this program. Is it still worth it to sign up for this?
Based on the evaluation I got, I can fit 5.8 kwh system and get 31 cents per Kwh.
System is about 20K (HST incl).

Basically I'm breaking even.
But with the additional benefits of getting back the HST and claiming the system on my tax returns, I'm still wondering if it will be worth it.
Plus I'm wondering if it increases the home value as well. At most we'll be in this home for maybe 3-5 years again.

I'm trying to read through all the info in the first post but the changes since this first started seem significant.
So any advice would be appreciated.
Jr. Member
Aug 31, 2015
137 posts
28 upvotes
Scarborough, ON
Mike15 wrote:
May 2nd, 2017 12:38 pm
Can't say I'm surprised,

Image
And it's getting worse.
Jr. Member
Aug 31, 2015
137 posts
28 upvotes
Scarborough, ON
Majoram wrote:
May 5th, 2017 12:58 pm
... claiming the system on my tax returns, I'm still wondering if it will be worth it.
In terms of taxation there isn't that much benefit. CCA will allow you to offset the revenue that you make in the first 6-7 years or so of your system's life - more if your generation isn't so good. After that you will be paying your marginal tax rate on what you earn from your panels and in Ontario if you are in the top tax bracket that rate is now 53.53%. Not as good as capital gains or dividend income. You cannot use a loss from the panels to offset other income.
Jr. Member
Nov 29, 2011
160 posts
34 upvotes
Toronto
Why even think about it if you are going to move within 5 years. Throwing away your money.
[OP]
Deal Guru
User avatar
Nov 18, 2005
10354 posts
1856 upvotes
Kingston
Majoram wrote:
May 5th, 2017 12:58 pm
Hello,

I just heard about this program. Is it still worth it to sign up for this?
Based on the evaluation I got, I can fit 5.8 kwh system and get 31 cents per Kwh.
System is about 20K (HST incl).

Basically I'm breaking even.
But with the additional benefits of getting back the HST and claiming the system on my tax returns, I'm still wondering if it will be worth it.
Plus I'm wondering if it increases the home value as well. At most we'll be in this home for maybe 3-5 years again.

I'm trying to read through all the info in the first post but the changes since this first started seem significant.
So any advice would be appreciated.
I wouldn't do it, which is why I put "THE FAT LADY HAS SUNG" in the title.
ROI is too low for the illiquidity and you have to be in for the duration to achieve that ROI as there is definitely no guarantee (or even history) of what you'll get for the system if you sell your house before the 20 year contract is up.
Newbie
User avatar
Nov 29, 2015
46 posts
19 upvotes
Bradford, ON
Hey folks, just looking for opinion, based on full cost to install panels. Including permits, hydro connection, etc. Including tax, what's an acceptable cost per watt. The best I have been able to find is $3.11per watt. 9.35kw system. We recieve the taxes back which is a bonus. This drops the price of panels down to $2.75 per watt.

Also, is there any benefit to paying off the panels in full? Or is it better to borrow from the bank and make monthly payments with interest? If I go with a home equity line of credit can I claim the interest? Is a personal line of credit better? ... Thanks!
Jr. Member
Aug 31, 2015
137 posts
28 upvotes
Scarborough, ON
Whether you put a loan on these or not depends on your specific personal circumstances, risk tolerance, etc. But you can deduct the interest against the income that you make on the panels so if you are borrowing money for any reason it makes sense to apply the loan against the solar panels. With regard to what type of loan - that doesn't matter but the lower interest rate that you pay the better. But if you do have interest expense on your panels it won't actually save you money in the short term since you have depreciation (aka CCA) that will offset the income that you make from the panel for about 5-6 years or so. See JWL's post #1853 in this thread for an excellent detailed description of how this works. If you borrowed $30,000 at 3% then you would have $900 per year in interest expenses each year so that will reduce the amount of CCA that you can claim in the early years and extend the period until you have to pay income tax on the revenue that you generate. So in his example your net income would be $5100 instead of $6000 due to the $900 of interest expense.

Of course the downside is that you are paying $900 per year to the bank!
Newbie
Mar 11, 2010
82 posts
2 upvotes
Mississauga
IMO, use Heloc for the investment, It's a low risk. 2.29% with TD.
Even if you have money, Invest it somewhere else with higher return (of course not GIC)


wayner9 wrote:
May 8th, 2017 9:30 am
Whether you put a loan on these or not depends on your specific personal circumstances, risk tolerance, etc. But you can deduct the interest against the income that you make on the panels so if you are borrowing money for any reason it makes sense to apply the loan against the solar panels. With regard to what type of loan - that doesn't matter but the lower interest rate that you pay the better. But if you do have interest expense on your panels it won't actually save you money in the short term since you have depreciation (aka CCA) that will offset the income that you make from the panel for about 5-6 years or so. See JWL's post #1853 in this thread for an excellent detailed description of how this works. If you borrowed $30,000 at 3% then you would have $900 per year in interest expenses each year so that will reduce the amount of CCA that you can claim in the early years and extend the period until you have to pay income tax on the revenue that you generate. So in his example your net income would be $5100 instead of $6000 due to the $900 of interest expense.

Of course the downside is that you are paying $900 per year to the bank!
Deal Addict
Dec 15, 2005
2576 posts
20 upvotes
Thank you all for replying. I'll take the advice and cancel.
I did realize that the return alone was not worth it. I just wasn't sure about the HST and taxes side of it.
I also thought it would add some value to our home and thus why I was thinking it might be offset in resale value.

Thanks again everyone!
wayner9 wrote:
May 5th, 2017 2:36 pm
In terms of taxation there isn't that much benefit. CCA will allow you to offset the revenue that you make in the first 6-7 years or so of your system's life - more if your generation isn't so good. After that you will be paying your marginal tax rate on what you earn from your panels and in Ontario if you are in the top tax bracket that rate is now 53.53%. Not as good as capital gains or dividend income. You cannot use a loss from the panels to offset other income.
Frankdee wrote:
May 5th, 2017 4:24 pm
Why even think about it if you are going to move within 5 years. Throwing away your money.
JWL wrote:
May 5th, 2017 10:47 pm
I wouldn't do it, which is why I put "THE FAT LADY HAS SUNG" in the title.
ROI is too low for the illiquidity and you have to be in for the duration to achieve that ROI as there is definitely no guarantee (or even history) of what you'll get for the system if you sell your house before the 20 year contract is up.
wayner9 wrote:
May 8th, 2017 9:30 am
Whether you put a loan on these or not depends on your specific personal circumstances, risk tolerance, etc. But you can deduct the interest against the income that you make on the panels so if you are borrowing money for any reason it makes sense to apply the loan against the solar panels. With regard to what type of loan - that doesn't matter but the lower interest rate that you pay the better. But if you do have interest expense on your panels it won't actually save you money in the short term since you have depreciation (aka CCA) that will offset the income that you make from the panel for about 5-6 years or so. See JWL's post #1853 in this thread for an excellent detailed description of how this works. If you borrowed $30,000 at 3% then you would have $900 per year in interest expenses each year so that will reduce the amount of CCA that you can claim in the early years and extend the period until you have to pay income tax on the revenue that you generate. So in his example your net income would be $5100 instead of $6000 due to the $900 of interest expense.

Of course the downside is that you are paying $900 per year to the bank!
sweetlikechutny wrote:
May 5th, 2017 1:04 pm
Depends on the ROI you want. My personal opinion is that it is not worth it.

In my case, I can have a 10kw system installed for around 24k. So I would have almost double your annual solar income, with only 4k additional cost... Sounds like your roof is not ideal for solar at this time in the program. Maybe try shopping around for better quotes.
My Heatware
Location: Toronto
Newbie
User avatar
Nov 29, 2015
46 posts
19 upvotes
Bradford, ON
So the consensus is that it's not worth putting up solar anymore? Just looking at why you wouldn't. If your using the banks money why is the investment a bad idea?
[OP]
Deal Guru
User avatar
Nov 18, 2005
10354 posts
1856 upvotes
Kingston
MoreDealz wrote:
May 11th, 2017 6:46 am
If your using the banks money why is the investment a bad idea?
1. The bank does expect to be repaid + interest so in the end it is your money (+interest)
2. If you are comfortable with using leverage to fund investments there are better risk/return opportunities.
Jr. Member
Aug 31, 2015
137 posts
28 upvotes
Scarborough, ON
There are now some additional options - yesterday Tesla began taking orders for their solar roof tiles. These may make sense if you have to get a new roof since that typically costs several thousand dollars on its own. I wonder if you can work these into the microFIT program, although they may not even be installing them in Canada by the end of the year and I think microFIT ends at the end of 2017. But it may make more sense for net metering as, depending on the size of the house and your energy consumption, it may make sense to install more than the 10kW maximum of micro FIT.
Deal Fanatic
Apr 20, 2011
7281 posts
2296 upvotes
ON
MoreDealz wrote:
May 11th, 2017 6:46 am
So the consensus is that it's not worth putting up solar anymore? Just looking at why you wouldn't. If your using the banks money why is the investment a bad idea?
It's not that it's bad, it's just not as good as it once was for the time period you're locked in. It could still very well be a good opportunity for some.
wayner9 wrote:
May 11th, 2017 10:16 am
There are now some additional options - yesterday Tesla began taking orders for their solar roof tiles. These may make sense if you have to get a new roof since that typically costs several thousand dollars on its own. I wonder if you can work these into the microFIT program, although they may not even be installing them in Canada by the end of the year and I think microFIT ends at the end of 2017. But it may make more sense for net metering as, depending on the size of the house and your energy consumption, it may make sense to install more than the 10kW maximum of micro FIT.
I have not seen efficiency quotes, but I suspect the decorator effects greatly diminish their capability. You might not exceed that 10kW after all on an average house..
Jr. Member
Aug 31, 2015
137 posts
28 upvotes
Scarborough, ON
aqnd wrote:
May 11th, 2017 6:28 pm
It's not that it's bad, it's just not as good as it once was for the time period you're locked in. It could still very well be a good opportunity for some.
You aren't locked in to anything - that isn't the issue. You get a guaranteed rate for twenty years but you can opt out at any time. The subsidy isn't as good as it used to be so the economics don't work as well as they used to.
aqnd wrote:
May 11th, 2017 6:28 pm
I have not seen efficiency quotes, but I suspect the decorator effects greatly diminish their capability. You might not exceed that 10kW after all on an average house..
It looks like the setup will generally involve some of the panels being "dummy" tiles that look the same but don't have the PV cells. Someone on the Tesla forum priced it out and said that the price for the typical house would be around $60k which is far more than asphalt shingles plus solar panels.

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