The Impact of a Cost Rebate on the Economics of Solar Power in Canada

Title: The Impact of a Cost Rebate on the Economics of Solar Power in Canada
Authors: MacDougall, Hillary
Date: 2016-12-16
Abstract: Incentives have been implemented in countries like Canada, the United States of America, and China, among others, to stimulate the deployment of solar power. Electricity from solar energy is one source of renewable energy that can reduce greenhouse gas emissions. Achieving a widespread adoption of solar projects depends on both the current subsidy for solar power and determining the ideal geographic location for solar insolation. This paper analyzes the impact of various systems cost incentives on the economics of residential solar projects in Western Canada. Eighteen cities across three provinces were analyzed for both photovoltaic and concentrated photovoltaic projects with start dates of 2016, 2018, and 2020. Additionally, this research looked at the impact of optimizing a PV system and how this impacts generated revenue. The internal rate of return (IRR) and discounted net present value (NPV) were calculated for each city under various cost incentive scenarios. The internal rate of return was then mapped for a visual estimate of the most economically viable location in which to install a solar system. This research finds that the internal rate of return for PV and CPV projects increases over time and shows the extent to which the application of additional systems cost incentives impacts this economic measurement. In order to make solar projects profitable to homeowners in Western Canada (IRR > 7%) the government needs to subsidize systems costs by 30%. The results also show that the value of the discount rate used has an impact on the net present value over time, and that the net present value generally increases over time, with the application of additional cost incentives. Moreover, the findings recommend deferring a solar project until the year 2020 where systems costs will decline and the price of electricity will rise, making solar projects an attractive investment.
CollectionInstitut de l’environnement - mémoires // Institute of the Environment - Research Papers