Canadian Finance Blog

Posted: 17 Nov 2011 02:00 AM PST

As an admittedly ~~cheap bastard~~ frugal guy, I cringe at opening my bills each month. Sure, I like having things like running water and heat, I just don’t like paying for them. Even though utilities are incredibly cheap, I still don’t like paying. Imagine all the money I’d have if I didn’t have to pay utilities. I could spend it on all sorts of other extravagances- like potato chips. Have I ever mentioned how awesome chips are? Oh, only every minute? Never mind then.

We’ve established my hatred of paying for utilities. How can you avoid paying for them? Well, beyond illegally squatting in your neighbour’s basement, there’s no way to get free utilities. But what about minimizing them?

Enter Solar Power

One of the ways that’s become popular is buying a solar power system for your home. Especially if you live in a warm climate with a lot of sunlight. Before you go down to the local Canadian Tire and start buying solar panels, is the idea even feasible? Just how much will it cost? This blog post will attempt to answer some of those questions, and will probably fail. Don’t say I didn’t warn you. Keep in mind that I have zero practical experience in this arena, nor do I even know anyone who is doing this. With that out of the way…

A solar power system has two components, the panels themselves and the battery system. In simplistic terms, the panels convert the sunlight to energy, where the battery stores it, since your house will use energy even when the sun isn’t shining. The panels are installed on the roof commonly, meaning you might have to replace your roof before even embarking on the project. Let’s assume your roof is relatively new, so onto the next step. How much does it cost to install?

Cost of Solar Power

Well, this is where it gets murky. Canadian Tire has a 85 Watt panel currently on sale for $600. An 85 watt panel will produce 85 watts per second, which is just enough to… power a 60 watt light bulb with a little room to spare. Doh. You’re obviously going to need more than one.

According to this article (easily the most useful one I found on the topic) having 720 watts worth of capacity will mostly power a normal house. 9 Canadian Tire panels would give you 765 watts, at a cost of $5400. As is the nature of our economic system, I checked around, and the cheapest I could find after my exhaustive search (read: 3 minutes on eBay) was about half that much from a wholesaler out of Montreal.

That’s just the cost of the solar panels. If you’re a relatively handy guy, you’ll probably be able to install them yourself. If not, you’re looking at maybe $500-$1000 for installation. Once they’re installed, you can either install a battery system to draw on when it’s dark, or simply draw from the existing power grid system at night. You’d sell your excess power back to the grid during the day (often at attractive government mandated prices) and then draw off the grid at night, meaning the cost would approximately be a wash.

There are also tax incentives available for home owners who take the initiative to install a solar power system. In Ontario, the provincial government is willing to let a homeowner write off the HST paid for the system, a 15% savings. Many other provinces have similar incentives for solar power. The federal government is willing to kick in $500 assuming the components of the system are on their approved list. We’re not talking huge amounts of money here, but a few hundred bucks here and there help make the system more economical, which is the real reason we care.

Should You Bother?

Understandably, you’re probably a little nervous about this. Solar power has come a long way since you were first amazed by a solar powered calculator, but is it feasible for your energy needs? I’m not going to pretend this piece is the penultimate authority on the subject. However, the cost seems downright reasonable. Just how much money can you save?

Assuming the system costs $7500 to install (a generous estimate, to be safe) and you pay $100 in power like I do, your investment in solar power pays for itself in a little over 6 years. Considering the solar panels have an expected life of 25 years, you could have next to free power for 19 years. As demand for energy continues to go up, the price of said energy will surely increase as well, meaning the return becomes even more attractive in the future.

What’s most exciting about this concept is that solar energy isn’t very far away from being a mainstream source of energy, even in a cold place like Canada. A key part of thinking like a wealthy person is not being dependent on others. I don’t know about you, but I’d enjoy the freedom of no longer having a power bill. As long as the numbers make sense.

How To Screw The Power Company originally appeared on Canadian Finance Blog on November 17, 2011.