Economics of Solar Power in Canada – Introduction


The provincial flags, as seen from below, arranged in a semicircle on top of a wall.

Photovoltaic (PV) solar panels convert sunlight into electricity. This electricity can help power homes, businesses, and communities. Large solar farms, which have thousands of solar PV panels, can provide power to the electrical grid.

The cost to install solar has fallen by about 50% in the United States (U.S.) over the past five years, and costs have fallen in Canada as well. Falling costs are important, because they make solar power more cost competitive with other forms of traditional generation. As provinces try to increase the amount of renewables in their electricity mix, via residential, commercial, community, and utility-scale systems, it becomes important to understand the economics of solar power in Canada, especially when compared to what consumers pay for electricity from the grid.

Figure 1: Communities examined in this study.

Data Source: NRCan’s Canadian Geographical Names Database


This map shows the locations of the 21 546 communities examined in this study. Most are located in the southern half of the country, though many are spread throughout northern parts of Canadian provinces, as well as in Canada’s territories.

Open data can be freely used and shared by anyone for any purpose. The data for these graphs are available.

This study looks at the economics of Canadian solar power by calculating break-even prices for residential, commercial, community, and utility-scale solar power in almost every Canadian community.Footnote 4

  • Residential projects supply electricity to a home and are assumed to be 5 kW in size.
  • Commercial projects supply electricity to a business and are assumed to be 200 kW in size.
  • Community projects supply electricity to a small community, or to a non-profit project, and are assumed to be 200 kW in size. Importantly, community projects in ESPC are assumed to be part of a non-profit organization and pay less in taxes than a similar-sized commercial project.
  • Utility-scale projects are large generation stations assumed to be 50 MW in size and supply electricity to the grid. ESPC looks at utility-scale projects in two ways. One way is with fixed mounts, which point the face of the solar panel in a direction that never changes. The other way is with tracking mounts, which move the panel during the day to follow the sun in the sky. Tracking mounts help increase the amount of electricity a panel can generate, but are more expensive to install than fixed mounts.

ESPC’s analysis estimates break-even economics, and broad assumptions are needed to analyze such a large geographic area. In particular, ESPC made important assumptions about average homes, businesses, and community projects, like which direction solar panels will face and residential roof slopes. However, every home, business, and community is different, and real results could differ from modeled results. It is recommended that members of the public, if interested in installing residential, commercial, or community solar, speak with a professional and get a site assessment for cost, viability and performance, and site-specific breakeven economics.

Some homeowners, business owners, and community groups are not solely motivated by saving money when deciding to install a solar project. An additional motivation may be reducing their greenhouse gas emissions and environmental impact. ESPC uses basic financial methods to understand whether an owner could save money, such as considering how much money an alternative investment would make if the money used to install solar was invested elsewhere. This helps determine a breakeven electricity price at which the project owner recovers all their costs. If solar power is installed for environmental reasons, its breakeven prices will be lower than indicated here, though this may not be a good indicator of whether an owner saves money.

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