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Will a drop in price spark a solar revolution?

Solar used to be the domain of the moneyed and environmentally conscious, but with a dramatic drop in the price of panels, Albertans are installing photovoltaics like gangbusters. Is it enough to spark an energy revolution in the province?

Oct 13, 2015

by Elizabeth Hames

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“It used to be the only people who installed solar would do it for environmental reasons or to reach that label of net-zero electricity. Today, we have a lot of customers moving forward with these installations purely based on economics.” — David Vonesch, COO, SkyFire Energy
Photo courtesy Skyfire Energy

At first blush, the Zen townhomes going up this year in Cranston, a planned community in southwest Calgary, will be unremarkable. Like almost every other new starter home in the area, the designs are simple and traditional – row upon row of two- and three-bedrooms meant to sell to young families and others looking to set up in the suburbs. But look up, and you’ll see an environmentalist’s fantasy come true: solar panels on every roof. “This is really our vision coming together,” says Ryan Scott, president and CEO of Avalon Master Builder. “We’ve really worked on the conservation piece for the last number of years; building better walls, putting in better windows, really conserving energy. We’ve been waiting for the price to get to the right point. And this has come to it.”

It’s a vision that would have been nearly impossible just five years ago: new homes constructed with built-in solar panels, all for one low price, starting in the $280,000s. But after a massive solar panel manufacturing boom, and an unexpected global recession, the cost to install solar photovoltaics has dropped by half, more in some cases. Now, Scott says, the additional cost of the solar panel is akin to adding a bay window off the living room or opting for granite countertops over Formica.

David Vonesch, chief operating officer of SkyFire Energy, agrees. He says that in 2010, it cost his customers about $24,000 to install a solar power system large enough to account for half their electricity needs (about 3.5 kilowatts), and it would have taken about 25 to 30 years for the system to pay for itself. Today, he says, it’s about $12,000 to install a system of the same size. Even with rising labour costs, the system will pay for itself after 10 to 15 years. After that, the energy’s free.

“That’s dramatic,” Vonesch says. “It’s literally almost exactly 50 per cent from five years ago for a full system cost.”

The price drop is enough of an incentive to kick-start the solar industry globally and here at home. Alberta is in the midst of a mini solar boom, which is almost certainly the result of reduced prices. People who once would have seen the cost of solar as a barrier to entry are now entering the market in droves.

“It’s changed a lot,” Vonesch says. “It used to be the only people who installed solar would do it for environmental reasons, or to reach that label of net-zero electricity. Today, we have a lot of customers moving forward with these installations purely based on economics.”

By the end of 2010, there were just 80 homes producing their own solar electricity in Alberta. In July of this year, there were between 1,100 and 1,350 (there is a slight discrepancy in the numbers provided by the provincial government and CanSIA, a national solar industry association). Much of that growth has happened in the past few months. Vonesch says his company has installed more solar power systems in the past year than in the previous 13 combined. Solar Max Power, which is part of Landmark Group of Companies, has installed systems on more than 200 Landmark homes in the past four years. “That’s just blowing our minds,” says manager Kyle Kasawski.

We can thank China for that. When most of the world’s solar panels were made in Europe and Japan, global production of solar photovoltaic (PV) capacity was relatively flat. Then China entered the scene, and everything changed. Chinese companies began manufacturing solar panels in earnest in the mid-2000s, playing on their advantage of scale and access to financing. Suntech, one of China’s largest manufacturers of solar panels, went public in 2005, and became the world’s largest manufacturer of solar panels in 2013. Today, six of the top 10 solar panel manufacturers are Chinese companies.

While other industries were struggling after the 2008 recession, the solar panel industry experienced a boost. The theory goes like this: Countries that had previously been greedy for solar panels suddenly felt the need to spend their money elsewhere (stimulus plans, for example). The demand for solar panels dropped, and so did the price along with it. But remember, Al Gore’s documentary An Inconvenient Truth was still visible in the rearview mirror, and the world was working to quit its oil addiction – and all of a sudden solar was cheaper than ever. So the decrease in demand didn’t last long, and manufacturers quickly jumped in to fill the gap. Between 2010 and 2013, the world added more solar PV capacity than in the previous four decades combined. And by 2013, the world was installing solar PV capacity at a rate of 100 megawatts a day. If you were to look at it on a chart, global production of solar panels looked as glassy-smooth as a lake. That is, until 2009 when it shot up like Mount Everest rising right out of the water. Figures like that have major financial bodies and research centres such as the International Energy Agency predicting solar could be the world’s leading source of electricity by 2050.

Alberta’s solar future
But, barring any major policy or market changes in this province, the solar revolution will likely hit Alberta long after other parts of the world are basking in sun-derived electricity. While there certainly are more Albertans adopting solar technology as a source of electricity, it still makes up only the tiniest fraction of the electricity generated in the province. Moreover, the energy sector has been slow to adopt the technology, which is in itself a long story. The majority of growth in the province’s solar electricity sector has been among homeowners, and, of those, most tend to be motivated first by a desire to do good for the planet. The fact that a solar array costs a lot less than it did five years ago, that’s just the extra boost they need to take the plunge.

Mark Kelly, who recently bought a new house in the Sunset Ridge area near Calgary, is one of them. He had always wanted solar panels on his home, but the financials just didn’t make sense. He checked into it a few years ago when his kids were young. It would have cost about $15,000 to $25,000. “I guess we could have sacrificed or scrimped or whatever,” he says, “but it just wasn’t easily doable at the time.” So when his home builder, Landmark, said it could install a four-kilowatt system for $9,000 earlier this year, he went for it. Since he moved in this past March, he’s produced more energy than he’s consumed nearly every month, meaning he gets a credit on his Fortis statement instead of a debit.

But not everyone is able to generate enough electricity to make financial sense of their rooftop panels. Chuck Kiene of Edmonton recently installed a three-kilowatt system on his home, mostly to “do my part” for the planet, he says. But he also saw it as an attractive investment. However, the system hasn’t been paying off as quickly as he’d hoped.

“I feel good having them. It’s a conversation piece,” Kiene says. “From an investment standpoint, it’s really not beneficial to the consumer. More so of an ethical investment. Investing into our future and our kids’ future.”

Even Scott admits the two panels he’s installing on each of his new Zen townhomes won’t save buyers much on their energy bill. He expects that on a $75 bill, it’ll save them around $10 or $15 each month. However, Zen homeowners can install new solar panels at any time for less than $1,000 each. That would have been inconceivable even a few years ago.

Scott hopes it’s enough to spark a culture shift. “There’s still that mentality out there: We’re in an oil and gas province, so we’ve got lots of gas. We don’t need to worry about [electricity],” Scott says. “We’re hoping that by showing it and by getting it out there then people will go, ‘Oh, this is an option, and it’s not really all that expensive and it does make financial sense.’ ”

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2 Responses to Will a drop in price spark a solar revolution?

  1. What is the symbolism behind the environmental destruction evident under the panels in the photo?

  2. Stephen pelkey says:

    Wondering why chuck Kiene 3 kW solar didn’t work out as planned compared to Mark Kelly and the 4 kW system in Calgary did?
    Thank you