Area homeowners considering a transition to solar certainly acknowledge the good they will do for the environment. They also realize that they will contribute to Alberta’s plan to achieve a carbon-neutral economy by 2050. Further, they appreciate the fact that solar will provide them with a reliable and secure form of energy for their households. The most striking revelation of transitioning to solar is the tremendous cost savings solar installations will deliver on utilities.
Traditionally, all of the above has given BLDG clients enough incentive to move forward with the transition. However, in the last 2 years especially, we hear a lot of enthusiasm from clients who are keen to generate direct and indirect “income” from retrofitting their property with a residential Solar PV system. At the earliest stages of a project, we get asked; how do I make money on solar as a homeowner? Read ahead to find out.
Direct and Indirect Ways a Transition to Solar Energy Can Make Edmonton and Northern Alberta Homeowners Money
I. By Selling Carbon Credits Generated by Residential Solar
The first way is a direct income-earning method. Carbon credits (aka carbon offsets) are tradable certificates that represent a one-tonne reduction in, or removal, of carbon dioxide or carbon dioxide equivalents (CO2e). Carbon credits can be generated from your upcoming solar system installation and subsequent usage. These carbon credits can be sold into Alberta’s compliance market under various programs. For details on how many carbon credits your new system will generate, what the credits will be worth, and where to sell them, click here.
II. Cost Savings and Alberta Incentives
While it varies on your home’s location, size of property/roof, occupant usage, and type of system (view details), the average homeowner saves about $1,500 per year on energy expenditure when they switch to solar in North America. Since Edmonton gets significantly more sun than most places in Canada, we see our customers save closer to $3,000 per year. Looking at Alberta rules, larger residential systems can deliver energy surpluses back into the grid, providing owners with extra value generation (summer rates of 30.0 ¢/kWh or winter rates of 12.5 ¢/kWh). Learn more about Solar Club here.
More ambitious homeowners may even contemplate redirecting the savings and additional value generation into other income-generating investments.
Extra Tip: Take advantage of provincial and federal grants to reduce your capital expenditure on solar installation and increase your income earning potential.
III. Reinvesting Funds Freed-Up by Interest-Free Retrofit Loan
As a part of Canada’s long-term strategy to reduce carbon emissions, the federal government has launched the Greener Homes Retrofit Loan. It is an interest-free loan that allows homeowners to access between $5,000 and $40,000. Homeowners enjoy a 10-year timeline to repay the loan. Given that you plan to invest in solar in the first place, you can use the loan to pay for your retrofit, and the cost savings from the your energy consumption to pay back the loan. Any funds that you have saved for the project could be reinvested elsewhere.
IV. Grants and Tax Incentives
If you were an early bird, last year the Feds were giving homeowners an additional $5,000 grant on top of the interest-free loan to use on your project or at your discretion. Key takeaway is to research the available government grants and incentives that can pad your wallet nicely. Secondly, even though you may have missed out on the Greener Homes Grant, it doesn’t mean that you won’t qualify for future programes that may come out in the next 24 - 48 months, whether it is municipal, provincial or federal.
If you are a business owner who uses your residence as a primary place of business, you can also get a nice tax deduction for solar installation and maintenance. Learn more about tax incentives here.
V. Increased Equity and Resale Value
Research shows that solar panels generally increase the resale market value of a home by as much as 4 percent, which translates into thousands of dollars. Although, in a city such as Edmonton (the second sunniest city in Canada) this percentage can be even greater given that dramatically reduced energy expenditure is a major incentive for new buyers. If you plan to sell your property within a few years of solar transition you will make money from your investment in solar upon resale. That being said, you can realize the benefits even sooner if you take out a home equity loan based upon the forthcoming increase in property value. The home equity line of credit (HELOC) can be used to reinvest in income-earning investments that generate a return that is higher than the interest paid on the HELOC.
VI. Increased Occupancy Rates on Rental Properties
This solar money-maker applies to property owners who intend to place the home on the long term or short-term rental (STR) market. Logically, long term renters will be attracted by energy savings which will help increase occupancy rates and ensure a more consistent stream of rental income. Meanwhile, those of you who are in possession of a Residential Rental Accommodation (Short-Term) business license in Edmonton can also enjoy more consistent income by outfitting the STR with solar. How? Research conducted by Airbnb has found a 141% increase in bookings for eco-friendly homes. Travelers desire to reduce their carbon footprint, and seek out STRs that are more energy efficient. Your solar transition therefore becomes an effective marketing tool to attract STR renters, increase bookings and occupancy rates, which equates more money.
If making money is a primary factor for adding solar to your property, we can help you plan, select and install a PV system that will help you generate electricity in the most optimized way. If your home is in the Edmonton or Northern Alberta area, contact BLDG Electric for a consultation.