By: Eduardo Alejandro Quintos (York University)
The Markham Convergence Centre (MCC) presented two possible assessment sites for the implementation of a solar installation project: the parking lot and the rooftop. The rooftop of the MCC provided the best option for the installation as the Ontario Power Authority grants rooftop solar projects a guaranteed price of 80.2¢ a kWh for the duration of the microFIT program (“OPA” n.d.). Through our assessment, the most viable capacity for the MCC’s solar installation project would fall under the requirements stipulated to create a FIT program and rather fall under a microFIT installation. We have decided to create a single solar installation with three financing options using a Canadian manufacturer using the same inverter to present very reasonable options for the MCC to consider. The project will be using the same inverter as the inverter we researched provided the most efficiency with an applicable capacity factor along with the least miscellaneous losses. The proposed installation is rougly 9.2 kW in size, just under the 10 kW threshold for a microFIT installation.
The manufacturer we decided to use was Canadian Solar, headquartered in Guelph, Ontario Canada fulfilling the 60% Canadian production/manufacturing requirement outlined by the OPA (“OPA” n.d.). As a group, we decided to utilize their mono-silicon 200 W capacity modules for both effectiveness and aesthetic. The amount of modules that would be employed would total at 46 units to meet with the 9.2 kW capacity recommendation. These modules were best suited for the MCC because of its rooftop size and orientation, and the solar potential for the area.
Using RETScreen to compile a financial analysis, the group was able to present three possible financing possibilities for each manufacturer, while including the financial parameters also. For simplicities sake, the information regarding financing will be displayed in a table:
| Financial Options | Option 1 | Option 2 | Option 3 |
| Inflation Rate (%) | 0.0 | 0.0 | 0.0 |
| Project Life (yrs) | 20 | 20 | 20 |
| Debt Ratio (%) | 10 | 25 | 50 |
| Debt Interest Rate (%) | 7.50 | 8.00 | 9.00 |
| Debt Term (yrs) | 7 | 7 | 7 |
Table 1. Financial Parameters for Canadian Solar
The terms in column one are defined as such according to RETScreen: Inflation rate – in referral to the national economy, stipulates the increase in price of commodity over a given period of time relative to the purchasing power of the domestic country’s currency. For the purpose of our assessment and the requirements within the OPA microFIT contract, inflation rate does not apply to our analysis. Project life outlines the length of the entire project, again under OPA guidelines; the maximum time allotted for microFIT contracts is 20 years. Debt Ratio refers to the percentage at which the customer borrows from any financial institution to initiate the proposed plan. Debt interest rate is the interest rate calculated by the financial institution on the loan taken by the customer, and lastly the debt term, which identifies the length of time it takes the customer to pay off financial obligations and begins to make money on the installation. Following the financing options is the actual price of the installation itself. As we do not wholly know the exact price of the modules, along with the price of the inverter, and installtion costs, we have made an educated guess based on the equation: cost per kWh produced (80.2¢) X capacity of installation (9,200 W) = total cost of program ($73,784.00).
Utilizing RETScreen and plugging these financial parameters into the program helps create cumulative cash flow graphs to showcase the length of time it will take to pay back outstanding financial debts, and the amount of money over the entire length of the contract it will generate. The following graph outline these possibilities:
Graph 1. 10% Financing (Option 1)
Graph 2. 25% Financing (Option 2)
Graph 3. 50% Financing (Option 3)
The three financing options provides excellent feedback and information hopefully garnering some inclination by the MCC. All three options present reasonable, if not very exciting financial results that would hopefully sway the MCC into implementing a solar installation project. Based on the data gathered and adhering to the requirements outlined by the OPA, the most suitable option that will generate the most amount of money in the least amount of time would fall under option 1 or debt financing at 10%. This would mean the MCC would have to pay up front roughly $66, 405.60. This would allow the MCC to pay off its financial obligations in as little time as 8 years total – meaning paying off the total cost of the installation itself along with the loan acquired through the bank. The remaining 12 years would generate all income of the MCC reaching plateau at roughly $110,000.00. RETScreen is an excellent tool to utilize and create a financial analysis for any renewable energy installation MCC included. This program helps identify certain barriers that may be apparent in the initial stages of implementation. By creating this financial assessment, the MCC now has options available to refer towards before initiating the program.
Work Cited
Natural Resources Canada (2004). RETScreen International: Clean Energy Decision Support Centre. Ottawa: Minister of Natural Resources Canada.
Micro Feed-In Tariff Program Overview. (n.d.) Retrieved March 26, 2012, from http://microfit.powerauthority.on.ca/sites/default/files/microFIT%20Program%20Overview%20v%20%201%206%20FINAL%20.pdf
microFIT Price Schedule. (2010, August 31). Retrieved March 26, 2012, from http://microfit.powerauthority.on.ca/pdf/microFIT-Program-price-schedule.pdf
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