Solar energy: Is it commercially viable in Canada?

Many pundits have weighed in on solar technology as an alternative energy source – from the nay-sayers to the die-hard supporters. Outside of the merits of solar as a renewable source of electricity, however, is the question of its economic viability.
The adoption of solar power in Canada lags behind many other countries because of historically low energy prices. Proponents of this renewable source of power would like to see better communication between federal, provincial and municipal bodies to increase capacity. (iStock)

It's not hard to see the "green" benefits a solar panel has over a smokestack, but there are still lingering questions when it comes to determining whether solar is economically viable as a long-term means of supplying electricity to Canada's communities.

A recent report from the Canadian Solar Industries Association (CanSIA) in Ottawa, Solar Vision 2025, examines that question based on various scenarios for commercial use of the technology: Aggressive adoption, medium and "not as much as we’d hoped," according to CanSIA president Elizabeth McDonald.

The uptake of solar power in Canada over the next decade will depend on a large number of variables, from financial support to technology costs and infrastructure needs, McDonald notes. "If everything falls into place, solar could conceivably represent 20 per cent of the new electricity supply generated in the next 20 years."

The key is getting everything to fall into place smoothly.

Growing pains

"The biggest issue is getting people on board," she says. "Everyone — including government — is blissfully unaware of the energy future. We’ve been energy-rich for a long time. But we’re paying a price for that [with our health]."

'The real issue is the hunger for oil and gas.'—Elizabeth MacDonald, CanSIA

That's because Canada's electricity demands have traditionally been met, at least in part, by burning coal and other fossil fuels that generate pollution. But changing to other sources of power isn't easy.

For one thing, Canada is not considered as ready as other jurisdictions for widespread adoption of solar power — and not just because it's in a northern region that gets fewer hours of sunlight in winter months. It's also because energy costs here are relatively low compared to those in other countries, so solar represents a much more expensive option for Canada, she notes.

Policy support from government in particular is lacking, which means solar is forced to compete with a heavily subsidized fossil fuel industry. According to the CanSIA report, on a global basis in 2009, renewable energy received $1 in government support for every $5 to $6 given to conventional energy.

McDonald says that in Canada there are definitely things that need to be worked out at the federal, provincial and municipal levels to help spark the widespread adoption of solar. "Canada seems to lag in the area of getting it to all work together. It’s perceived as a battle with oil and gas — but it’s not. Solar uptake will not replace Alberta’s position as the country’s largest provider  of oil and gas.

"The real issue is the hunger for oil and gas  will soon surpass what [supplies] we have, so we need to conserve and find alternatives before we run out," she says.

The Sarnia Solar project is a 950 acre site in Sarnia, Ont. with a peak generating capacity of 80 MW, making it the largest photovoltaic facility in the world ((Dave Chidley/Canadian Press))

The problem is that each region of the country is having a different conversation when it comes to solar technology, she adds, rather than developing a cohesive policy and approach to using it. "In Quebec for example, Hydro Québec plays a very important role. Everyone needs to work together to decide the appropriate mixed energy supply going forward."

She commends initiatives such as the Ontario Power Authority’s FIT (feed-in tariff) program, which is focused on encouraging and supporting alternative energy adoption.

"B.C. has also put out a Clean Energy [program]; and Alberta and Saskatchewan are showing interest, in particular with the agricultural community."

 At what cost

By the numbers: Solar power in Canada

12,800 – Number of homes that can be powered by Enbridge's solar farm in Sarnia, Ont., the largest photovoltaic solar power plant in the world. 

2016 – Year when Canada's second major commerical solar farm is scheduled to begin operating. The private farm, owned by Samsung, will be located in Ontario.

15% – Percentage of Germany's electricity derived from solar power. The country is a global leader in solar generation, and by 2020 solar is expected to supply 30 per cent of that country's electricity needs.

29 million – Number of homes that use solar power around the globe. (David Suzuki Foundation)

Atul Mahajan, president and CEO of Oshawa Power & Utilities Corp., agrees the move to renewable energy needs government commitment and resources to get to where it needs to be. "Green lies at the heart of what we want to do as a society. But it also means inconvenience and cost."

The solar industry has its work cut out for it, he adds. "Solar is happening everywhere around the globe, but you have to bring it to where it’s needed. That requires investing in infrastructure, including solar farms which take up a lot of space, and additional grids to deliver the power to where people live and work."

He estimates that a 10 megawatt (MW) solar farm could service 2,500 to 3,000 homes. However, that also requires four to five acres of land per megawatt produced. "Imagine what acreage you need to produce 10 megawatts; that’s a significant chunk of land."

Ask Mahajan if it’s feasible, however, and he says: "It absolutely is. Right now solar is not cost competitive. But the price of generating solar power, as well as the equipment and installation costs, is coming down. There are already places in the world where solar costs are nearly comparable to other forms of power.

"In Canada we’re blessed with hydro, which does make it hard to compete right now," he adds. "But as an industry, we have to include renewable energy into the mix."

Andrew Kinross, director for energy with Navigant Consulting in Boston, says solar affordability is realistic within the next 10 to 15 years.

"Not too long ago the capital costs for large-scale, 10 megawatt solar plants were $7 per watt. They are now $3.50 per watt. It’s conceivable that we could get to $2 and even $1 per watt, which would translate into about 10 cents per kilowatt-hour," he says. "Getting cost to $2 or $1 per watt could play a big part [in solar adoption]. There is actually a fair amount of optimism that could be achieved."

But he notes that some important technology issues need to be solved first — and manufacturers will need to scale up and develop a track record. "In theory we should see lower costs for new technologies happening over the next three to seven years."

Some jurisdictions get as much as 20 or 30 per cent of their energy from the Sun. Proponents of solar power say the technology will become more efficient, and therefore cheaper, in the future. ((Darryl Dyck/Canadian Press))

Potential technology innovations include thinner silicon wafer designs, increased cell efficiency and thin film technology.

Cost efficiencies can be found through more streamlined processes for approving and building plants. 

Kinross adds that despite the fact that solar is one of the most expensive generation technologies to develop, "On the flip side, it’s the one that the cost is being reduced the fastest. If we stick with it, it will become competitive with conventional sources."

A sunny future

Mahajan and others say that despite the challenges, the future for solar is bright.

"Some jurisdictions in the world are getting 20 to 30 per cent [of their electricity] from solar power. We’re not there yet. But we can get there if the various proponents — homeowners, utilities, investors, power producers and government — come together. The majority of utilities look at this as a game-changing event. Solar is going to be part of the solution, not just an interesting fashion statement."

After all, he says, we must remember that solar is a relatively immature technology.  "When we can get economies of scale, we can take cost out of the system. All of these things are going to have an impact in reducing the costs. Slowly but surely we will get there."

People should also take into account that technologies such as coal, gas and nuclear did not happen overnight, adds Kinross. "It took decades to get to where they are at. Solar will chip away at that, and before you know it, it will be a significant piece of the market share."