How Much Does Solar Energy Cost in Ontario?

Corey Lee in Commercial Solar

The province of Ontario might be popular for its spectacular lakes and bustling cities, but with almost 300 sunny days every year, it also has enormous potential to offset your energy costs when you go solar. However, when choosing solar, the first and arguably most important question anyone in the province has is “How much does solar energy cost in Ontario?”

In Ontario, the cost of solar for every watt installed is about $2.7-3.4 for residential customers but can be as low as $1.6/W for large-sized solar power systems installed on commercial facilities. As for the total cost, it depends on your energy consumption and a few other factors. Let us take a look at all these factors.

Which Factors Affect the Price of a Solar Power System? 

Energy Consumption

The cost of a solar power system depends on its size, which depends primarily on the energy consumed. For example, consider a commercial facility that consumes 2000 kWh of energy per day. The annual energy consumption would thus be 2000 kWh x 365 = 730,000 kWh. Considering Ontario’s potential of generating 1166 kWh/kW annually, the system size required in this case will be:

730,000 kWh ÷ 1166 kWh/kW = 626 kW

For a 500 kW system, considering a typical cost of $1.6/W, the total cost would then be 500,000 W x $1.6 = $800,000. For someone who needs a 1 MW system, the price per watt might drop a little. Suppose it drops to $1.5/W, the total system cost would then be 1,000,000 W x $1.5 = $1.5 million.

Households, on the other hand, consume an average of 9000 kWh annually, according to the Ontario Energy Board. Depending on the location, a typical household would thus need a 6.5 kW or 7 kW system. Considering the average cost of $3/W for residential systems, a 7 kW plant would need about $21,000.

Quality of Equipment

Solar equipment worldwide is available at a considerably wide range of prices. For instance, your installer can opt for solar panels from a non-reputed, relatively new solar company for a lower price point which will reduce the likelihood of the system performing reliably over 3 decades.

On the other hand, using high-quality equipment from reputed manufacturers who have been in business for many years will mean a slightly higher price tag, but it also ensures long life and excellent performance. 

Quality of Job/Installer

A building’s energy consumption and equipment cost are certainly the prime factors in how much a system will cost, but does the price of solar vary with installers? It certainly does. Installing a full-fledged solar power system requires paying attention to a large number of things in a complex sequence of technical and non-technical processes.

Trustworthy, experienced solar installation companies with a proven track record, such as Green Integrations not only choose top-quality solar equipment but also deploy a team of highly experienced professionals who know every single step of the process, providing peace of mind through precision in installation as well as service.

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Complexity of Job

We saw some numbers for the average cost of solar power systems. Statistically, however, as the saying goes – “on average, nothing is average”. Even for the same system size in kW, the same quality of components, and the same installer, there will be cost variations based on how complex the job is.

For example, in the northern hemisphere, solar panels produce the best results when installed facing south. If you have a north-facing roof, and you decide to have your installer modify the mounting structure to make the panels face south despite being installed on the northern side, there will be added expenses in the designing, manufacturing, and installation of the new structures.

There can be several such factors that complicate the system design, adding to the total cost of the plant.


There’s no debate now whether solar panels are good for the environment, and governing authorities nationally as well as globally are putting several incentives in place for faster adoption of this green technology.

But exactly what solar incentives does Ontario provide? Over time, the province has launched a few different financial incentive schemes. However, with dropping prices of solar technology and subsequently faster adoption, most of the incentives are now closed.

However, businesses can still avail the Federal Tax Provision for Clean Energy Equipment to fully expense their solar system. This means that although you won’t get a direct cost reduction, you can still enjoy some savings in your coming year’s tax returns thanks to your solar PV system.

Besides the financial incentives, solar customers in Canada are also eligible for the net-metering program, which allows solar power plants to be connected to the grid in order to send excess energy into the grid which is stored as credits, allowing consumers to use that energy when needed. This eliminates the cost of batteries in pretty much all cases, reducing the initial investment by a significant portion.

Purchase Model

A better indicator of cost for any commodity or equipment is the total cost of ownership, rather than the price tag it comes with. For solar PV systems, particularly, the purchase model can strongly affect how much you will end up paying (and more importantly, saving), over the lifetime of the system.

A system purchased by availing a bank loan will cost more and save less than one purchased cash. A leased system might cost less upfront but costs the highest overtime and saves the least amount of money.

Canadian provinces are also beginning to offer soft loans under the Property Assessed Clean Energy (PACE) program, and Ontario might soon launch the same. PACE financing allows you to cover the entire upfront cost of your solar system with a $0 down, long amortization period, and low-interest rate. For homeowners, there is also the Home Energy Loan Program (HELP), which offers low and fixed-interest loans with long amortization periods.

Payback Period – A More Important Parameter

There is no doubt that the cost of a system is an important parameter when deciding to go solar, but in most cases, just the price tag does not tell the whole story. There is another important parameter that serves as a better indicator of whether going solar makes sense – the payback period. 

But what is the payback period? It is the amount of time required for any investment to pay itself off, and the point when actual savings/profit begin. For solar, it can be denoted by the following equation: 

System cost ÷ Value of energy produced = Years to payback

The payback period for any system primarily depends on the existing price of electricity. The higher the price per kWh, the faster the payback. Regardless of how much a system costs, a faster payback is an excellent indicator of the system’s value. 

The payback periods for solar power systems in Ontario, not considering rebates, vary from 7 years to over 10 years. Interestingly, the one case where your payback begins immediately is when you opt for a payment plan instead of paying up front. In this case, your savings begin from the first month, since your payment amount for the solar power system is lower than your monthly expense on grid power.

Summing it Up

Ontario ticks off most, if not all of the factors that make going solar lucrative. It is one of the best provinces when it comes to solar resources – the average solar system here can produce 1166 kWh of electricity per kW of solar panels per year.

At less than $2 per watt for commercial (larger) systems and about $2.5 per watt for residential systems, the prices in the province are not much above the national average. In many places, solar power systems are also known to increase the value of the building, whether residential or commercial, so you don’t have to worry if you are unsure about owning/using a building throughout the life of a system.

For businesses, a bonus benefit of going solar is being able to improve their ESG score. With rapidly increasing awareness about sustainable investments, getting a solar power system for your company certainly upgrades your ESG standing.

Among the few things to ensure when going solar are choosing a reliable installer with a proven track record, top-quality solar equipment, and avoiding the lease model. As far as possible, avoid aiming for the cheapest price since good quality solar power systems last nearly three decades without any serious issues.

Ultimately, whatever the price of solar for your particular facility/home, in most likelihood, solar is going to make a remarkable financial case!

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