Pioneer Solar: PV System For Free?

I received a flyer from Pioneer Solar in the mail the other day which claims to help people get a solar system installed on their house, farm, or business for free. Sounds too good to be true, right?

Well, like most things there's good and bad points about it and what might be a good deal for one person might not for another.

Here's how it works:

The Ontario government recently started a program where homes and businesses / farms that install solar or wind power will be paid a guaranteed rate per kilowatt for a 20 year contract.

What Pioneer Solar does is install the PV system for "free" but for the first 10 years, the money you're paid by the government for the electricity goes to Pioneer Solar.  You get to keep the revenue from the 10 years left in your contract with the government though.

The example in the flyer states:

Solar System Earnings / Month = $840
Solar Finance Payment               = $780
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Initial Monthly Earnings            = $60
Eventual Monthly Earnings       = $800 (after 10 years)


They're promoting it as an investment that's better than stocks.  One way of looking at this is that you'll eventually be earning a monthly income with no initial investment.

However, using the figures from the flyer this means that you'll have paid over $93 000 for the PV system.

From all the research I've done I estimate that a PV system large enough to power a modern but energy efficient home, would cost between $25 000 and $35 000 to professionally install.  If you do it yourself it's could be half of that and you don't need Pioneer Solar to apply for a 20 year government energy contract.

Another downside is that all this energy produced goes to the grid and doesn't isn't actually used for your home. I assume however that once you own the solar system after 10 years, you can turn it into a hybrid system to power your house. It's possible however that the 20 year government contract may disallow this (I've written Pioneer Solar and email to clarify this).

Despite those downsides, you're still getting a PV system for "free" and making an income for at least 10 years from selling the energy.

For those who are looking to go off-grid and be a self-sustainable as possible, the prospect of waiting 10 to 20 years to use the electricity might not be worth it.  Though the income it would provide would go a lot towards becoming independent.

If you're looking to help the environment and make some money however it might be a great idea.

I know if I owned a property right now suitable for such a PV system, I'd be giving them a call.

Home Energy Independence as Retirement Investment

Let's say you've paid of your debts and you've freed up some money. What should you invest it in?

Mutual funds, RRSPs, bonds, stocks?

All those things have some risk involved and the least risky investments have the poorest rates of return. Furthermore, when you invest in these you're handing money over to somebody else to manage it for you.

Financial planners, fund managers, the companies you hold stock in; in some way you become dependent on them.

I'm not knocking these types of investments.  For some people they may be an excellent choice. However, there is an alternative:

Invest in your own home's ability to provide for you now and in retirement.

I'm sure we're all familiar of the many ways to do this so I won't go into too much detail; but it basically comes down to either conserving energy or generating your own.

Fortunately the most inexpensive things you can do which give the quickest "return on investment" are simple energy efficiency and conservation things like installing compact fluorescent lightbulbs, turning down your thermostat and installing insulation.  On the more expensive side of this you can replace older appliances with more energy efficient ones.

The less energy you use, the less your utility bills will be, the less money you'll need in retirement. Makes sense, eh?

Once you've maxed out your energy efficiencies you're ready to begin investing in actually producing your own electricity.  Now instead of just reducing the money going out to utilities you'll be living for "free" and maybe even making some money;  "Green energy" actually can be an investment!

Many people think things like solar panels and wind generator are too expensive for the average person, but how many people do you know who buy brand new $40 000 cars or pay hundreds a month to credit cards or RRSPs?  If you can afford those, you can afford to produce your own electricity.

Plus unlike cars or investments that can depreciate, things like solar panels will actually decrease your utility bills (possibly to zero), increase the value of your home and depending on which province you're in, give you an income by selling energy to the electrical grid!

Once you've paid off the cost of equipment (2-15 years depending on what you've installed) it will still continue to provide energy for many years (solar panels can last 25-40 years).  If you would normally spend $200 a month on heat and electricity a month, producing your own energy would be equal to a $200+/month "return on investment".

You don't have to do this all at once either.

For example, our budget may not be able to provide for enough solar panels to generate all our electricity but I can buy an extra panel or two each year.  Eventually I'll reach a point where all my power is provided for by solar!

Now that I've covered money and shelter, tomorrow I'll talk about what to do if you plan on eating during retirement.