How Long Does Solar Take to Pay for Itself in Ontario? Net Metering vs. the HRSP Rebate

The payback periodThe length of time it takes for hydro bill savings to equal the upfront cost of a solar system. is the time it takes for your savings to cover the upfront cost. The basic formula is:

Payback = Total System Cost ÷ Annual Hydro Bill Savings

For example:

• Solar system cost: $25,000
• Annual Hydro Bill Savings: $2,500
• Payback periodThe length of time it takes for hydro bill savings to equal the upfront cost of a solar system. = 10 years

At that point, you break even. Every dollar you save after that is a return on your investment, minus any maintenance or equipment replacement.

You currently have two pathways for going solar in Ontario: net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months. or the Home Renovation Savings Program (HRSP). Each one generates savings differently, and that changes the payback periodThe length of time it takes for hydro bill savings to equal the upfront cost of a solar system..

Thousands of Ontario homeowners already use net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months., according to OEB net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months. data. With net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months., you send excess solar electricity to the grid and receive credits you can use at night or in the winter. On a June afternoon when nobody is home, and the panels are producing more than the fridge and a few lights use, the surplus flows to the grid as a credit you draw on later. For how credits work month to month, see Understanding Your Bill Under Net MeteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months..

This means you can size your system around your annual electricity use, rather than how much you use when the sun is shining. As a result, net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months. economics are fairly consistent across homes. If you use 6,000 kWh per year, you might install a 5 kW system. If you use 12,000 kWh, you might install a 10 kW system. The larger system costs more, but it also saves more each year.

This is why net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months. payback periods tend to fall within 12 to 17 years, even across homes with widely different electricity use.

Several factors can push paybacks higher:

Higher system cost caused by:

• Long travel times for projects located more than an hour outside a major city
• Required electrical upgrades
• Specialty roofing materials, such as cedar shakes or clay tiles, that require custom mounting hardware
• Very steep roofs that require additional safety equipment or scaffolding
• Flat roofs that require specialized racking systems

Lower solar production and savings can result from:

• Shading from trees or neighbouring buildings
• Suboptimal roof orientation, particularly north-facing roofs
• Lower electricity prices

These factors affect the economics, but for a straightforward installation with good solar exposure, net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months. paybacks are fairly predictable.

The economics of the Home Renovation Savings Program are different. With the HRSP, you receive an upfront rebate for installing solar and battery storageA system that stores solar electricity for later use, typically during power outages. Batteries are optional and are not required for net-metered solar systems.: $1,000 per kW up to $5,000 for solar, and $300 per kWh up to $5,000 for a paired battery. For the full list of incentives, see Government Financing and Incentive Programs.

However, if you accept the rebate, you cannot participate in net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months.. Any excess solar electricity you export to the grid earns no bill credit. This changes how the system saves you money.

Instead of looking mainly at how much electricity your home uses over the year, you also need to consider how much solar electricity your home can use when it is available. A battery stores some excess daytime production for later, but once the battery is full and your home's needs are met, additional solar production has little financial value.

The HRSP rebate is capped at 5 kW of solar and about 16 kWh of storage. Installing additional solar or battery capacity beyond the rebate cap generally makes little financial sense.

If your home's electricity use is low, even a system sized to maximize the rebate may produce far more electricity than you can use. You receive the same rebate, but more of the system's production goes to the grid without compensation.

If your consumption is high, the picture changes. If you use a lot of electricity throughout the day (central air running all afternoon in July, for instance), a much larger share of the solar production goes directly to your home or into the battery. More of every kilowatt-hourA unit of energy that measures how much electricity is produced or consumed over time. This is what you see on your hydro bill or inverter monitoring app. generated translates into actual hydro bill savings.

HRSP payback periods range from less than 10 years for high-consumption households to more than 25 years for lower-consumption homes.

Most Ontario utilities show a 12-month electricity total on your bill or online account. Use that number to find the example closest to your home.

In the examples below, "solar electricity offset" is the system's annual production divided by your annual electricity use. An offset of 100% means the system produces as much electricity over the year as the home consumes.

Net MeteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months.

• System size: 5 kW solar
• Installed cost: $15,000–$20,000
• Annual hydro bill savings: approximately $1,200
• Solar electricity offset: 100%
• Estimated payback: 13–17 years

A 5 kW system reasonably matches this home's annual electricity use. Net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months. turns excess summer and daytime production into credits the home draws on at other times.

Home Renovation Savings Program

• System size: 5 kW solar + 15 kWh battery
• Installed cost: $20,000–$28,000
• Annual hydro bill savings: approximately $900
• Solar electricity offset: 100%
• Estimated payback: 22–30 years

Despite the HRSP rebate, this household does not use enough electricity to fully use the energy the system produces. Once the home's immediate needs are met and the battery is full, excess production exported to the grid provides no additional savings. The upfront rebate does not offset the lost net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months. credits.

Net MeteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months.

• System size: 10 kW solar
• Installed cost: $25,000–$30,000
• Annual hydro bill savings: approximately $1,900
• Solar electricity offset: approximately 100%
• Estimated payback: 12–16 years

The net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months. system is now twice as large, but the home also uses twice as much electricity. The higher upfront cost comes with greater annual savings, so the payback periodThe length of time it takes for hydro bill savings to equal the upfront cost of a solar system. remains similar.

Home Renovation Savings Program

• System size: 5 kW solar + 15 kWh battery
• Installed cost: $20,000–$28,000
• Annual hydro bill savings: approximately $1,400
• Solar electricity offset: 50%
• Estimated payback: 14–18 years

The HRSP system size hasn't changed, but the home's electricity consumption has. The home now uses or stores more of the solar electricity rather than exporting it to the grid. Annual savings increase and the payback periodThe length of time it takes for hydro bill savings to equal the upfront cost of a solar system. improves.

Net MeteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months.

• System size: 15 kW solar
• Installed cost: $33,000–$40,000
• Annual hydro bill savings: approximately $2,700
• Solar electricity offset: 100%
• Estimated payback: 12–16 years

With net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months., the system scales to match the home's higher electricity needs, provided there is enough roof space. Ontario caps net-metered systems at a 12 kW ACThe type of electricity used in your home and by the grid. Solar panels produce DC electricity, which must be converted to AC by an inverter before it can be used in your home. inverterA device that converts DC electricity from solar panels into AC electricity for use in your home or export to the grid. Every grid-connected solar system requires an inverter., so this 15 kW DCThe type of electricity produced by solar panels. DC power only flows in one direction and must be converted to AC by an inverter. solar arrayThe complete group of solar panels (modules) installed together on a roof or ground-mount that work as a single system to generate electricity. pairs with a 12 kW inverterA device that converts DC electricity from solar panels into AC electricity for use in your home or export to the grid. Every grid-connected solar system requires an inverter.. The system is larger and more expensive, but it produces more electricity and saves more each year, so the payback periodThe length of time it takes for hydro bill savings to equal the upfront cost of a solar system. stays similar to the smaller examples.

Home Renovation Savings Program

• System size: 5 kW solar + 15 kWh battery
• Installed cost: $20,000–$28,000
• Annual hydro bill savings: approximately $1,900
• Solar electricity offset: 30%
• Estimated payback: 10–15 years

The HRSP system remains the same size, but the economics improve as household electricity consumption increases. At 18,000 kWh per year, the home uses or stores far more of its solar production directly. Less goes to the grid without compensation, and annual hydro bill savings rise. For a high-consumption home, the HRSP payback periodThe length of time it takes for hydro bill savings to equal the upfront cost of a solar system. can be far shorter than for the same system on a lower-consumption home.

These three homes are illustrations, not cutoff points. Actual results depend on when you consume electricity, solar production, battery operation, installation cost, and several other factors. The examples show a fundamental difference between the two programs.

With net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months., you can generally scale the solar system to match your annual electricity use. If you use more electricity, you install more solar but also save more. This is why net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months. paybacks tend to stay consistent.

With the HRSP, the economically attractive system size is much more constrained. Once you've claimed the maximum rebate, adding solar or battery capacity provides limited additional financial value because the grid pays no compensation for excess electricity you export. The same system size can produce quite different financial results depending on how much electricity you use and when.

For a side-by-side of the two setups, see Solar Setup Options.

You're a strong candidate for an HRSP solar and battery system if you have:

• High electricity consumption
• Enough daytime electricity use, especially in summer, to absorb most of the solar production
• Limited roof space that would restrict a net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months. system to approximately the same size anyway
• An interest in battery backup in addition to the financial return from solar

If your consumption is lower and you have enough roof space for a properly sized net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months. system, net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months. may offer better long-term economics even without the upfront rebate.

A projected solar payback periodThe length of time it takes for hydro bill savings to equal the upfront cost of a solar system. is only as reliable as the assumptions behind it. Electricity price escalation, estimated solar production, system costs, and other assumptions all affect the result. Small changes can make a system look considerably more attractive when projected over 20 or 25 years.

This matters most when you review estimates from solar installers. Installers use different assumptions. Compare both net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months. and the HRSP before you decide. An installer may recommend one option without showing you how it compares financially with the other. As the examples above show, each option can perform very differently financially. For help reading proposals side by side, see Comparing Solar Quotes.

Once you know which program fits your situation, the next step is figuring out the right system size. For net meteringA solar system configuration that allows excess solar electricity to be sent to the grid in exchange for hydro bill credits. These credits can then be used to offset future electricity imports. In Ontario, unused credits expire after 12 months., you size the system to your annual electricity use. With the HRSP, the rebate cap and your consumption pattern determine what makes financial sense. See Sizing Your System for how your electricity use and roof set the size of a system.

The Home Solar Accelerator gives you an independent analysis of your electricity use, solar potentialA metric used to describe the efficiency of a solar system. It represents how many kilowatt-hours a system produces annually for each kilowatt of installed capacity., costs, and payback periods before you choose a system or installer. Our role is not to convince you that solar is a good investment. It is to help you determine whether solar makes sense for your home and, if it does, which approach makes the most sense.

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