Solar In Canada 2023 — A Primer
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Canada is in the process of introducing tax credit incentives and investments in developing and manufacturing solar PV, energy storage, and other renewable energy technologies. Think: Inflation Reduction Act heads north. As per the 2015 Paris Agreement, Canada has pledged to reduce greenhouse gas (GHG) emissions by 40–45% from 2005 levels by 2030 and has made a commitment to reach net zero emissions by 2050. Solar in Canada is a big winner, as the country aims to generate 90% of electricity from renewable and non-emitting resources by 2030.
The Government of Canada’s 2023 budget positions growing the clean economy as one of its core priorities. Its “made-in-Canada plan” is underpinned by a federal toolkit for investing in the clean economy. It includes a set of investment tax credits, low-cost strategic financing, and targeted investments and programming that respond to the unique needs of sectors or projects of national economic significance. To support and accelerate clean electricity investment, Budget 2023 proposes to introduce a 15% refundable tax credit for eligible investments in non-emitting electricity generation systems. Budget 2023 proposes a refundable tax credit equal to 30% of the cost of investments in machinery and equipment used to manufacture or process key clean technologies and extract, process, or recycle certain critical minerals essential to clean technology supply chains.
As Canada moves forward towards becoming a net-zero economy by 2050, more rebates, incentives, and tax cuts are being introduced. SolarX has compiled a reference for these federal and provincially available solar incentives in Canada, including those offered by energy efficiency programs, major Canadian municipalities, and major LDCs.
US-based Solar Alliance suggests that the introduction of a 15% Clean Electricity Investment Tax Credit (“ITC”) has the potential to rapidly accelerate the adoption of solar in Canada. Several other provisions will support the transition to clean electricity and benefit the industry. But it is the ITC, they say, that will have the greatest immediate impact for investments into clean electricity generation and energy storage by non-taxable entities — like indigenous communities and municipally-owned utilities. The goal for the Canadian ITC and other incentives is to enhance the country’s competitiveness, which will make Canada more attractive to investors and level the proverbial playing field with the US.
As part of the budget announcement, the Canada Infrastructure Bank will invest up to CA$20 billion (US$14.7 billion) into clean energy growth and infrastructure projects, in the form of two separate CA$10 billion (US$7.3 billion) facilities through its Clean Power priority area and its Green Infrastructure priority area. The investments will come from existing resources, the government said.
The Canadian Renewable Energy Association says there are currently more than 43,000 solar (PV) energy installations on residential, commercial, and industrial rooftops in the nation, providing power directly to those homes and businesses. Most of Canada’s solar PV capacity consists of utility-scale solar installations, typically known as “solar farms.” This sector of the industry is poised for significant growth, driven by massive cost reductions and the need for non-GHG emitting electricity generation to address climate change.
Ontario is one of the provinces in Canada that has been proactively promoting the use of solar energy. In recent years, the government has introduced several incentives to encourage homeowners and businesses to adopt renewable energy sources, particularly solar power. EcoWatch has compiled a fine list of companies and provisions for homeowners in Ontario to consult as they consider taking advantage of incentives.
The Who’s Who in Solar in Canada
Some of the key players are AMP Solar Group Inc., BluEarth Renewables Inc., Canadian Solar Inc., Greengate Power Corporation, and Quadra Power Inc.
AMP Solar Group Inc. started as a small solar developer in Ontario in 2009 and has grown into a multi-technology global developer at scale. Across Canada and the US, it works with a broad range of utilities and C&I customers to develop decarbonization roadmaps in the push to net zero.
BluEarth Renewables Inc. has a portfolio that includes over 1 GWAC (gross) in operation, under construction and contracted pre-construction, and over 7 GW of high-quality development projects that are actively being advanced. In March, it announced it acquired 7 wind and solar development projects in the US, totaling approximately 1 GW. BluEarth acquired this development portfolio from Ozone Renewables, LLC (“Ozone”), which includes projects in Washington, Oregon, Ohio, and Oklahoma.
On April 10, Canadian Solar announced the rebranding of its wholly-owned global energy subsidiary as Recurrent Energy. Recurrent Energy, previously the company’s North American utility-scale solar and energy storage project developer, will now include all of Canadian Solar’s global development and services businesses. This past week, Canadian Solar announced financial results for the first quarter ended March 31, 2023. Here are some highlights:
- 66% increase in solar module shipments year-over-year (“yoy”) to 6.1 GW, in line with guidance of 5.9 GW to 6.2 GW;
- 36% increase in revenue yoy to $1.7 billion, in line with guidance of $1.6 billion to $1.8 billion;
- 18.7% gross margin, in line with guidance of 18% to 20%;
- Net income attributable to Canadian Solar of $84 million or $1.19 per diluted share;
- 25 GWp of solar development pipeline and 47 GWh of battery storage development pipeline; and,
- Carve-out IPO of CSI Solar subsidiary on track to be completed in the second quarter of 2023.
Greengate Power Corporation‘s Lathom Solar began development in 2017 and includes close to 1,280 acres of land located approximately 15 kilometers southeast of the town of Bassano in the county of Newell. The project area has a strong solar resource and will generate clean energy over its 35+ year lifetime.
Quadra Power Inc. has been active since 2007 in the development of both small and large-scale installations across Ontario, Canada. A renewable energy company whose key focus area is solar project construction and development of PV plants, both “on” and “off grid,” it offers 200 MW of direct solar power construction projects. It teams with the business, finance, and engineering experience of its sister company, Quadra Solar.
Final Thoughts about Solar in Canada
The forecast for solar in Canada beginning in 2023 and extending forward is positive. Because Canada plans to achieve net-zero emissions by 2050 and is expected to replace the share of fossil fuel in the energy mix with renewables, extensive opportunities exist for the solar market in the coming years.
Over the medium term, factors such as upcoming solar projects and supportive government policies to reduce reliance on fossil fuels are anticipated to boost the Canadian solar energy market. The country is expected to reach 35 GW of total solar installed capacity by 2050, which would significantly increase its share in renewable energy generation.
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