A new electricity pricing program introduced by the Ontario government will be a boon for rooftop solar, even though it was originally designed for electric vehicle owners.
The new electricity rate, known as Ultra Low Overnight (ULO) pricing, is meant to shift electricity demand from peak to off-peak hours.
The approach is tailor-made for EVs that can get a price break for charging overnight, when system demand is low. But it also boosts the value of solar generation.
Until now, a homeowner whose solar panels produced surplus power would get a credit of 10.3¢ per kilowatt-hour (kWh) under the province’s Tiered Pricing program. Under ULO pricing, the credit shifts to 8.7¢/kWh all day on weekends, and 12.2¢ on weekdays from 7 AM to 4 PM, and from 9 to 11 PM.
But the real sweetener is when the rate soars to 28.6¢/kWh between 4 and 9 PM on weekdays, when province-wide demand is at its peak. With summer’s long days, solar will generate a substantial amount of power during these prime pricing hours. If your panels face a little to the west, they’ll do even better.
As an example, the floors in my home have radiant heating, supplied from a hot water tank. We have an EV as well as rooftop solar panels. The majority of the electricity I consume is for heating the home. By heating the tank at night, using that heat during the day, and by charging my car at night, I shifted much of the electricity I use to the ultra low overnight rates. The average electricity price on my last power bill was just 4.3¢/kWh, a big drop from the 10.3¢ I was paying under the tiered pricing regime.
But the big gain comes from the solar. My rooftop panels earned a credit of 13¢/kWh, up from the same 10.3¢ under the tiered program, almost a 30% increase. Why so much? Because a portion of the credit was earned during peak pricing hours at 28.6¢/kWh.
Selling power to the grid at 13 ¢/kWh and buying it back at 4.3¢ is my kind of business deal! But that deal makes sense because everyone wins: grid operators and consumers get a more stable system that is less prone to expensive and disruptive blackouts. And we all save money when distributed energy sources like rooftop solar cut into demand for emissions-intensive gas plants, and eventually make those power stations obsolete. The price differential makes it easier for some building owners to install solar arrays that wouldn’t have made economic sense without ULO pricing.
Not everyone can shift their demand as much or as easily as I have. But anyone with solar will benefit very easily from the new ULO pricing program. (And if you don’t have a large load to shift, you may still benefit by switching to Time-of-Use instead of Tiered pricing.)
Whether or not the Ontario government intended to create stronger economic incentives for residential solar, they’ve done something good, and we should all be taking advantage of it. The program is a great example of how a jurisdiction like Ontario can address the surge in power demand from air conditioners on hot days without turning to expensive and polluting gas plants.
ULO pricing is rocket fuel for rooftop solar economics. And, oh yeah, it’s good for EV owners, too.
Glen Estill is an energy analyst and owner of an EV and a residential solar photovoltaic system.
