Financing Your Solar Power System in Canada (Complete Guide 2018)
There are many ways to finance a solar power system in Canada. Some people pay in cash, some get a renewable energy loan, while others add the entire cost of the system to their property tax (PACE).
This page briefly describes several of the most common solar financing options in Canada. You can continue reading from top to bottom, or jump to your preferred financing option by clicking on it below:
Renewable Energy Loans
There are currently three+ Canadian banks that are offering special loans for investments in personally owned solar energy infrastructure. Renewable energy loans are the second most preferred financing options for Canadian homeowners.*
*Source: SPPC Research
RBC Energy Saver™ Loan
The RBC Energy Saver™ Loan is a great financing option for most Canadian homeowners. The loan includes flexible repayment terms, no early repayment penalties, and combined savings opportunities for various other home energy products and audits.
One downside to this financing option is that the maximum amortization period is just 10 years, 5 years shorter than the next options that we will discuss. Contact the Royal Bank of Canada (1-800-769-2511) for rates and details.
Scotia EcoEnergy Financing
Another great renewable energy loan is the Scotia EcoEnergy Financing Program. The loan will cover 100% of the start-up costs of installing a solar system and amortization can be extended for up to 15 years.
One downside to this financing option is that it appears to be only available in areas where solar is incentivized by the local utility or by the provincial government. Contact Scotia Bank (1-877-552-5522) for rates and details.
In line with their branding, TD Bank of Canada offers various options for homeowners looking into solar power. Financing is available for the installations done through a qualified building contractor and installer and discounts are available for a HELOC upon the purchase of a CSA approved panels.
The obvious downside here is the stipulations of hiring a ‘qualified building contractor and installer’ – we don’t know what that means to TD nor to what degree they need to verify. Please contact TD Bank (1-866-389-8888) for rates and details.
ATB Financial (Alberta only)
Another renewable energy loan option is offered by ATB Financial and allows you to finance your system for rates as low as prime + 2.00% and for an amortization period of up to 15 years.
The obvious downside here is that you must be an Alberta resident to participate. Contact ATB (1-800-332-8383) for specific rates and details.
Home Energy Loan Program (Toronto only)
The final option that we are aware of is the Home Energy Loan Program (HELP). Under this program you can receive up to $75,000 with rates as low as 2.00% and for an amortization period of up to 15 years.
The obvious downside here is that you must be an Toronto resident to participate. Contact the HELP program coordinator (416-392-1826) for specific rates and details.
Did we miss any loan programs? Let us know by messaging us here (links to another page).
Home Backed Loans
There are at least three ways that you can use the value of your home (or future value of your home) to help finance your solar system.
The first option is to build the cost of the system directly into your home’s mortgage. This will allow you to amortize your system over the same period as your house (typically 25 years) and at the same low rates.
The downside here is that this option would only apply if you’re considering adding solar to a new home purchase or a new home build.
Home Equity Loan (second mortgage)
If you already own your house (or are in the process of paying it off), then there is always the option of obtaining a Home Equity Loan – also known as a second mortgage.
Under this scenario you can borrow up to 80% of the value of your home minus the unpaid balance of the existing mortgage. Home Equity Loans are typically offered a better rates than Renewable Energy Loans and can be amortized over a period of up to 25 years.
The Home Equity Loan is typically awarded and withdrawn in a single lump sum and re-payed on a fixed term at fixed rates.
The downside to this financing option is that you will need to arrange (and pay for) a new home appraisal. You can read information from the Financial Consumer Agency of Canada or talk to your bank for more details.
Home Equity Line of Credit (HELOC)
Another option for current homeowners is to access a Home Equity Line of Credit (HELOC). This allows you to borrow up to 65%-80% of the value of your home at a competitive interest rate.
The HELOC is typically awarded in lump sum and then withdrawn only as needed. Rates are often variable and linked to prime at the time of lending.
The downside to this financing option is that you may also need to get a new home appraisal. You can read information from the Financial Consumer Agency of Canada (same link as in previous section) or talk to your bank for more details.
Other Financing Options
Property Assessed Clean Energy (PACE)
Property Assessed Clean Energy is an innovative financing option that allows homeowners to go solar with $0 down and to repay the loan through their property tax bill. This type of program greatly reduces the barrier to entry for solar and is becoming more popular in Canada.
Solar City Halifax
The first well known PACE example is the Solar City Halifax Program. This programs allows Halifax homeowners to go solar with $0 down with a 10 years fixed interest loan at 4.75% (with the option to pay the balance in full at any time and without penalty). Loan repayments appear along with the property tax bill as a ‘Local Improvement Charge’.
In June 2018, An Act to Enable Clean Energy Improvements was passed in the province of Alberta that enables the Alberta PACE financing option. It’s expected that the act will come into force in early 2019 and that municipalities will begin enabling PACE by mid to late 2019.
Believe it or not, paying in cash is the most preferred financing option by Canadian homeowners*. Paying in cash allows you to maximize your return on investment by avoiding any financing costs.
However, depending on your situation, paying in cash may not be the best option. Similar to any large purchase (boat, car, home, etc.), it may make more sense to flatten your out-going cash flow by financing your system over its guaranteed useful lifespan (solar systems are typically guaranteed for 25 years).
*Source: SPPC Research
Bank loans are essentially non-specific loans granted to you by your bank. This is opposed to Renewable Energy Loans which are granted by banks for a specific purpose.
Rates and amortization periods vary greatly between individuals based on credit, income, and employment status. Contact your bank for details and approval.
Installer Financing Options
The final financing option that you may want to consider are special programs offered by you installer. It’s becoming more common for solar providers to add third-party financing options directly into their system proposals (Financeit is a popular one).
Other installers have already brokered financing options directly with the bank, with their bargaining position supported by a high volume of customers. Companies who do this often have access to $0-down financing and low rates not available elsewhere. However, this remains relatively rare in Canada (Powur is one that we know of).
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