Clearing the Clouds: Demystifying Solar Carbon Credits
Solar energy use is growing at a rapid pace. As we develop greener ways to produce and consume energy, more businesses and individuals turn to solar to offset their electricity bills, and become more sustainable. But solar benefits don’t end there. There are opportunities for everyone to generate carbon credits (also known as carbon offsets) when installing solar systems, and Radicle wants to make it simple for you to benefit even further from installing solar panels on your home or business in Alberta. If you’re eager to learn more about solar energy and how to harness its benefits, we’ve got you covered.
Solar panels for homes and businesses
To access the financial opportunities that solar provides, let’s first dive into solar panels for homes and businesses. Solar is incredibly reliable and low maintenance and can last for 25+ years, so it will be easy for you to take advantage of the many benefits of solar energy. Most homes and buildings are suitable for a solar panel installation, and the solar energy potential in Alberta is plentiful.
The number of solar panels you need depends on your home or business and how much electricity you use. The average home in Alberta uses roughly 7,000kWh of electricity per year. This means the average home will need somewhere between 14 and 18 400W solar panels to cover its annual energy needs. When it comes to solar for businesses, this will all depend on the space and size available for panel installation.
On average, the cost of a residential solar system will be approximately $10,000 to $16,000. According to Solar Alberta, “the average Alberta household consumes about 7200 kWh of electricity per year. In Alberta, this would require a solar PV system of around 6000 installed Watts to reach net-zero electricity use on a yearly basis. Assuming a cost of $2.50/Watt of installed capacity, this system would cost about $15,000.”
If you are considering installing panels on your home or business, there are many factors to take into consideration when choosing a solar contractor. Our friends at UTILITYnet have a vast network of Energy Marketers that can help with your decision on which provider is right for your project. These solar experts will equip you with all the information you’ll need to register for Radicle’s Solar Program once your installation takes place.
So how are carbon credits from solar generated?
Green energy generated from solar projects reduces and replaces greenhouse gas (GHG) emissions that come from electricity generated by carbon-based fuels. These offsets are transferrable certificates representing 1 tonne of CO2 or equivalent greenhouse gas removed from the atmosphere, which can then be sold on the carbon markets. Carbon credits can be generated from a vast range of projects all over the globe, and in Alberta, you can generate carbon credits from your solar panels. About half of a carbon credit is generated for every megawatt-hour of solar energy produced in Alberta.
Once you have solar capabilities on your home or business (or maybe you already do!), you can register with Radicle to start generating credits. Registering solar panels, checking eligibility, and going through data verification to generate carbon credits on your own can be quite demanding. In the past, this has meant that smaller solar installations, like residential systems, did not have the ability to engage with the carbon market.
That's why Radicle was the first organization to create an aggregated solar pool so that projects of any size, including residential solar systems, can generate carbon credits. These systems are registered under one project and generate carbon credits from emissions reductions. Once a solar project qualifies, Radicle registers it with the Alberta Emissions Offset Registry (AEOR), allowing single home solar panels to create credits alongside large commercial projects. Radicle’s solar experts will ensure that the data is verified with accuracy and rigour behind the scenes, so that system owners can receive annual payments for their solar credits.
The number of carbon credits a home generates each year will depend on how much power your system has produced. This will depend on how much sun (and snow) your location in Alberta gets. Typically, a residential home will be between a 5.8kW and 7kW system, and generate roughly seven credits per year. The credit amount varies for businesses depending on the system. A typical 100kW system would generate around 80 credits, and a 1MW system would generate approximately 800 credits.
Credit generation depends on a variety of factors, but typically a 10 kW capacity system will see revenues of around $130 per year. A variety of factors determines the final value of any carbon credit: the type and total development costs of the project they originate from, their standard and vintage, as well as their originating location and co-benefits. In the end, it all comes down to supply and demand, because credits are not pure commodity products. They are unique, and a host of interconnected influences determines their value. Radicle is competitive with the carbon markets, so revenue potential and our different pricing models will be explained by our experts when you reach that stage of Radicle’s Solar Program.
Once you’re registered with Radicle’s Solar Program, our team will check your system each year to see how much power it’s produced and how many credits you've generated. The Alberta Registry requires that the entity that registers the project reports on the project for the entire crediting period - which is eight years. The 8-year crediting period starts when the project is registered, and you’ll earn capital for the full 8-years of credits as long as your system continues to produce power
So how do you find out if your solar system is eligible to earn carbon credits?
Radicle makes it simple.
Some grant providers take the environmental attributes or the carbon credits from your project in exchange for the funding they provide to you, which means you as the system owner can't also register for credits. This is critical to ensure that the offsets are not double-counted. Not all funding will take the environmental attributes, so it’s important to check your eligibility first.
Eligibility can be determined by these points:
- The system must be in Alberta
- The system must be grid-connected
- The system has not received funding from a source that takes environmental attributes, such as: Emissions Reduction Alberta Grant, Residential and Commercial Solar Program (NDP Grant), 2019+ Alberta Municipal Solar Program, and the City of Edmonton’s Change Homes for Climate Solar Program
So what’s next? If you don’t have solar panels on your home or business, start with an installation. Once your system is up and running, fill out our eligibility form and provide Radicle with some basic data on your solar system. Our experts will determine your eligibility, and reach out to discuss pricing models for your credits. After a contract has been signed, we’ll register your system, and you’ll start generating carbon credits.