The New Economics of Solar in Canada
How Electricity Rates and Solar Costs Have Changed and Where the Market Is Headed
Canada’s electricity mix is about 80 percent from non-emitting sources, yet it currently generates only 1 percent of its electricity from solar. This is well below the global average of nearly 7 percent.
Across most of Canada, there are substantial solar resources available, with a national average production potential of approximately 1,133 kWh per kilowatt per year. Saskatchewan has the highest solar potential in the country, followed by Manitoba, Alberta, Ontario and Quebec.
Hydroelectric power accounts for roughly 55 percent of the country’s electricity generation, producing clean power at relatively low cost. This also gives Canada a grid that is among the least carbon-intensive in the world, setting aside provinces like Alberta that continue to rely heavily on coal and gas. Under those conditions Canada has seemingly treated solar as a supplement rather than a strategic priority.
However, recent drought conditions cut Canada’s hydroelectric output by 3.8 percent in 2024. British Columbia imported 14.5 million MWh and Quebec 3.9 million MWh of electricity in 2024 from the United States.
With climate impacts worsening, energy diversification is becoming critical. Solar presents itself as a widely available and increasingly affordable resource that Canada needs to soon adopt at a large scale.
What is Driving the Demand?
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Many provinces across Canada are experiencing rising electricity rates, driven by inflation, aging infrastructure and broader economic uncertainty, including the ripple effects of U.S. trade policy on energy costs.
“Increased cost of living, especially on the hydro side, is the number one driver,” says David Hampson, Founder & CEO of Hey Solar, a Toronto-based solar provider operating across Canada. “We’ve seen two 20 percent-plus increases in the last three years, with an average of around 5 percent historically. That, tied in with solar companies pushing grants and rebates, also helps customers learn about these opportunities.”
As the grid signals that it intends to keep getting more expensive, the need to tap into solar is increasing. Another cost consideration that has shifted client conversations over the past few years, according to Hampson, is battery storage.
“Five years ago, it was 99.9 percent solar only with the Greener Homes Grant,” he explains. “Three years ago, this dropped to about 67 percent as battery technology started hitting the market more widespread, and now it’s almost entirely a two-pronged approach of here is your solar-only solution versus your solar-plus-storage option, which now costs the same as where solar only was back in 2022.”
Battery storage costs have dropped more than 40 percent in 2024 according to BloombergNEF. Having the ability to store energy changes the relationship between a building and the grid. A solar-only system reduces consumption during daylight hours. A solar-plus-storage system gives a building owner the ability to manage energy across the full day, storing surplus generation, drawing on reserves during peak-pricing windows and maintaining power during grid outages. For commercial buildings, such active energy management is increasingly valuable as time-of-use pricing structures push peak costs higher.
Canada’s policy framework is catching up to this reality. Ontario’s Home Renovation Savings Program offers rebates specifically for paired photovoltaic and battery energy storage systems under a load displacement program, which means homes on a net-metering program are not eligible for this grant. Alberta’s deregulated market allows solar owners to earn retail-rate credits for excess electricity through its Micro-Generation Regulation, with some retailers offering higher summer solar rates (read more about all of this in our Guide to Alberta Electricity Rates and How to Save on Your Bills). British Columbia has committed $36 billion over 10 years to grid expansion which includes 10 renewable energy projects. Nationally, planned battery storage additions could increase Canada’s total storage capacity five-fold, from 552 MW in 2024 to 2,768 MW by 2030.
How Much Solar Costs
Solar panel prices have fallen significantly over the past decade: a complete installation in Canada currently averages $2.40 to $3.50 per watt, which includes labour, permitting and grid interconnection, all of which can vary considerably and affect the final quote a homeowner receives.
Hampson says, “The most frequent misconception is ‘Hey, solar is cheap, but this quote isn’t.’ It’s come down significantly since 2010, yes, but it’s not like popping down to Costco or IKEA. This is more of a buying-an-EV-type investment.”
Like an electric vehicle, a solar system involves meaningful upfront capital, significant long-term savings, and a quality spectrum that ranges from excellent to problematic depending on who does the work.
“A lot of misinformation is out there on the Internet, unfortunately,” Hampson adds, “and while solar companies are ‘biased’ in a sense, we do find we’re educating along the way with customers and connecting the dots.” A typical residential system in Canada typically between 5 and 10 kilowatts will cost between $12,000 and $35,000 before incentives, depending on size and province. Most homeowners get a payback in 6 to 12 years, depending on electricity rates, local incentives and system configuration. With storage, the upfront cost rises, but so does the functional value. Battery systems in Canada run between $700 and $2,000 per kilowatt hour installed.
Hampson’s advice to prospective buyers is “Do your research as best you can, but please, even if the first quote sounds really good get three or more quotes from other companies. There are companies out there who are not installers and are willing to provide unbiased opinions, like Glean Solar and TAF, where they have reviewed thousands of proposals and prices to provide data-driven analysis.”
TAF, The Atmospheric Fund, is a Toronto-based regional climate agency that launched its Home Solar Accelerator program in early 2026, offering homeowners across the Greater Toronto and Hamilton Area free, personalized support through every step of the solar process. This includes assessing a roof’s solar potential, gathering quotes from pre-qualified installers, navigating permit and interconnection approvals and coordinating installation. The program also advocates at the policy level for streamlined permitting and consistent net metering rules across Ontario. For GTHA homeowners, it represents a meaningful entry point into a process that has historically required significant independent research to navigate well.
Beyond differences in solar irradiance, the policy and incentive landscape vary enough by province that a strategy optimized for Ontario may look meaningfully different from one designed for Alberta or British Columbia.
“Provincial nuances do change the narrative,” Hampson observes. “Here in Ontario, we have rebates for PV+BESS for a load displacement-style program, versus solar rates from hydro companies in summer for Alberta with their net metering programs. Being aware of these differences is key to success with solar companies, especially those operating nationally.”
“Toronto has the Home Energy Loan Program (HELP) which is a loan up to $125k and can be spread over 20 years for solar. Edmonton has had successes in the past with grant funding for new solar,” he adds.
For building owners, the practical takeaway is that the questions worth asking an installer go well beyond panel brand and price per watt. Understanding how a company navigates local utility interconnection procedures and what post-installation support looks like.
For a more detailed look at solar panel prices, read Here’s What Solar Panels Cost in Canada»
Innovations in Solar Technology
The dominant image of solar in Canada remains the rooftop panel array that is functional, but this image is already changing. Designers are exploring cutting edge solar technologies that provide greater flexibility to install and harness solar from different angles and building systems.
“Personally, I think solar moves away from just a rooftop asset,” Hampson says. “We’re already seeing solar glass with 98 percent transparency. Morgan Solar, a Toronto-based innovation company have solar blinds which will allow commercial buildings to participate in the energy transition. Solar powered balconies (with glass) or Building Integrated PV (BIPV) through Mitrex will add a design element and get designers and architects asking, ‘what is possible?’”
For the green building sector, this matters beyond the novelty. BIPV reframe solar from an add-on technology into a decision made at the design stage, which encourages building designers to think about facade specification, energy modelling and the relationship between a building’s skin and its energy systems.
“In terms of homeowner expectations, modules will continue to develop and become more efficient, inverters will slowly increase warranties, and maintenance will become a more online/remote solution as technologies in monitoring become more prominent,” he adds.
On the commercial scale, solar-plus-storage is still in its early stages. Hampson acknowledges that large-scale paired systems are not yet widespread, but points to the conditions that are pulling them closer. Storage costs are falling, federal tax incentives for commercial owners are in place and financing mechanisms like Power Purchase Agreements are making it possible for building owners to access solar infrastructure without carrying the full capital cost themselves.
“It won’t be long,” he says, “before we see mass deployment, be it through purchasing or through mechanisms like PPAs.” For commercial building owners watching the market, it is worth anticipating this shift and positioning their business now to be able to make the change when the opportunity is right.
Mass Deployment in Remote Areas
Among the most forward-looking solar work happening in Canada right now is in First Nations communities, where solar has become an instrument of energy sovereignty.
Across the country, Indigenous communities are pursuing solar and storage projects designed to give them control over their own power, reducing dependence on diesel generators in remote areas or on external utilities that have historically delivered expensive and sometimes unreliable service. In British Columbia, BC Hydro’s 2024 and 2025 calls for power together selected 14 renewable energy projects, nearly all with majority First Nations equity ownership, representing between $2.5 and $3 billion in Indigenous asset ownership. Natural Resources Canada has supported 14 Indigenous clean energy projects through its Indigenous Off-Diesel Initiative, providing over $28 million to help remote communities transition away from diesel generation.
Projects in rural and remote communities offer a model for energy diversity planning, grid independence and long-term energy sustainability that the broader sector would do well to study.
Looking Ahead
Solar in 2026 is not the same proposition it was five years ago. The storage revolution has changed what a rooftop installation can do, government incentives, along with services like TAF’s Home Solar Accelerator are lowering the barrier to entry and provincial incentive programs are moving in one direction.
Canada has the resources and the technology but is only slowly developing the conviction that solar is essential. The country that built its clean energy identity on hydro now has an opportunity to build the next layer with solar, and the pathway looks hopeful with Canada’s net-zero target, which is just 24 years away.
Images from Depositphotos
