Ontario greenhouse operators are under continual pressure to increase production and lower costs. To meet higher demand, many vegetable, flower, and cannabis growers are installing grow lighting and expanding their operations. But these improvements require access to more energy resources and are butting against some restrictive market forces: a new carbon tax, continually rising natural gas and electricity rates, and grid constraints.
To help organizations reduce GHG emissions and compete with recent US tax policy changes, the Canadian federal government has temporarily increased the eligible write-off for investments in clean energy and manufacturing equipment to 100% in the first year.
Dramatically shortening the payback period and offering significant capital savings has made large-scale solar energy systems a very attractive option for greenhouse operators to control their energy demand and electricity bills.
Rising Electricity Demand from Greenhouses is Causing Grid Constraints
Grow lighting consumes more electricity than what is used by irrigation and circulation pumps, electric heating, and air conditioning combined. It’s also the primary driver behind the forecasted jump in energy consumption by Ontario greenhouses from 1.4 TWh of electricity in 2018 to 3.9 TWh in 2024.
Ontario’s Independent Electricity System Operator (IESO) commissioned a study to research the greenhouse industry’s consumption profile. The report found that in regions with high concentrations of greenhouses, lighting was the most significant driver of greenhouse peak hour demand and this was “impacting local transformer stations.” Peak hour demand is the hour in the day when the grid experiences the absolute highest load. Local distribution networks are designed to meet the area’s maximum energy needs. Exceeding that maximum can cause network outages and costly damages.
The study went on to say that as a result, “some growers do not have access to enough energy – natural gas or electricity – to meet their production needs, experiencing electricity connection constraints.” Growers can experience energy constraints in a number of ways, including having to curtail energy consumption (by temporarily shutting off lighting) when the grid is under stress or being told they can’t connect a proposed expansion or new build, halting construction.
The good news is that businesses don’t need to wait years for utilities to make upgrades. Demand-side management options like behind-the-meter power generation allow greenhouses to produce their own energy, thereby reducing demand on the grid and permitting connection or avoiding curtailment.
Canadian 2018 Accelerated Investment Incentive for Clean Energy Projects
From 2018 until 2024, the Accelerated Capital Cost Allowance for clean energy generation and energy conservation increased from 30% (Class 43.1) or 50% (Class 43.2) to 100% for first-year depreciation.
This means growers have the ability to write off the full cost of the solar energy equipment and certain incurred expenses against business income in one year instead of spreading it out over several tax periods, thereby:
- lowering taxable income during a high revenue year
- decreasing immediate tax obligations
- improving cash position
- decreasing the average cost of capital by up to 75% to encourage investment
- and reducing investment risk.
Contact us for your custom business assessment
Rechargeables encourages greenhouse operators who want to take advantage of this quickly-expiring program to contact us by July 31 to accommodate for construction and application processing timelines. Your project must be invoiced and installed by Dec. 31, 2024 to take full advantage of these tax incentives.
Regardless of Tax Incentives, Here’s Why Now is the Time to Look at Solar Energy
Greenhouse operators have the capital to invest
Operations have been profitable the last few years as consumers’ interest in healthy eating is driving up demand, along with prices.
Solar offers a great ROI
Rechargeables partner Ben Gagnon, President of Sunbeam Energy, has installed many MW of solar for greenhouse operators. In his experience, growers save hundreds of thousands of dollars over the lifetime of their net-metered solar power systems.
Solar can lower operating costs
“We can build a system that actually eliminates their hydro bill,” said Ben. “Growers are spending this money on electricity anyway, so instead we help them invest it into solar energy technology. Once the solar system is paid for, the day-to-day operations are covered and the cost of hydro is gone.”
The Three Types of Solar Power Systems for Greenhouses
In Ontario, all new solar energy systems are net metered. Net metering is a billing mechanism that allows customers to sell their excess electricity back into the grid. Customers are only billed for their total or ‘net’ energy use and have 12 months to use up their accumulated energy production credits.
Click to expand and learn what type of solar PV system is best for your site.
Watch the videos below to learn more about the different racking options available for ground-mounted systems, offering improved performance and higher returns.
Solar energy systems can be installed on flat or pitched roofs of on-site packing houses or other outbuildings if ground realestate is limited. The average payback is 5 to 10 years for these types of systems.
Traditional opaque modules can be installed on the roof of a greenhouse, with the caveat that the success of this design is very location and crop-dependent due to the increased level of shading.
Greenhouse Integrated Photovoltaics
Produced in North America by panel manufacturer Heliene, these 100 W bi-facial modules are designed to be incorporated into the greenhouse’s structure – giving growers a new way to reduce electricity costs as well as their carbon footprint, while increasing crop yields. The solar cells produce electricity from both the front and back sides to maximize power production. To compensate for shading and further improve plant growth, a red light polarizing polyurethane backsheet filters and transforms the green light spectrum into red, which has been shown to improve crop productivity.
As part of a government-funded trial, which was conducted by Niagara College, the GIPV modules were retrofitted onto half an acre of herb-producing greenhouses in Beamsville, ON. Interim results were positive: the modules had produced 9% of the site’s annual electricity demand, plant performance was actually improved and the increased red light had hindered thrips.
The Important Role Clean Energy has in Helping Reduce Agriculture GHG Emissions
Agriculture produces 10% of Canada’s greenhouse gas emissions. As each year passes, every sector is under increasing pressure to cut emissions as projections say we’re unlikely to hit our 2030 target.
Canada is one of the largest markets in the world for smart greenhouses, facilitated by a new breed of grower who is tackling the challenge of developing a sustainable, net zero greenhouse that produces as much power as it uses and efficiently recycles water.
The Accelerated Investment Incentive is just one example of governmental support driven by the Pan-Canadian Framework which seeks to help businesses “adopt clean energy technologies…and create jobs.”