Why Electricity Price Inflation Is a Hidden Boost to Your Solar ROI
Written by Solenery
1 min read
Introduction
Rising electricity prices may sting at the meter, but for solar owners, they’re a secret turbocharger. Even modest annual rate hikes can dramatically amplify your long-term solar savings—shortening your payback period and boosting your overall return on investment.
In this post, we’ll break down the mechanics, model a few scenarios, and show you how to harness inflation to make your panels pay off faster.
The Inflation Effect on $/kWh
Let’s start with a baseline:
- Ontario average rate: $0.12/kWh
- Assumed inflation: 2% per year
Projected electricity rates over time:
| Year | Rate ($/kWh) |
|---|---|
| 1 | $0.12 |
| 5 | $0.13 |
| 10 | $0.15 |
| 25 | $0.20 |
💡 Quick Insight: Every extra cent of inflation adds ~$66/year in value for a 6 kW system (6,600 kWh × $0.01).
Compounding Your Savings
Solar savings increase annually due to two key factors:
- Panel output stays high
(degrades only ~0.5% annually) - Electricity rates rise
(your offset becomes more valuable)
Multiply your system’s annual production by the growing rate to see the compounding value in action.
Modeling Different Inflation Scenarios
| Inflation Rate | 25-Year Savings (6 kW system) | Increase vs. 0% Inflation |
|---|---|---|
| 0% | $19,800 | — |
| 2% | $27,500 | +39% |
| 3% | $30,200 | +52% |
If you’re in a higher-growth region like Alberta (3–4% hikes), your gains can be even more dramatic.
Regional Rate Trends
Electricity inflation varies across Canada:
- Alberta & Saskatchewan: 3–4% annual increases
- Ontario & Atlantic provinces: ~2%
- Quebec & Manitoba: 1–1.5%
Check your utility’s historical rate charts to fine-tune your assumptions.
Impact on Payback Period
Higher electricity prices = faster return on your solar investment.
| Inflation Rate | Estimated Payback Period (6 kW system) |
|---|---|
| 0% | ~16.4 years |
| 2% | ~12.6 years |
That’s nearly a 4-year acceleration just by accounting for realistic electricity inflation.
Conclusion
Don’t fear rising electricity prices—leverage them.
By factoring inflation into your solar ROI model, you’ll unlock:
- Shorter payback periods
- Higher lifetime savings
- More compelling solar economics