Subsidies: the cornerstones of the energy transition

Does money bring happiness? I don’t know, but what I do know is that it can drastically boost the profitability of a solar project!

In this new article about the future of solar energy in Quebec, I'll share my experience from Europe regarding subsidies for residential solar projects. We'll also explore how other parts of the world approach it, and consider the best solutions tailored to our beautiful province.

“Solar isn’t profitable”

Probably one of the most frequent phrases I’ve heard in my career…

In reality, it’s neither entirely true nor false. When we talk about profitability, it’s always in relation to something else.

Saying solar isn’t profitable for an off-grid project like a cabin doesn’t make sense, because having electricity is a necessity, not a choice. Unless you compare that investment to an alternative, like a generator.

When discussing profitability for a residential solar project (house connected to the public grid), we compare the solar kWh produced—powering our home—to the kilowatt-hours we won’t purchase from Hydro‑Québec, i.e., the savings generated.

The higher the price you pay for grid electricity, the more profitable a solar project becomes. Another variable in calculating profitability is, of course, the total cost—factors like equipment, labor, safety, ethics, and the installer’s experience matter. (A cheap, low-quality installer can cost you a fortune, trust me.)

Solar profitability in Quebec in 2025

Before talking about the future, let’s look at the present. Today, residential solar in Quebec remains underdeveloped, due to one major factor: the price of Hydro‑Québec’s electricity.

(For practical comparison reasons, values are expressed in USD.)

On average, residential electricity costs 0.058 USD/kWh here. For context, North America averages 0.14 USD/kWh, and globally it's about 0.11 USD/kWh.

Just for fun, here’s one of the world’s most expensive regions: Bermuda, at 0.458 USD/kWh…

At that price, lights definitely don’t stay on by accident!

That’s because Bermuda relies on diesel or oil-fired thermal plants for electricity.

I think this context is important, especially when people in Quebec complain about electricity prices.

Now, for solar: a 6 kWc installation including 12 solar panels and a 6,000 W inverter costs around 15,000 CAD.

Here’s the profitability snapshot:

⚙️ Assumptions

System capacity 6 000 Wc

Installation cost 15,000 $ (no subsidy)

Estimated annual production 7,800 kWh

Initial electricity price 0.103 $/kWh (Hydro‑Québec)

Annual price increase estimate 2.5 %

System lifetime 25 years

Inverter replacement year 13–15, 2,500 $

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📈 Savings generated

In Year 1: 7,800 kWh × 0.103 $ = 803.40 $ saved

That yearly saving grows slightly with price increases.

Over 25 years, cumulative savings are estimated at around 28,000 $.

Subtracting the inverter replacement (2,500 $) leaves a net gain of approximately 25,500 $.

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🔁 Return on Investment

Initial investment 15,000 $

Net savings over 25 years 25,500 $

Payback period ≈15 years

Internal rate of return (ROI)~5.5 %–7.5 %

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🧠 The bottom line

The payback period for a residential solar system is around 15 years. Remember: every electricity price hike shortens that timeline. It’s the one time you’ll be glad Hydro‑Québec rates go up…

Let’s be honest a 15-year payback is too long to motivate many homes to invest in solar. To hit Quebec’s target of 125,000 projects in the coming years, only one solution works: financial incentives.

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Subsidies around the world

Many countries have already tackled the same challenge: how to speed up residential solar adoption? They've implemented varied financial incentives tailored to their context.

Tax credits – United States

• Mechanism: Homeowners deduct 30 % of solar installation costs (panels, inverters, batteries) from their federal taxes, reducing the upfront cost significantly.
• Duration: Scheduled through 2032, then 26 % (2033) and 22 % (2034).
• Note: Recently removed due to policy shifts, including Trump’s “Big Beautiful Bill.”
• Key benefit: Direct tax deduction simplifies financial planning.
• Source: IRS – Residential Clean Energy Credit

Feed‑in tariffs – France (2010s)

• Mechanism: Owners sold all their solar power to the grid at a fixed rate (20–60 c€/kWh).
• Duration: 20-year contracts, inflation-adjusted.
• Evolution: Replaced by surplus selling and self-consumption schemes.
• Benefit: Stable revenue reduced financial risk.

Net Metering – Quebec

• Mechanism: Solar surplus fed to the grid is credited at the same rate as electricity consumption.
• Benefit: Uses the grid as a “virtual battery” with no extra cost and real-time energy valuation.
• Limitation: Doesn’t provide extra income—just offsets electricity costs.
• Source: Hydro‑Québec – Net Metering Option

Tax exemptions (VAT/GST) – France/Australia

• France: 5.5 % VAT instead of 20 % for ≤9 kWc installations.
• Australia: STCs reduce GST on solar systems.
• Benefit: Indirect fiscal support encourages residential solar.
• Sources: Photovoltaïque.info, Clean Energy Regulator Australia

Self-consumption bonus – France

• Mechanism: Financial bonus based on system size, encouraging on-site use rather than total resale.
• Example: ~300 €/kWc over several years.
• Benefit: Promotes energy autonomy and reduces grid waste.
• Source: EDF Solutions Solaires

Low-income support – California

• DAC‑SASH program: Provides free or low-cost solar to low-income households in disadvantaged areas.
• Goal: Reduce energy poverty and democratize renewables.
• Source: Grid Alternatives

Storage rebates

• Mechanism: Incentives solely for residential battery storage, even without solar.
• Example: Germany offers up to 30 % storage cost rebates.
• Benefit: Encourages storage to optimize self-consumption and grid stability.
• Source: BMWK – Germany

Zero-interest loans – Canada (Canada Greener Homes Loan)

• Mechanism: Interest-free loan up to 40,000 CAD over 10 years for energy-efficient home upgrades, including solar.
• Benefit: Enables investment without added interest burden.
• Source: Canada Greener Homes Initiative

In conclusion

You see, many financial tools exist and have been tested worldwide. Countries have refined models based on outcomes for better or worse.

Quebec, despite lagging behind, now has a genuine opportunity to draw from international models and adapt them locally.

In my view, pairing federal interest-free loans with an investment tax credit tied to installed capacity (/kWc) would be a solid foundation. Add geographic and income based adjustments, and we’ve got a recipe for success.

👉 I even spoke with Liberal deputy Gregory Kelley, who supports income-based incentives. You can see the full interview here.

Whatever path is chosen, diligent evaluation is key: Is it working? What are the real outcomes? Adjust until Quebec’s model is sound.

Énergie Solaire Québec, in ongoing dialogue with Hydro‑Québec, advocates this vision too. Their president, Patrick Goulet, publicly calls for investment paybacks under 10 years a crucial trigger for broader adoption.

Because ultimately, regardless of the incentive, if solar projects become financially attractive, Hydro‑Québec’s goal of 125,000 installations will be met in a flash. And Quebecers, they’re ready for it.

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