Energy costs are rising across Canada. At the same time, governments are pushing hard to reduce emissions. Renewable energy grants and tax credits help businesses cover the upfront cost of cleaner systems like solar, biomass, and energy‑efficient equipment. For many Canadian businesses, especially farms and agri‑businesses, these programs can cover 15% to 50% of project costs when used correctly.
This guide explains how renewable energy grants and tax credits work, how they differ, and how programs like the Agriculture Energy Systems Pilot Program fit into the picture.
Renewable energy support usually comes in two forms. They work differently and affect your cash flow in different ways.
Grants provide direct funding toward a project. Most are cost‑shared, meaning you pay part of the cost and the program reimburses the rest.
Typical features:
Example: The Agriculture Energy Systems Pilot Program in Prince Edward Island offers up to $75,000, covering up to 50% of eligible project costs for farm energy upgrades.
Tax credits reduce the amount of tax your business owes. You must first pay for the equipment, then claim the credit when filing taxes.
Typical features:
Example: Manitoba’s Green Energy Equipment Tax Credit provides a 7.5% to 15% tax credit for geothermal, solar thermal, and biomass energy equipment installed in the province.
The Agriculture Energy Systems Pilot Program is a strong example of how renewable energy grants support Canadian businesses in agriculture.
Eligible applicants include:
The program supports practical, on‑farm energy improvements, including:
The program is currently open, with applications accepted subject to available funding.
While grants often provide the largest dollar amounts, tax credits can still play an important role.
This provincial tax credit supports:
Key rules to note:
For businesses developing or testing new clean energy technologies, Alberta Innovates offers the Renewable and Alternative Energy Program. It supports projects that are moving from the idea stage to working models and pilot projects. In program terms, this means projects that range from early design and testing (level 3) up to pilot projects in real-world settings (level 7). The program is open to small and medium-sized businesses, industry groups, and technology developers.
In many cases, yes. But there are limits.
Most tax credit programs require you to subtract any government assistance received. For example, if a grant covers 50% of your costs, the tax credit may only apply to the remaining 50%. Rules vary by province and program.
Tools like GrantHub’s eligibility matcher can help you filter programs by province and industry in seconds, making it easier to see which grants and tax credits may work together.
For more detail, see How to stack grants and loans without violating funding rules.
Applying after starting the project
Many renewable energy grants require approval before you buy equipment or begin work. Starting early can make your costs ineligible.
Assuming tax credits are cash payments
Tax credits reduce taxes owed. If your business has little taxable income, the benefit may be limited unless the credit is refundable.
Ignoring technical standards
Programs often require CSA‑certified or approved equipment. Non‑compliant systems are usually rejected.
Overestimating stacking potential
Grants and tax credits often interact. Claiming one can reduce the value of the other.
Q: Are renewable energy grants considered taxable income?
In many cases, grants must be reported as income, but related expenses may offset the impact. Always confirm with your accountant.
Q: Can Indigenous‑owned farms apply for the Agriculture Energy Systems Pilot Program?
Yes. Mi’kmaq First Nations and other Indigenous groups conducting farming activities are eligible applicants.
Q: Do I need to complete the project before receiving grant money?
Usually, yes. Most programs reimburse approved costs after installation and verification.
Q: Can small businesses outside agriculture access renewable energy support?
Yes. Programs like Alberta’s Renewable and Alternative Energy Program are open to SMEs in multiple sectors, depending on the project type.
Q: Are used or refurbished systems eligible?
Typically no. Most grants and tax credits require new equipment that meets specific standards.
Renewable energy grants and tax credits can significantly reduce the cost of cleaner energy systems, but only if you apply to the right programs and follow the rules. GrantHub tracks hundreds of active grant programs across Canada, including energy funding by province and industry. Checking which programs match your business profile is the smartest place to start.
See also:
Was this article helpful?
Rate it so we can improve our content.
Canada Proactive Disclosure Data
The Canadian government has funded over 400,000 businesses through 1.27 million grants and contributions. Check your eligibility in 60 seconds.