The installation of domestic solar energy systems has dramatically increased over the last few years, as the price of photovoltaic cells drops and power prices rise. The rate of installation is growing at about 30-40% per annum. About 50 new solar connections are made every month. Meridian’s solar customers have risen from 50, to 2500 in the last three years – and that includes me.
Encouraged by the ideals of improved self-sufficiency, resilience and energy efficiency, many New Zealanders like us are adding solar panels to new and old homes. Despite the initial capital cost, when complemented with other energy conservation measures, solar panels offer a return on investment of up to 15%. But the rapid rise in solar installations has prompted an adverse reaction from the power companies previously offering the best solar buy-back rates. Both Meridian and Contact, have in recent months reduced their feed-in tariff rates and therefore potentially affected the pay-back time and viability of solar for many.
Meridian’s rate for current connections offers 25c/kWh per day for the first 5KW, and 10c/kWh after that. For new customers the rate will be 7c/kWh in summer and 10c/kWh in winter, a significant change. They expect new, lower rates to apply to existing customers like me, in the New Year. Contact’s rates have gone down from 17c/kWh to only 8c/kWh. They say they don’t want to ‘subsidise solar ahead of other renewables’, even though they offer a far lower rate for solar feed-in than they charge the same customer for power used at night or at a later time. They also buy solar at a low rate and then sell the surplus power to the next customer at a higher charge.
The Sustainable Energy Chairman Brendan Winitana says the reduction of the feed-in tariff by the power companies shows they see solar as a competitor to their own generation sources, and want to cut costs (feed-in buy back rates) and maximise profits (by maintaining high supply charges). Meridian says they need to remain competitive, “the other power companies have dropped their rates”. They say they’re “following the market”. Incidentally this company, now almost half owned by private investors, posted over $220million profit last year.
Overseas, some countries have government controlled feed-in tariffs to incentivise solar installations. In New Zealand those rates are solely decided by the power companies. That leads to uncertainty, potential volatility, and threatens the viability of rooftop solar energy generation.
However, some solar advocates say the reduced feed-in tariffs will do little to dent the rising investment in solar panels. As power prices continue to rise and photovoltaic cell prices reduce, discerning investors will continue to seek the energy security, efficiency and resilience that solar panels offer.
It’s expected that some people will invest in bigger systems to offset increasing power bills. Battery storage is becoming cheaper all the time, so as buy-back rates from power companies reduce, the value of investing in batteries improves. People may also reduce their energy consumption rather than pay more to buy-back electricity. Worse deals from power companies will also encourage people to get smarter with their use of the energy they generate – the self-consumption model, where the incentive is to use more of the energy you create when you create it because it’s more efficient than storing it or feeding it into the grid only to have to buy it back later at a higher price.
The ‘race to the lowest price’ competition between the power companies seems unlikely to disincentivise solar generation too much, given the range of reasons people invest in it. But it will discourage grid-feed behaviour.
There are many good reasons power companies should be supporting localised solar generators. Solar panels offer power companies extra energy creation when their main sources are depleted. For Meridian for example, solar offers additional capacity when lake levels are low. Solar generation on the periphery also helps reliability and efficiency in areas at the end of the network where it costs more to supply energy than power companies can charge for it. Distributed solar energy production also helps offset transmission loss.
Power companies take home millions of dollars in profits, pay their CEOs huge salaries and disconnect the homes of tens of thousands of families unable to pay their bills. Equity and fairness for solar generators is likely to be low on their list of priorities.
Christine,
This is an excellent post you put up here,
We know that the end game is for the power retail companies to maximise their profits and have total control the power prices of every property in the country.
Our old meters they are so eager to remove actually reverse the meter register if your own generated power flows back through the meter to the grid, thereby netting 100% return on your power sold back to the grid for those who are fortunate to retain their own meters that still have the spinning wheel drum and a manual register that still reverses the amount of power actually used.
As an electrician we have installed many of those older models that debit automatically any self generation revenue through reverse registry, and when we carried out load tests on their function & accuracy abroad, we would reverse the meter register to see if they still function this way accurately and correctly.
There is no law preventing you from retaining your own meters, the Electricity Authority advises us all.
Our advise is refuse any change of your non electronic all mechanical analogue metering.
Simply request a recertification of the existing model if it is a reversible register model.
Or find one to buy and become a MEO (meter equipment Owner) as Electricity Authority request we become one if we own a meter simple form filled in at no cost and take back your power.
We can provide an email address where to order these original style meters at this location.
Just enquire on this site and they will advise you.
Merry Xmas all.
http://www.stopsmartmeters.org.nz/how-to-avoid-getting-a-smart-meter/
While Germany on the other hand, pays farmers to have wind turbines on their farms, offers subsidies for the installation of PV panels on private homes, barns and even churches and the private power companies pay almost what they charge if you feed into the national grid. This is also the country that after Fukushima, shut their nuclear stations almost overnight.
We ought to be ashamed of ourselves! This is really shocking news and one day these companies will be forced to act responsibly.
Germany is also in the process of building lots of new coal fired power stations to replace its nuclear fleet, and is strip mining for lignite
one village in germany even built there own grid formed there own power company
mopped up there unemployed http://blog.rmi.org/blog_2014_02_19_renewables_power_a_rural_german_village
I’ve had solar installed. You’re right, the savings come in what I can do with the power I generate during sunlight hours – heat and run the spa pool for later use, throw my clothes in the dryer, run power tools and garden contraptions … All of which would be cost prohibitive without my solar generation!
Next step – buy a battery storage unit to run the fridge and tv during non-sunlight hours! Any profit I can keep from Meridian is a good thing 🙂
Meridian’s old tariff was 4 times the wholesale rate.
I’m not sure how subsidising the middle classes out of poor people’s pockets fits into the collectivist mindset.
Subsidies for Carbon Pollution?
New Zealand has one of the most abundant renewable energy markets in the world. Hydroelectricity and currently geothermal is booming.
Unfortunately our solar resources are not the greatest but why do we want to encourage IMPORTs of solar panels. How many carbon miles in that, transport and coal based electricity to make them in polluted China.
So we want replace our clean proven renewable energy resources for relatively dirty solar? It’s great for Australia, replacing their coal based electricity and abundant solar resources but for New Zealand? i don’t think so.
Time to think for ourselves and our own circumstances and stop jumping on bandwagons. Greenies wanting subsidies to support their own ill considered investments. Typical.
I am in agreement here. We have a world class hydro system and potentially 100% hydro if Tiwai Point closes.
It would be much better for all of us to support the hydro system and make sure everyone gets a fair deal. I think the electricity market in NZ needs to be more transparent to the consumer.
Solar is OK but it is a personal choice and on the whole it weakens the grid. It is a misconception that generating solar is good for the economy or the environment.
@ Andys
‘ The Grid ‘ you speak of used to be our ‘grid’ . The collective Grid . The Grid , like our other essential infrastructure should never be expected to show a profit . The solar power generation concept is as a result of that ‘ Grid ‘ being taken from the collective ‘ us ‘ and privatised , thus forced to generate profit . That , by itself made the ‘ grid ‘ it’s own worst enemy . Therefore , fuck the grid and generate electricity however you can .
The need for making a profit from the ‘ Grid ‘ is in effect our enemy so lets kill it off I say .
Our Banks operate within that same premise so lets get rid of them too . Oh , and the money lenders , casinos and public transport ‘ companies ‘ .
Health providers , for example are heading that way on a daily basis . Every time some lizard slithers into parliament to lobby our plump and plush politicians to push for health insurance company to take over from the Ministry of Health, sick people in NZ should quiver in fear .
You say @ Andys
” Solar is OK but it is a personal choice and on the whole it weakens the grid. It is a misconception that generating solar is good for the economy or the environment. ”
Solar is NOT a personal choice . It’s a ‘ choice ‘ forced upon people who find themselves being rorted by swindling ‘ power companies ‘ .
‘ On the whole , it weakens the grid . ‘ Of course it fucking does . That’s called competition . And competition isn’t always a good thing is it Meridian / Contact ? In fact I’d suggest that ‘ competition ‘ generally is a cluster fuck of an idea . It’d be much better to have co-operation instead . Imagine if we had power generators on lakes and rivers and as a public asset they found themselves enjoying a cooperative financial environment of information , person power and other asset sharing ? Would we have an efficient and affordable power grid ? Or would we have a few loathsome creeps sucking at our natural resource tit ?
” It is a misconception that generating solar is good for the economy or the environment. ”
While I’m reluctant to try and dignify your comment with a response , I have to ask why you would think that ?
I have an idea of why you ask that question regardless of why you think that . And I doubt very much that you do in fact think that .
You might say something as dumb as that to try and plant a logical fallacy into the minds of those who are yet to come up to speed with the wily ways of the Machiavellian Confederate . Well , good luck with that here mister . You’d best stick to WhaleOil . That’s where you’ll still find the few terminally stupid who would fall for that bullshit .
Meanwhile , the rest of us are trying to pick our way through the dystruction that 30 years of neo liberalism as left lying around . We , as a society are slowly working out the shape of the swindle . It is happening . The fog is lifting .
Ideology first, environment second
Renewable energy as a percentage of energy is grown from 65% during the last year of the Labour government to 79% now and towards the goal of 90% in 2025.
This has nothing to do with the National government, but interesting isn’t it. Politicians would be quick to assign blame if the positions were reversed. Imagine, the headlines: “More Carbon Pollution under National”
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11372220
Solar energy is produced at non peak times that is the problem. It does not displace Gas/Coal for Peak demand times
To be fair to everybody, it should be bought from producers at market wholesale rates. Otherwise you have the situation in Queensland where under the GFC, the government regulated that solar power would be bought at three times the retail rate, or 7 to 8 times wholesale rate. Now the poor who couldn’t afford the solar panels are paying higher electricity prices and subsidising the rich and middle class.
What perverse outcomes.
For reference as an expat NZer…
i have solar panels here in Australia getting 8c/Kw for export and even with the installation subsidy, it does not pay for itself. For reference I have a 2KW system, producing 2600KW per year and exporting 80% of power produced. It cost me $4000 upfront, if I take into account depreciation, opportunity cost…it isn’t really worth it here in Victoria. Probably less so in New Zealand, unless there is a revolution in Battery technology. That is what we really need to make it worthwhile.
Beware of the law of unintended consequences. And Smart people learn from others mistakes.
“Solar power isn’t a choice”
I see, so i am somehow “forced” to go out and flick $20,000 to a PV company?
Why should I bother “gracing” your comment with a response, I should wonder.
if you going to install solar that depends on messy contract arrangement that have shifting goal post that is a risk ,the hot water is largest user of electricity we advise people to install solar for water heating take your saving through reduced power input through the meter that way what ever these rouges at the power companies do doesn’t affect you you are heat water with the sun you taking the subsidy directly but more importantly there is no arrangements with these pricks
Great article Christine I would like to see a Solar Users group formed so we can lobby the Electricity Authority to pay a fair price for the solar power produced and returned to the national grid.
The power companies obviously feel threatened by the continued increase in families adoptin solar power.
Ideology first, environment second
Renewable energy as a percentage of energy is grown from 65% during the last year of the Labour government to 79% now and towards the goal of 90% in 2025.
This has nothing to do with the National government, but interesting isn’t it. Politicians would be quick to assign blame if the positions were reversed. Imagine, the headlines: “More Carbon Pollution under National”
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11372220
Solar energy is produced at non peak times that is the problem. It does not displace Gas/Coal for Peak demand times
To be fair to everybody, it should be bought from producers at market wholesale rates. Otherwise you have the situation in Queensland where under the GFC, the government regulated that solar power would be bought at three times the retail rate, or 7 to 8 times wholesale rate. Now the poor who couldn’t afford the solar panels are paying higher electricity prices and subsidising the rich and middle class.
What perverse outcomes.
For reference as an expat NZer…
i have solar panels here in Australia getting 8c/Kw for export and even with the installation subsidy, it does not pay for itself. For reference I have a 2KW system, producing 2600KW per year and exporting 80% of power produced. It cost me $4000 upfront, if I take into account depreciation, opportunity cost…it isn’t really worth it here in Victoria. Probably less so in New Zealand, unless there is a revolution in Battery technology. That is what we really need to make it worthwhile.
Beware of the law of unintended consequences. And Smart people learn from others mistakes.
I have never understood why the Rate of Return on Investment has ever been a consideration when installing solar, when it has never been when buying a new car, tv, spa pool etc etc etc.
Exactly. At the moment it is a consumer item. To make you feel better about yourself, ” aren’t i clean and green”. I am not keen to subsidize tv, spas either. If it actually reduces carbon emissions in New Zealand, one can make a case. But not if it increases costs for non solar users such as the poor.
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