Monday, February 17, 2014

Why The Green Party's Solar Panel Proposal Is Smart Policy

Yesterday the Greens announced a policy to increase the number of solar panel installations, the second stage of their highly successful home insulation policy which has been in effect since  2009.
 
Low cost government loans would be provided in order for households to install solar panels and which would then be paid back over a number of years. Details of the Greens policy can be found here.
 
The reaction from National has been negative as expected. John Key was quoted on Breakfast this morning as saying:
"If you look at the big emissions at the moment in New Zealand, it's Genesis through Huntly where they have coal fired power plants, and the plan that [the Greens] have got is going to reduce all competition and in my view, put up power costs to consumers, not reduce it, [and] actually locks that in."
Unfortunately for Key the experience overseas with home solar power has been exactly the opposite. In Western Australia (WA) solar panel installations have grown from zero to 130,000 in just five years and continue to grow at a rate of more than 2,000 a month. This has been pushed by a 70% rise in power costs from utilities since 2008.
 
The massive increase in home power generation has led to what appears to be a “death spiral” for utilities as the gap between the cost to generate, transmit and sell electricity and the end charge to consumers has widened. This has led to state owned Synergy revealing that the cost of delivering power through the grid was $500 million more than what it received from consumer bills.
 
Meridian chief executive Mark Binns said last week he "can't follow" the numbers put forward by proponents of solar power. “On our numbers, in our analysis, it is still probably not viable if you went to an accountant."
 
This is an odd statement to make from a man that runs a company that sells solar sheds to farmers as “the future of your farm.” The first benefit on their website mentions reducing your energy costs.

It could just be that Binns has seen the writing on the wall from his off siders over the Tasman and is concerned about his own companies long term viability. If the Greens solar policy rolls out over enough households it could make a very real dent in profit margins.

 
One of the major differences between Western Australia and New Zealand that could see solar having less of an impact here is sunshine hours. While most areas in New Zealand get more than 2000 sunshine hours annually, WA averages roughly 2900.
 
That being said solar still has a lot to offer in New Zealand. The government’s own Energy Efficiency and Conservation Authority (EECA) states:
“…if every New Zealand home had a 3kW photovoltaic (solar) panel array, they would collectively generate enough power in a year to satisfy over a quarter of New Zealand's annual residential electricity needs.”
As New Zealand's solar energy resource is about 4 kWh/m2 per day the potential cannot be balked at.
 
For those New Zealanders that have already gone down the solar route the benefits are telling. Nelson solar panel users have reported making a profit from feeding electricity back into the grid. As more households come onboard opportunities like this will likely dry up but it is still worth noting that real world experiences fly in the face of what industry experts like Mark Binns are saying.
 
Other real world examples include Putaruru farmers Hugh and Sue Chisholm. They have installed one of the country's largest solar powered systems ever to be used on a dairy farm and expect to see a return on investment of 12.8 per cent.
 
The Greens solar policy isn’t a magic bullet, but coupled with the home insulation programme it is another step in the right direction. National needs to stop dragging its feet and get on board with  sensible policy.

3 comments:

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