If Germany has the world’s highest uptake of solar energy, with sunshine hours equal only to Invercargill, then Hawke’s Bay should be in pole position to leverage the latest innovations in solar energy.The 60-year-old solar business, previously plagued by inefficiency, high cost and poor performance, appears to be nearing a tipping point that will shift the demand from early adopters to mainstream use.
The cost of photovoltaic (PV) cells has plummeted by around 80%, battery storage is undergoing a metamorphosis, smart energy management is improving, and researchers have come up with jaw-dropping breakthroughs in materials and processes.
Then there’s an invitation for the region to partner with China’s ‘solar capital’ to showcase and import leading edge systems.
Sun city synergies
If an offer by the mayor of Dezhou City stacks up, Hastings mayor Lawrence Yule believes Hawke’s Bay could become the solar capital of New Zealand, showcasing the latest Chinese technology.
Yule was part of a Hawke’s Bay trade mission to Shandong Province last year when he was shown streets, hotels and office buildings in Dezhou City powered by locally developed solar systems.
He’s now bringing himself up to speed with what that technology might offer for the region before putting proposals to his council, Napier City, HBRC and potential business partners and formalising a science and technology memorandum of understanding (MOU) in China in May 2015.
He’s prepared to arrange for land and buildings and sort out consenting issues in the hope the solar alliance might be operating within two to three years. Yule’s hopeful the right mix of technology might even attract government funding.
“It’ll be a Hawke’s Bay relationship, but I want to start it … this is a technology of the future. The Chinese have offered to set it up so why wouldn’t you?”
Yule wants to work closely with local power company Unison to avoid any conflict that might undermine its customer base or place undue pressure on its network. “If the world is going to move this way the more we understand the opportunities the better … We don’t want a rear-guard action against this.”
He suggests Unison’s smart metering system, able to control demand management and variable pricing, makes it a good candidate for integrating solar into the mix.
Roof top relief
John Bell, Massey University business manager for Hawke’s Bay is “110%” behind Yule’s plans, offering university backing if there’s sufficient interest. But he suggests there’s a need to look at a wider range of technologies and partners.
He’s enthused by new nanoparticle-based material for solar power plants, designed by an engineering team at the University of California, that absorbs and converts over 90% of the sunlight it captures.
The concentrating solar power (CSP) system uses thousands of reflective mirrors to aim sunlight at a tower sprayed with a light absorbing black paint to maximise absorption. It heats molten salt to generate electricity from steam 24 hours a day, and can be retrofitted to coal, oil and other generating plants.
Bell says the solution, revealed in October and funded by the US Department of Energy’s SunShot programme, is what everyone’s been waiting for.
Lawrence Yule is already looking for opportunities to make solar shine. Panels on the roof of Hastings District Council offices or the Regional Sports Park might help offset daytime power bills and high line charges.
Unison might like to be involved if the technology pointed to true diversity of land use through fields of distributed solar panels, although some might complain about the glare or the view.
“In the US they have whole deserts of the things … we need more understanding (of whether) there’s a good case for that. It’s more attractive the cheaper it becomes. As a country I don’t think we’re doing enough,” says Yule.
Bell believes local councils should collaborate on a compelling case by removing all obstacles for potential partners in China or the US. Building those partnerships now “could make the difference between being at the forefront of commercialisation in five years or fifteenth in line.”
Steep curve ahead
Like other sunrise industries, many are watching the early adopters for leadership. Hawke’s Bay Regional Council’s $2.2 million refurbishment of its leaky north-facing Napier premises in 2013 looked like such an opportunity.
However, the annual saving of $3,000 over 16 years to get payback on the $45,430 investment wasn’t convincing enough.
There’s been strong interest in solar at a series of public meetings, so it’ll remain in HBRCs draft long term plan, although there’s no specific programme.
Interim chief executive Liz Lambert is all for Hawke’s Bay becoming the ‘solar capital’. “Let’s claim it before Marlborough tries it, like they did with wine country”, but wants to see a credible business case.
Her council will keep a close watch on Yule’s negotiations with Dezhou City, hoping at least for a more cost-effective offering to kick start its stalled $6 million Solar Saver loan scheme.
In its last LTP, HBRC provided for up to $6 million in loans to encourage installation of solar hot-water heating, to be repaid via a voluntary targeted rate on the borrowers, with consents to be issued by the Napier and Hastings councils. However, the scheme hasn’t been progressed due to advice, periodically reviewed, that the payback period for conversions would be too long.
Aaron Duncan from Freenergy Solar has around 200 installations in Hawke’s Bay with a growing focus on commercial and industrial premises.
Only two years ago his business was 90% solar water heating, now PV panels which power a house and divert excess electricity to hot water cylinders make up 85% of his business. He’s completed several 10kw, 40 panel jobs and is negotiating for 40kw systems requiring up to 160 panels.
The ideal customer, he says, is company-owned premises with plenty of rooftop real estate. “One company pays $60,000 a month on power and we believe we can save at least half of that.”
He says there’s plenty of reliable data showing solar works for dairy farms, wineries and the biggest installation in New Zealand, a shopping mall in Whangarei with a 240kw system.
Bruce Emerson of Harrisons Energy Solutions, entered the market in mid-2014, convinced solar was maturing. He reckons New Zealand has grown from around 1,000 to 30,000 installations a year, up 300% nationally and locally in the last year alone.
Emerson “and just about every other installer” – either franchisees like himself, remarketers, re-branders or direct importers – “have been inundated with inquiries.”
There were six installers at the Hawke’s Bay Home Show in September and as Aaron Duncan says, “just about every sparky in Hawke’s Bay can source products from wholesalers now.”
Ideally solar energy turns your home or business premises into a mini power station diverting excess capacity back to the grid to further reduce power bills.
The big four power retailers will buy excess domestic generation but they’re not exactly encouraging it. “They don’t want to be subsiding your power when they can be charging you full whack,” says Duncan.
He says it’s up users to make solar work for them regardless of the power companies. “While it’s nice to have a feed-in tariff to offset costs, that’s not what we base our business case on.”
Bruce Emerson says solar is on a sustainable growth path and he’d hate to see Australian-style subsidies or buy-back tariffs skewing the market by creating unsustainable growth and quality issues. “Don’t fiddle with the industry to give it a boost, as that encourages fly by nighters to cut corners.”
He would, however, like to see government controls to prevent retailers colluding on price. He’s referring to the 24 hour period in November 2014 when Contact and Meridian slashed their buy back rate for self-generation.
“If they’re agreeing to cut the rates that’s a concern” as it could be undermine the potential for solar growth, he says.
The Dezhou model being look at by Mayor Yule, for example, is not designed to connect to orthodox lines network and is a challenge to lines companies and Transpower.
Yule warns: “You have to make sure existing players don’t discourage the introduction of new energy sources,” asking “why wouldn’t you use an energy source that’s free?”
He echoes Deputy PM Bill English’s recent comments that lines companies may eventually have to rethink the distribution model they operate under.
He empathises with consumers whose electricity bills are often higher than their annual rates, creating a sense that “the whole value proposition has been lost”.
Regardless he reckons there’s a sweet spot for solar to co-exist in a parallel evolution with lines companies reducing the load on networks, cutting the carbon footprint and bringing benefits to ratepayers.
Yule has a case study from one Chinese distributor operating in New Zealand, promising a four year return from a $20,000 investment in a 5kw system. Couple that with new micro battery technology that can be charged “from nothing to something in a minute” and he has a eureka moment.
“If I was to build another house in the countryside, I’d probably go off-grid … with solar and cellphone technology and stored water…”
Local lines company Unison isn’t taking the challenge lying down. It has a commercial scale research installation at its offices, and at Fitzroy on the Park it’s trialling solar generation and battery storage to smooth peaks.
Unison’s Ken Sutherland says he’s looking into engineering and network management implications and power quality issues related to solar photovoltaic generation.
Additional transmission network investment may be required to cope with growth in electric car use, new technologies and solar on-selling.
If 50% of household power was solar, that could reduce Unison revenues by a third, but the fixed cost of line capacity would remain static, with that cost still needing to be paid by electricity users.
Sutherland doesn’t see solar photovoltaic generation as a substantial component of New Zealand’s energy mix. Currently the country has a “highly renewable mix with several large scale renewable generation schemes in the development pipeline” and an oversupply of generation.
Shocked into solar
Bruce Emerson, says the biggest driver for solar panels isn’t necessarily the ‘clean and green’ incentive or increasing viability, but the exorbitant prices charged by electricity resellers.
“Over the past 12 years the price of electricity has risen 118%, while the cost of solar panels has decreased as this industry gets up to scale. It’s the perfect storm really.”
Most of us, he says, are perplexed about why power costs so much when it’s mostly produced from sustainable and renewable resources and our dam infrastructure and distribution network has been around for decades.
With commentators speculating that more accurate data from smart meters will result in significant increases in peak hour pricing, he says, people will turn to solar “to give the two finger salute to energy retailers”.
Aaron Duncan agrees peak hour charging will put more pressure on those who can least afford it, making solar even more compelling.
“I’ve had pensioners in tears ringing me about their power bills, they’re so frustrated … many are going to bed really early to avoid power use and some turn off their hot water cylinders entirely … It’s sad.”
Unison’s Sutherland says time of use (TOU) tariffs may result in “greater variability in electricity pricing” to reflect differing power costs. But the result would be “a reallocation of costs” amongst all users, rather than an increase in profits.
Smart solutions ahead
A counter to smart meters may be smart solar management systems that determine more effective use of power.
Duncan says automated controllers interface with the inverter, monitoring daily generation and consumption, diverting excess to the hot water cylinder, spa pool heater or swimming pool pump rather than the grid.
Small scale storage with 3-4 hours runtime as part of ‘distributed solar technology’, enables better solar management and less reliance on the grid.
Traditional lead acid batteries arrays are giving way to smaller, more eco-friendly lithium batteries that charge more rapidly with the cost now in freefall, in some cases from $30,000 to $15,000.
Eventually, says Duncan, the grid will keep batteries charged to further compensate for peak hour tariffs.
Others innovations include new types of longer lasting n-type silicon base material, transparent film overlays for glass and more efficient PV panels embedded in roof or paving tiles.
SolaRoad began a three year trial in the Netherlands in November using a short stretch of cycle track with ‘Lego-like’ panels; each square metre can supply enough energy to power one or two houses.
People power a driver
Unlike other countries that depend on fossil fuel generation there’s no strong environmental driver for New Zealand, with 75% renewable generation, to take up solar.
While supportive of large-scale solar generation for Hawke’s Bay, Aaron Duncan believes that must be driven by domestic and business uptake of more affordable, smarter systems.
Massey’s Hawke’s Bay business manager John Bell insists opportunities to partner with technology owners in China and the US should be pursued with vigour by local councils so we can deploy domestic, micro-generation and massive electrical power generation as soon as its commercially viable.
Bell says we should avoid trying to replicate existing efforts and let international experts lead the way, preferably with Massey assisting through its global science and technology connections. Sunlight and our open spaces, he says, are Hawke’s Bay’s genuine point of difference.
Payback’s a Glitch
Claims of massive growth in Hawke’s Bay solar installations may have some merit, but if those connecting back into the power grid are any indication, the trend is hardly revolutionary.
Unison only had 20 solar links in 2012 and that had ramped to a total of 136 by November 2014, including 122 residential, 11 business and three schools.
Unison chief executive, Ken Sutherland says lower prices, more suppliers and a rise in awareness have led to “a modest increase”.
However, he claims the recent reduction in solar buy-back rates by Contact and Meridian has reduced the value of selling back to the grid, placing more focus on the quality and capacity of solar systems and users extracting maximum value from their investment.
The Electricity Authority is currently looking into a call for fairer and more predictable buy-back prices and allegations that power companies are trying to stifle solar generation.
BayBuzz research suggests a prime market for solar systems is baby boomers, looking to cut costs ahead
A 3kw entry level system can cost $6000-$10,000 with payback between 5-8 years, although offsetting a monthly power bill of $400-$500 may require a $20,000 system.
Unison remains sceptical, suggesting even an investment of $9,000-$12,000 and selling about $900 a year back to the grid with payback over 10-15-years is still not viable, particularly if no one’s home during the day.
And Sutherland wonders whether a small scale 1.5kw system at around $7,000 would stand the test of time or generate the same long-term output over “more reputable brands”.
“Unison’s detailed modelling, which is based on typical consumer load profiles relative to solar generation forecasts, certainly doesn’t support a 5-6 year payback,” he says.