It’s not just you heating up in our summer sun.
The case for solar is warming up too, with next-tier customers holding out for a shift in the cost of the latest kit – and in the position of electricity lines and retail companies – before taking advantage of Hawke’s Bay’s perfectly placed north-facing roofs and abundant sunshine.
Obstacles to uptake include the high price, reduced buy-back rates, Unison’s solar pricing, and official reports stating return on investment (ROI) doesn’t stack up.
Regardless, the industry is consolidating and bracing for growth with the arrival of next generation panels, tiles, lithium-ion batteries, smart appliances and new financial packages that lower the bar for entry.
“This is the future where we’ll be plugging our car into the house; where any excess solar generation goes into a 14kWh battery that will be hard to use up unless you’re operating a lot of machinery,” suggests Te Awanga-based solar broker Sebastian Nilsson.
Many hope a Labour-Greens update on previously rejected Fair Go for Solar and Electricity Industry Amendment bills and a supercharged Electricity Authority (EA) will provide direction and force the industry to be more accommodating to solar.
Solar buy-back rates, once over 10 cents per kWh, dropped to 7-8 cents per kWh from 2014, reducing surplus solar savings.
Setting the price
Then in April 2016 local lines company Unison introduced its solar pricing – dubbed by some a ‘solar tax’ –saying its flat-rate prices were creating unfairness between customers with and without solar. Unison argues that customers who can’t afford solar shouldn’t have to carry the cost of the network being available when still needed by solar customers.
It says solar reduces daytime consumption but makes “no contribution to reduction in peak demand, particularly when customers need it most in winter”, which is a major driver of network costs and investment.
Bruce Emerson, owner of Harrisons Energy Solutions regional franchise, says the solar differential of “3 cents per kW to draw on the Unison network”, along with low buy-back rates, created a level of uncertainty.
Most people have ‘calmed down’ after the initial shock and are now figuring out other ways to make solar work for them.
“Inevitably solar will play a significant part of the electricity matrix; it may never be on par with grid electricity, but in five years it will be substantially bigger,” says Emerson, a comment seconded by Unison.
Emerson, recalling lengthy power cuts during the 2016 Hawke’s Bay storm, warns there will be increasing pressure on the network and national grid as storms become part of our changing weather patterns.
Uptake still minimal
While early adopters have ‘filled their boots’, Harrisons is having to work much harder to convince next-level home owners who are mostly waiting for prices to drop.
Some members of the Sustainable Electricity Association (SEANZ) are trying to help by offering solar as a service or Solar PPA (power purchase agreement) deals, where customers pay a fixed power price to have a system installed.
Spokesperson Kristin Gilles says “upfront costs need not be a barrier” now that you can get solar for zero-dollars down.
Just over 700 of Unison’s 110,000-plus mainly residential network customers across Hawke’s Bay, Rotorua and Taupo – less than 1% – are on solar.
That’s a far cry from 20 solar installations in 2012 and 500 by April 2016, and with about 20 switching monthly, it’s a promising trend.
From 1 April 2017, Unison began rolling out a time-of-use (TOU) price structure to reward customers actively managing their demands, thereby reducing peak time network pressure. Under this pricing, solar users pay on average $185 less in lines charges than non-solar customers in recognition of their lower demand.
Emerson says solar customers are already “fairly savvy” about load shifting their power, and applauds Unison’s move to TOU, hoping it will eventually make solar pricing redundant “because everyone will be on the same page”.
In November, Unison CEO Ken Sutherland, who’s also Electricity Network Association (ENA) chairman, slammed electricity retailers for pointing the finger at lines companies ahead of the Government’s first independent review of electricity generation and retail pricing in a decade.
He pointed out the irony of Meridian, Mercury and Trustpower – each posting ‘bumper profits’ – wanting the likes of Unison to drop their charges.
Unison, currently exploring distribution pricing with retailers and customers, expects to withdraw its solar pricing by April 2020 when new pricing is introduced. In the meantime, customers can move to Unison’s TOU price plan.
Marketing microgrids
In April 2016, Sebastian Nilsson, working for Gold Power Solar, outlined his vision for a solar-powered settlement along the Cape Coast after getting the Farmyard Zoo, Haumoana Four Square and Clifton County Cricket Club over the line.
The independent solar broker wants to progress the concept with local developers, claiming they’ll need only a single power line to sub-divisions with solar microgrids taking homeowners a step away from going off grid.
Excess generation would be fed back to the network or help fund community projects.
He’s also proposing that residential developers and owners of large commercial premises offer their tenant low cost power as part of their lease in a scheme that could pay off solar installations within five to 10 years.
Nilsson says it’s worth considering that power reticulation costs off the main road or for new rural homes or subdivisions can approach $100,000, compared to going off grid with solar for $25,000-$30,000.
“I’ve done a few in Hawke’s Bay and if you are worried, you have a back-up generator, even a solar powered one…things are moving forward.”
Solar school savings
As part of its zero emissions and ‘100% renewable electricity by 2035’ aspirations, the Government is investigating solar for schools.
SEANZ reckons an investment of $150 million for 25 kWp (kilowatt peak) systems would enable the country’s 2,500 schools to save $20 million a year.
More than 130 schools have solar panels or are moving that way for lighting and appliances. Locally, Freenergy Solutions has installed a small system on Tuai School and a 10kW system on a day care centre in Hastings and is currently installing 21kW (72 panels) onto Napier Intermediate.
Kristin Gilles from SEANZ says schools are perfect for solar as they consume all their energy during the day with savings diverted into better learning opportunities.
She says Pegasus Bay School in Christchurch, New Zealand’s first net-zero energy school which opened in 2014, now produces as much energy as it consumes. Its 86 kWp solar system is expected to save $28,000 a year.
Gilles believes new financial packages offered by solar installers will help other schools make the switch.
Unison in trial era
Through its solar generation and battery trials at Fitzroy Avenue in Hastings, Unison is learning first-hand the impact of solar, batteries and EV uptake, seeing how consumption patterns change and impact the system, and what the real costs and benefits are.
For now the company says domestic cost benefits remain marginal for most consumers, who are still heavily reliant on its network.
While “the benefits for consumers are not there yet”, Ken Sutherland agrees that in-home battery trials suggest “significant potential to help reduce peak demands.”
With improvements in price and performance, Unison will revisit consumer opportunities; potentially partnering with technology providers and retailers and trialling “peer to peer trading among consumers”.
Sutherland says those with “fairly constant daily and seasonal loads” – including large retail complexes, or “green communities” – could benefit from “an optimised combination of grid, solar and energy storage or a triple-play of solar, storage and EVs.”
Chinese whispers
In 2014, then-Mayor Lawrence Yule, was buzzing over the possibilities of a solar technology partnership with Dezhau City in China, a big idea that fizzled out within a year.
The Chinese planned a business here with Yule imagining council and the Hawke’s Bay Regional Sports Park rooves hosting leading-edge solar systems offsetting daytime power bills and high lines charges.
He hoped Unison might see value in distributed generation but after their representatives checked out the technology they backed off, claiming other parts of China and Korea were further advanced.
“Everyone knows solar is the way to go but it comes down to economics and when to go with it,” says Yule, who suggests everyone’s still waiting for a pivotal price shift.
A series of reports from consulting group Concept, backed by the Government’s Energy Efficiency and Conservation Authority (ECCA), Consumer magazine and the major power companies, further fuelled solar industry concerns.
Concept stated the $20,000 price tag of a full solar system would be better invested in home insulation and a second-hand electric vehicle.
It said outdated electricity pricing structures didn’t reflect “underlying cost drivers”; that “skewed uptake decisions” could increase greenhouse emissions, with inefficient expenditure potentially costing $2 billion over the next 20 years.
It concluded that significant uptake of solar panels could result in the wealthiest people getting lower power bills, while the poorest paid more.
Leadership needed
Strong leadership is needed, says My Solar Quotes founder Kristy Hoare, particularly when the country is trying to build as many houses as quickly as possible, mostly without considering the value solar could bring.
Some subdivisions make it compulsory, but most architects and builders aren’t bothered because it’s not their expertise or concern. “They just keep building the bare minimum … and make them look pretty so investors can buy and sell and make a profit.”
She suggests regulators include solar as a requirement for a high-end Homestar rating.
Solar, she says, is “going crazy” in many parts of the world. “China is installing the equivalent of a football field of solar panels per minute and there’s no chance a few companies in New Zealand can stop that momentum.”
A recent Australian case study revealed large power companies that lobbied hard against solar ended up being big installers. “It was a case of, if we can’t beat them, join them,” says Hoare.
While some remain averse, Vector and Mercury now sell solar systems. “Genesis was really sceptical but is now coming out roaring with adverts for a smart futuristic home including solar.”
Users pays stays
Unison’s Sutherland remains adamant that all customers meet their fair share of costs, so no single group is “subsidising another’s access to the network”. While incentives for EVs make sense, he doesn’t think solar fits the bill as there’s a high percentage of renewables already in the electricity grid.
Bruce Emerson doesn’t favour intervention either, believing the market will “find its own level” as installers become more proficient and competition drives prices down, weeding out those not committed to quality.
What’s needed, he says, is clear Government direction so lines companies and retailers don’t disadvantage solar. “They need to be told to work with the emerging technologies and develop policies and strategies that embrace them rather than pushing back.”
While Unison is “starting to move with the times”; evaluating the technology, installing charging points for EVs with solar batteries at remote DOC huts, Sebastian Nilsson says more needs to be done to positively shift the case for solar ROI.
And he says, “the Government needs to be more honest”. He claims data on the EECA website is either old, collected under a tree in the shade, or a generalised average, because “in Gisborne and Hawke’s Bay solar is gold.”
Nilsson, with a young toddler and a baby on the way, plans his own off-the-grid home. “I don’t want to remain in the cycle of 8% price hikes in electricity every year for the past five years.”
He predicts power companies will soon start battling it out to keep customers and “treating people a little more fairly, otherwise more will just bail and get off the grid”.
Discipline required
for solar payback
Although the price of solar panels has plummeted around 90% since 2005, the case for increased uptake and payback still largely depends on efficiency, prioritising daytime use, battery readiness and market awareness.
Making solar sing requires discipline – ironing, vacuuming and cooking during the day – and smart appliances or timers to schedule dishwashers, washing machines, clothes dryers, air conditioning and heat pumps.
Phone apps can help determine how much power you are generating, when to divert it to the water cylinder, activate smart grid appliances or offload to the grid.
Kristy Hoare, founder of My Solar Quotes, says an average 1.5kW solar system costs $6,000- $10,000 with return on investment of 10-15% annually, depending on how much you use, when, and what you export.
My Solar Quotes, which connects installers with customers, says a standard 3kW system with eleven 275W panels on a metal roof would range from $10,000-$13,000, compared with around $40,000 seven years ago.
A higher specified 5kW 18-panel system would cost around $15,500.
Setting the scene
Hoare says many Kiwis are opting for smaller modular systems that can expand as needed. And while there’s excitement over Tesla products, including Powerwall batteries, they’ve stopped taking orders because they cannot presently meet demand.
While similar battery systems are available, most installation companies advise getting panels on the roof with an inverter and grid connection so they’re ‘battery ready’ when the price is more attractive.
Solar broker Sebastian Nilsson claims payback on a home solar system can be under five years, “dropping your power bill from $380 to $30 if you are doing it correctly”, including using a diverter for hot water.
If you’re generating 1500kw/h per 1kw panel, he says that’s the equivalent of 9000kw a year to match or offset peak load, potentially saving 50% on annual power bills.
Panels typically have a 30-year warranty and while new and innovative designs are on the way, Nilsson says those installed by the Israelis 45 years ago are still working.
While panels will become more efficient, batteries will keep changing as well. “You just need to do your homework and know what you are getting.”
Bruce Emerson says all Harrisons battery shipments are pre-sold, mostly to early adopters who increasingly think about self-sufficiency without concern for the cost – typically $12,000-$15,000. “It still doesn’t make a lot of sense financially for most people.”
Nilsson suggests lithium-ion batteries will drop $3,000-$4,000 over the next couple of years, eventually bringing the relief the market is waiting for.
Resources:
• ECCA/ Energywise solar calculator. Is solar for you? www.energywise.govt.nz/tools/solar-calculator/
• SEANZ online ROI calculator: www.solaroptimiser.nz/