Solar water heaters are not a "silver bullet" for tackling climate change because they are of little help when they are needed most, a report has found.
The 75-page report from Parliamentary Commissioner for the Environment Jan Wright, released today, looked at the extent to which household solar water heaters could help to reduce the need to build more carbon-emitting fossil fuel power plants.
Dr Wright found solar water heaters reduced carbon emissions but were not a "silver bullet" because they did not flatten electricity peaks.
"While solar water heaters save electricity, they are least effective when savings are needed most - on the cold dark days in winter when people have their heaters and lights running and fossil fuel plants are cranked up to meet this peak demand," she said.
"Flattening this peak demand is needed if we are to avoid building more fossil fuel power plants and meet the Government's renewable electricity target."
The Government has set a target of 90 per cent renewable electricity generation by 2025, compared with 77 per cent last year.
"Unfortunately solar water heaters - even in large numbers - don't help much with this."
Household water heating accounts for almost 12 per cent of all electricity use in New Zealand, and solar heaters are promoted at both a central and local government level.
Some 30 councils have introduced or are considering solar water heating schemes - including in Auckland and Christchurch, where there is higher demand for new houses.
In Auckland, a pilot programme aims to install more than 250 solar water systems in homes and businesses within the next year, while solar heating is being promoted in the rebuild of Christchurch.
The Government has stepped back from funding solar water heaters, having scrapped grants for them in this year's Budget in favour of an information programme on efficient water heating.
Dr Wright's report found policymakers needed to take into account the importance of reducing peak electricity use to tackle climate change.
"Having electricity demand spread more evenly over time, either during the day, or across the year, means we can use our renewable energy sources like wind and run-of-river hydro to meet most of our needs, and that is better for the environment."
The report noted one way to spread demand more evenly was to heat water only at night, which cost about half as much as uncontrolled water heating.
That could be achieved with ripple control - which allows water heaters to be switched off remotely during the day - or smart meters.
But the report found ripple control infrastructure was being eroded at a local level; there were no set standards for smart meters; and lines company regulations did not encourage investment in load control and energy efficiency.
The report recommended the Energy Efficiency and Conservation Authority should provide better information on electricity efficiency and renewable options, including solar water heating, so the environmental benefits and cost-effectiveness of different options were clear.
It also recommended an investigation into how electricity regulations were constraining the potential for load control and demand management.