Solar water heating may not be worth investing in because it is near-useless at crucial peak times, the Parliamentary Commissioner for the Environment says.
In a report released this morning, commissioner Jan Wright told the Government that solar water heating would not significantly assist in its goal of 90 per cent renewable electricity generation target by 2025.
She also cautioned councils that were investing in solar water heating that they should consider whether alternatives would be more environmentally sound and cost-effective.
Dr Wright said solar water heaters performed best in summer when days were long and sunshine was brightest, and this reduced the pressure to build new baseload power generation.
"On a daily basis, solar water heaters are winners when it comes to reducing carbon dioxide emissions."
However, solar water heating did not reduce peaks in electricity demand, such as in winter when temperatures were lower, darkness came earlier, and carbon dioxide emissions from power plants were at their highest.
On a summer day solar water heaters used an average of 1kWh of backup electricity. But on winter days, they used 7kWh of electricity.
This meant solar-powered energy sources did not reduce the pressure to build new peaking power plants and power lines.
'Unfortunately, solar water heaters are at their least effective when saving electricity benefits the environment most," the report said.
The Government has committed to a 90 per cent renewable electricity generation target by 2025.
"The 'peakier' electricity demand becomes, the harder it will be to meet this target," the report said.
The Green Party, who are strong advocates of renewables including solar, said the report was "unhelpful" and did solar water heating a disservice.
Energy spokesman Gareth Hughes said: "We agree that peak electricity demand is a key area to focus on... but there is no magic bullet, it's always going to be a mix of energy sources - solar water heaters, or smart meters or heat pumps."
Thirty councils have some involvement in solar water heating schemes, or were planning a scheme.
In May, the Auckland Council launched a solar power pilot scheme, which included the subsidised installation of 250 solar water heaters in homes.
"Councils that are subsidising solar water heaters for environmental reasons should consider whether other assistance would yield greater environmental benefits at a lesser cost," the commissioner's report said.
Auckland Council environment and sustainability forum chair Wayne Walker said he found the report's findings "very surprising".
But he said the council remained committed to solar water heating as a means of reducing residents' and businesses' power bills and dependence on the national electricity grid.
Dr Wright said heating water only at night was more effective and cheaper than installing solar-power heaters.
The report recommended increased used of smart meters and ripple control - sending high frequency signals through power lines - to help turn off water heaters during the day.
She asked the Minister of Energy and Resources Phil Heatley to investigate how electricity laws constrained the ability to control electricity loads.