The Green Party's promise to save households $100 a year on power bills by lending them money to buy solar panels has been tentatively backed by energy experts, despite the Government's claims that the policy is a costly subsidy.
The party announced the second part of its energy policy in Auckland yesterday. Under the Solar Homes scheme, New Zealanders would be able to borrow up to $15,000 from the Government to install photovoltaic panels and then pay it back via their council rates over 15 years.
The interest rate on the loan would be the same as the Crown borrowing rate - at present 4.1 per cent.
Labour leader David Cunliffe said it appeared to be a sensible policy that his party would consider supporting once it had done a thorough analysis of the figures.
Greens co-leader Russel Norman said it was a cost-neutral policy and required no subsidy. That was disputed by the Government.
Energy Minister Simon Bridges said if the scheme required a lower interest rate, it was a government subsidy. He said solar was not a priority because of the abundance of cheaper renewable energy such as hydro, geothermal and wind.
The Greens and National have previously collaborated on a highly successful subsidised home insulation scheme.
But the Government said the Solar Homes scheme was not comparable because solar power was more expensive than buying electricity off the grid. The electricity savings were based on the calculation that a typical 3kW solar-powered system would cost $10,000 and generate $1000 worth of electricity a year.
At the present borrowing rate, households would pay off their loan at $900 a year, saving $100 on bills overall.
This estimate is based on the present borrowing rate, which could fluctuate over the 15-year loan period.
Energy analyst Molly Melhuish said the Greens' estimates were accurate.
"It's not only a good policy, it's a forward-looking policy in that the whole market all over the world is changing and the very large power stations are proving uneconomic."
She added: "Solar is a better buy, as cheap or cheaper in capital cost, [with] no maintenance costs whatsoever, and the only reason that people haven't poured in to buy solar electricity is that when they generate excess electricity they've had no guarantee of a reasonable price to sell that back."
The Greens said they would not follow other countries' example by buying back electricity at higher than the market rate, but would offer a "fair price" for any excess power generated.
The party's target is 30,000 installations in the first three years, which it predicted would create 1000 jobs and make the technology cheaper by growing the market.
Harnessing the sun
*Households loaned up to $15,000 to install photovoltaic panels.
*Potential electricity savings of $100 a year at present borrowing rate.
*Debt repaid through rates over 15 years and secured against the house rather than occupants.
*Excess power can be sold back to the grid at a "fair rate''.
*Panels expected to last 25 years.
*Target of 30,000 installations in three years.