'Explosive growth' tipped as power prices rise and solar panel costs fall.

Global demand for solar panels is expected to hit a three-year high this year and a local company says falling prices are set to spark "explosive growth in solar energy in New Zealand".

Nelson-based Solar City, which installs photovoltaic (PV) panels on roofs to generate electricity, says its orders in the six months to December 31 were up 390 per cent on the same period in 2012.

The company employs 22 people and was formed in 2010 in an amalgamation of three different business.

Solar City also installs panels in the Pacific Islands but chief executive Andrew Booth said the majority of the company's growth was in New Zealand.


Booth attributed the sales boom to a fall in the costs of solar technology at the same time as consumer power prices were going up.

"The difference [between] the price of a solar system in 2008 and today is the price basically has gone down by 343 per cent," Booth said.

"You've seen the fundamental economics of power in New Zealand change quite dramatically in favour of a technology which at the point of usage is able to deliver power at a far more cost-effective price point than ever before."

Booth said innovation and huge investment in the energy source from countries such as Japan and China was behind the drop in solar costs. He said an average Solar City install - a 2.5 kilowatt system which would meet about a quarter of a household's energy use - cost about $6500.

He said a system, which has a warranty for 25 years, typically paid for itself in about 10 to 12 years.

Booth said the view of some in the power industry was that the cost of the technology was dropping to a point where there would start to be "explosive growth in solar energy in New Zealand".

Sustainable Electricity Association New Zealand (Seanz) said in November that local solar PV installations had jumped 370 per cent in the past two years. This had taken the industry's value to about $42 million, or double what it was in 2011.

Seanz chairman Brendan Winitana said that in March last year the association had predicted growth in excess of 150 per cent for the 2014 financial year.


The equivalent of 50 solar installations were taking place each month, and the association's bi-annual survey showed 77 per cent of solar generating capacity was on-grid, enabling the home or business owner to sell any surplus energy, Winitana said.

The association said cost and control were key drivers of growth in New Zealand, with homeowners and businesses eager to take advantage of more cost-efficient system installation prices, measured against increasing grid supplied power, and to manage their own energy generation and demand needs.

Research firm IHS said global PV installations were set to rise by 17 per cent this year - the fastest rate since 2011.

"PV installations will accelerate in 2014 driven by low system prices, the creation of new markets in emerging regions and the continued growth in major countries such as the United States, Japan and China," IHS senior research director for solar, Ash Sharma, said in October.

"As the industry's recovery accelerates and market revenue returns to near record levels, solar manufacturers will leave behind the turmoil of recent years and enjoy improved business conditions," Sharma said.

Booth said the take-off in solar would be "quite fundamentally disruptive" to the energy industry's business model and that bigger European power companies had already seen huge amounts knocked off their market capitalisation.

In October, the Economist reported the share price of Germany's biggest utility company had dropped by 75 per cent from its peak in 2008 and income from fossil fuels and nuclear power generation was down by a third since 2010.