Solar Power: Still shining bright

In November Meridian Energy and Contact reduced their buy-back rates for customers using solar power. Photo / Getty Images

Solar buy-back rates have been reduced by the power companies, but it appears the boom will carry on regardless.

This month Meridian Energy and Contact, the last two power companies paying decent buy-back rates for their customers producing excess electricity from home solar panels, cut those rates by a large margin, bringing them back to about what electricity sells for on the open energy market.

The result seems to have been a collective shrug of the shoulders from the solar industry, which is saying it won't halt its meteoric expansion-an increase of 330% over the past two years, according to the Sustainable Electricity Association of New Zealand.

Meridian customers will find that the buy-back rates will drop from 25 cents/kWh to between 7c and 10c, depending on the season. "That's the market rate for electricity, from any resource -renewable or non-renewable," says Guy Waipara, general manager external relations for Meridian.

But Green MP Gareth Hughes disagrees, saying that electricity companies "see the high growth of the sector and Kiwis' gaining a sense of energy freedom and that's a worry for them." He has proposed that the buy-back rate should be set by the Electricity Authority and thinks it should be around the 17c/kWh mark -t he rate that Contact were paying.

"I think it should be somewhere between the wholesale and retail rate, possibly a figure reached by adding the average annual wholesale rate plus line charge, which would be fair and appropriate. Effectively the retailer that passes the power on to the customer next door charges both line charges, so you could see it as the retailer getting a it of premium off the home generator's solar power .

"I think the power companies are trying to deter Kiwis from getting solar."

Anthony Thornton, chief operating officer, Solar City, says the extent of the buy-back rate cuts is disappointing.

"The fair price is the full retail price minus the margin, so you end up about where Contact was. Electricity prices are made up of three different portions - you've got your lines charges and if you're not using the lines you shouldn't be paying any lines charges for the solar you're using in your home; then you've got the generation costs, which in New Zealand are about 9c/kWh; and then you've got another 9c/kWh on top of that which is the retailer margin, administration and overheads. "Nobody believes that a high feed-in tariff is appropriate for New Zealand, but it is about a fair price for solar."

Hughes thinks there is a chance that the electricity gentailers may even drop the rate further. "It's possible. We could be looking at 2c/kWh in the future hypothetically, but the fact is all the power in the relationship is with the electricity company ,which I don't think is fair and it' s discouraging greater uptake of solar. It shouldn't be the power companies or the politicians picking what the tariff should be, but an independent umpire."

People who believe that solar doesn't stack up on a residential basis haven't got all the facts.

CEO of Solar King, Roy Maddox

Waipara says there will be no further reductions in buy-back rates, and insists that the company is not anti-solar. However he makes the point that electricity is cheaper - from New Zealand Inc's point of view -through large-scale generation.

Here's where the solar industry disagrees.

Without high buy-back rates it is likely that people will favour slightly smaller roof arrays, says Roy Maddox, CEO of Auckland - based Solar King. "We knew this was coming. The solar companies doing the right thing by their customers should have been selling solar arrays sized just to offset daytime use anyway, and not putting in arrays designed to make money through buy-back rates.

"It really doesn't change the equation much. A solar array of between 2kW and 3kW is about right depending on energy use, and will offset the day' s energy use - your hot water, your fridge etc, with very little electricity being exported back to the grid. It will still pay for itself in eight years or less, and should continue to produce power for 30 years."

Maddox agrees with Hughes that there has been a lot of misinformation around solar .
"People who believe that solar doesn't stack up on a residential basis haven't got all the facts. A lot of people talk about solar not being on parity with wind and other things, from a large infrastructure point of view. That may be, but we're talking from a putting-a -few-panels-on-your -house point of view. From the consumers' point of view of offsetting consumption at the full retail [price] it always stacks up."

For Maddox, it also comes down to New Zealand's future. "In the long term does the government want to support carbon neutrality and getting rid of the dirty old coal that we burn, or not? The answer of course at the moment is 'not'."

Gareth Hughes also takes aim at the Energy Efficiency and Conservation Authority ( EECA) for failing in its role to bring up-to-date advice to customers. "I think some of EECA 's sums are out of date. I think EECA is only looking at the wholesale price of large-scale dams or wind projects, but they really should be looking at it from the consumer's perspective, who are not paying 8c/kWh, but 26c/kWh or in some regions 40c/kWh ."

This editorial series is made possible with funding from Solar King. To find out more about about Solar King's products visit solarking.co.nz

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