by Gareth Hughes
Solar could make a bigger contribution to New Zealand electricity supply with its price plummeting and a new international report out optimistic about the transformation of the industry.
In New Zealand we have only around 1-2 MW of solar photovoltaic (PV) generation despite having over 2000 hours of bright sunshine each year, and plenty of roofs to put panels on. Brendan Winitana, chairman of the New Zealand Sustainable Energy Association, has said the cost of installing solar photovoltaic panels had dropped by close to 50 per cent over the past 18 month and he’s predicting revenue growth of more than 170% in the next five years.
The plummeting PV price is also highlighted in the Bloomberg New Energy Finance report out recently that describes financing of US solar projects is in the midst of a transformation, with new business models, new investors, and new financing vehicles gaining sway.
A couple of key statistics that come out of the report are:
Given global greenhouse gas emissions are increasing, its vital solar plays a role in our future energy mix. In New Zealand we could be doing more to promote solar energy. To start, it wasn’t smart for the Government to axe the solar hot water grant scheme in last week’s Budget but instead could have extended it, and encouraged cheap or rates-based-loans to help with upfront costs. The Government could likewise support more grid-connected solar PV utilising all those rooftops, increasing efficiency and adding to resilience.
Solar does have a bright future and while opponents can’t hide behind the perceived high cost argument any more, it will struggle if Governments continue to focus-on, promote, and subsidise fossil fuels.
Published in Environment & Resource Management by Gareth Hughes on Tue, May 29th, 2012
Tags: climate change, EECA, fossil fuels, pv, solar
More posts by Gareth Hughes | more about Gareth Hughes
on the trolls and those who are unable to keep on topic
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I would love to put PV panels on my roof (in Gilden Bay)! Anyone know of green financiers? Would happily allow someone to reap the benefits of cashing in on excess power sold back to the grid… Win-win, as far as Im concerned. Solar hot water is on it’s way to my house, such a pity the Nats canned those grants…
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Using the sun to heat houses (and water) directly makes sense. The most simple way to do this is to have a dark brick wall and stick glass in front of it to make it hold significant heat. The mass of the brick will function as a “heat battery” so you can regulate, with an electric fan, when to extract that heat.
But it is wrong to subsidise solar ahead of other options. Vast energy savings can be achieved with heat pumps for example which can do hot water and home heating. Especially if they are ground-based…where they can be as much as 8x more energy efficient that direct electrical heating!
There are too many ways for people to cut back on power and the best way will all depend on individual circumstances. You need the market model here – not picking favourites with targeted subsidies for any particular method. Otherwise you will only end up with higher costs and lower energy efficiency.
Quote: “Given global greenhouse gas emissions are increasing, its vital solar plays a role in our future energy mix.”
Say what? If geothermal for example is cheaper then screw solar. You simply do what’s best. That’s the sort of comment you make when someone from the solar industry is giving you backhanders.
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I like solar, but the solar cells have a lot less going for them than more direct uses, and at 40 degrees South we do NOT get that much direct solar that I would want to buy a lot of the cells. The Sun is pretty low on the horizon for the next couple of months.
Wind is better for us, as we’re in the path of the roaring 40′s. Play to our strengths. We even have a local Wind Power manufacturer.
BJ
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Some questions on solar
1/ If the price is halving every 12-18 months, then doesn’t it make sense to hold fire for another 12-18 months then you can get double the power for the same price (rather than pushing for more solar installation today)?
2/ Does it make sense for the govt to subsidise installation of renewable energy, when in the most part it will be replacing renewable energy from hydro, wind and geothermal?
3/ If solar water heating takes 15 years until the saving equals the cost of intallation, aren’t people better off simply investing the same money for a better return, then they still have their capital investment as well?
What will make solar take off is not the government trying to push it with subsidies – it is when it is substantially cheaper to get your power from batteries charged with solar, rather than from the grid.
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BJ says “Wind is better for us, ”
A guy I know who is off the grid (but ironically under a power pylon) gets ten times more energy from $5000 of solar panels compared to a $5000 windmill, and he lives in a location known for it’s wind.
While it doesn’t work particualrtly well on a small scale, wind is far more effective when scaled up, hence the enormous size of windmills on wind farms.
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Taking $60 of petrol and adding $40 govt tarrifs and taxes so it costs $100 instead of $60 to fill my tank is the opposite of subsidies.
Imagine the outcry if they nearly doubled the price of power with tarrifs and taxes.
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Solar has a bright future, just not necessarily in “the land of the long white cloud”. Our peak electricity demands are in winter, not summer, so solar power is not a good fit for our needs. Wind and geothermal are better fits. Overseas countries closer to the equator get more solar insolation and their demand goes up in summer with air conditioning demands, so solar power is a natural fit for them.
Solar water heating should be encouraged. One starting point would be to ensure all new hot water cylinders have connection points for alternative heat sources (solar, wet back or heat pump for example).
Trevor.
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How about making a shower with an electronically controlled mixer, so you just press a button to your desired setting and the shower sets the water to the exact pre-set temperature you want (easy done). You then get in your shower, drench yourself for 30 seconds, then turn off the water so as to clean yourself (a tiny fan heater can cut in and keep you warm in the cubical). Once your’re done you rinse off for another 30 seconds with the hot water.
This is a comfortable way to turn a 10-minute shower into a 1-minute shower. It could save families a lot of money. Or how about a solar powered barbque? Using the sun to heat up a thick iron plate with some basic solar concentrators.
This is just a couple of examples – so many things people can do to cut back on power. It goes on. Again the point is you shouldn’t pick winners.
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My word there’s some disinformation going on in this thread. For starters it takes far less than 15 years before solar water heating pays for itself. Try 10 years or less and with increasing power prices, it was a most worthwhile scheme for anybody smart and lucky enough to have utilized it.
I believe Mr Hughes was talking about development costs. The oil and gas industry is highly subsidized in New Zealand by the government. The other problem here is that some MP’s are invested in power companies, and therefore do not want any scheme reducing the amount of power people need to buy.
The price is not halving every year, it’s halved in the last 18 months, meaning now is probably the right time to buy. The price could just as easily rise again as worldwide demand for alternative energy continues to increase.
New Zealand has enough sun in winter to make solar cost effective and on a worldwide scale, Aotearoa has a moderate to high amount of sun hours per year. We have more annual sunshine hours than Germany for instance, where solar has been subsidized effectively for many years.
Wind power (particularly ocean installations) are far more cost effective on a large scale, but in terms of small installations at a community level, solar is a very good option.
A subsidized system for small solar water heating and photovoltaic panels installations should be one of the first things the Greens organize when they form a government in 2014.
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Jackal says “My word there’s some disinformation going on in this thread. …..The price is not halving every year, it’s halved in the last 18 months, meaning now is probably the right time to buy.”
Gareths link says that prices have dropped “45 per cent in the last 12 months alone.”
And unless you are telepathic, you have no idea of whether 18 months time will be a better time to buy. But as prices are currently plunging, your advice that now is the right time to buy sounds a bit foolhardy.
Jackal says “For starters it takes far less than 15 years before solar water heating pays for itself. ”
I’ve looked at it several times and by the time it’s installed quotes were coming in at around $7000. The claims are it will save $500 a year in electricity for a large family, so for two adults and two small children we can probably look to save $350 per year.
That’s a 20 year payback for the whole system, by which time it’s getting close to having to be replaced.
If I invest my $7000, I can get a reliable return of 7% ($490pa) after tax. At the end of 20 years I have extra cash in pocket, AND I have my investment rather than an old solar water heater near the end of it’s life.
What could potentially make solar water heating obsolete (unless it plummets in prices) are new heat pump systems that cost LESS THAT HALF to heat water.
As I’ve always said (to borrow from George Bush), technology will make a bigger contribution to energy savings than anything that can ever be achieved by efficiency campaigns.
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Just because fuel is taxed does not mean it is not subsidised. Not as much in NZ though as in the rest of the world.
Most of the western worlds military spending is a subsidy to big oil.
Or do you still think Iraq was about introducing democracy?
US and British oil companies are massively supported with tax breaks and other preferential treatment.
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Payback for our solar system was less than 6 years.
About $70/month off our water heating bill.
Could be longer if you do not have 4 teenagers.
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Kerry – If I could have got a payback as quick as yours, we would have installed solar water heating. But we need a system that can withstand heavier frosts, and we have a colder climate.
The quickest payback people have been claiming in the south that I’ve heard is usually 12 years. In the three years before 2010, 425 took up the govt grant to install solar water heating in Nelson, compared to 7 in Dunedin and 1 in Invercargill.
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Solar, wind, and other non baseline renewables are a complete waste of time until an efficient storage method has been developed. There is some progress on this front:
http://www.economist.com/node/21548495
But we aren’t even close to large scale viability yet. Till then it’s nothing but an eco-loon and socialistic dream.
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Bjchip – “wind is better for us” – but there are a whole bunch of nimbys, including the greens when it comes to specific sites, that seem to disagree with you.
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I like cheap energy, and clean too. If alternative energy is clean, but expensive, I rethinking to use it.
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At least solar is environmentaly friendly, unlike the so called “environmentally friendly” coal seam gasification process that Solid Energy are progressing:
http://www.voxy.co.nz/business/solid-energy-refocus-csg-development-taranaki/5/124987
They should stick to biomass.
Trevor.
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I am adding my contribution as someone who has purchased a offgrid solar PV (electric) system.
I have almost finished phase #1 of my project. I am using 1.2kW of solar panels.
All up my system is worth about $13k. This will produce about 1,500 – 1,600 units per year, or about $450 worth per year. This is based on Auckland. Further south will be lower yields.
The financial figures don’t stack up.
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Jeremy – non-base line renewables are useful up to the point where their supply exceeds the demand. Just occasionally we are at that point in New Zealand, typically in summer nights.
If significant power demand is for air conditioning, then the excess can be used to run the air conditioning heat pumps and the output stored as heat or cold, shifting the power demand from peak to off peak times. For example, the off-peak power can be used to make ice, and the ice then used for cooling at peak times.
We can use the excess in other ways. New Zealand manufactures hydrogen (by steam reformation of natural gas) for both the oil refinery and the ammonia-urea plant. Excess off-peak power could be used to manufacture hydrogen by electrolysis of water, thus saving our natural gas.
And we still have the option of pumped hydro storage.
Trevor.
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Michael – I would have expected more than 1600 kWh from 1.2kW of solar panels per year – perhaps your area is cloudier than most. Also the biggest costs of off-grid systems are often batteries and their management systems, which are only needed for off-grid rather than grid-tied systems. When looking at the economics, it is the cost of alternative off-grid supply that matters, not the costs of grid power as the whole point of off-grid systems is to supply power where grid power is unavailable.
To me, solar power is most likely to be economical for users who have a steady demand for power and who are already using batteries to guarantee supply – like data processing centres and telecommunication providers. Solar power could be added to these systems relatively easily and cheaply to reduce their overall power bill and with the small advantage that the battery power could last a bit longer if the power is lost.
Trevor.
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Hello Trevor29. I obtained my figure from a NZ solar distributor’s guide. Based on other things I have read and my own (early) observations 4-5kWh/day (for this system) on average would be about right.
The caveat here is that is averaged over a year. Some seasons and some days will be a lot less – so it is inconsistent, and this must be kept in mind for anyone used to the convenience and plentiful grid supply.
I have done this for ideological reasons while fully aware of what I am getting myself into, having briefly lived on the Barrier.
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The fact is that we have a higher wind availability, than just about any other country on the planet.
The West Coast of South Island should have wind turbines on most ridges and if that were done we’d have a surfeit of energy to keep the hydro dams full and our industries humming. Cheap energy, intermittent but with a smarter grid, very useful.
…and as a rule, people who disagree with me discover that they are wrong.
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Alter a few of the power stations on the Waitaki River system so they can pump water up from lower lakes to higher lakes and excess wind energy can be absorbed and used later.
However I am not sure that the West Coast of the South Island is the best place for wind farms as the highest peaks and ridges are very difficult to get to. There are certainly plenty of other wind farm sites available. I believe the total practical resource is around 20GW – roughly 4 times our average electricity use.
Trevor.
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A report I found years ago on http://www.electricitycommision.govt.nz under Transmission To Enable Renewables (TTER) was titled Economic Wind Resource Study. It gave three tranches of available wind resource, each about 13GW of installed capacity, totally about 40GW. If all three tranches were fully developed, the output could be as high as 125GWH/year, or an average of 14.5GW, nearly 3 times our average electricity demand.
Almost none of the economic wind resource was located on the South Island West Coast. About 1/6th was located in Southland.
A google search came up with:
http://www.ea.govt.nz/document/3056/download/our-work/consultations/transmission/draft-report-on-transmission-to-enable-renewables
Trevor.
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Trevor
At current prices and with our current population distribution and electrical grid, not economic. It is however, where the wind is.
http://www.teara.govt.nz/en/southland-region/4/4
I think perhaps my unfamiliarity with NZ “administrative regions” led me to mistakenly use the “West Coast” as a geographic location of the stronger winds. The true location is Southlands. It isn’t presently populated enough to be usefully powered by wind as it already has a surfeit of hydro, but the energetic climate there is ripe for harvest. Our problem is that our population is over-concentrated in Auckland. Nothing to do with that same energetic “climate” and the temperatures in Invercargill… sure
Economic isn’t the same as available. It adds consideration of where the people are. I perceive Southland as a future industrial hub, based on the easy availability of cheap energy. It is a place that NZ can develop and do well with, using renewable energy. Auckland is far from convenient except to the geothermal fields… and more of that is always needed.
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FROG!!! A NEW GENERAL THREAD!!!
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It has been suggested that the next trans-Tasman optical fiber cable should land at Invercargill so New Zealand would still stay connected if there was a problem half-way up the country (such as Christchurch being knocked out by an earthquake). If this were done, then Southland could be an attractive location for data processing centres and cloud storage facilities, making good use of the electrical supply from Manapouri, etc.
Of course Southland already has its own heavy industry, consuming nearly 15% of our annual electrical generation – the Twizel aluminium smelter.
Trevor.
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In my state there are lots of windmills and solar stations producing electricity but unfortunately they are sold to other states for money!!Its not used for my people !!
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Despite the cost of solar PV “plummeting”, it’s still expensive, and not cost effective compared to grid power.
The only energy “thing” that I’ve found that looks to be even remotely cost effective is shower heat recovery systems, like this system, which has a payback period in the order of six years even with the most cost effective ways of conventionally heating hot water for showers. The current holder of that mantle is off peak electricity.
It is true; solar hot water costs less to run, but the capital cost is higher and thus the payback period compared to off peak electricity is quite long.
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There is a geothermal Resource Assessment Seminar about to be held in Taupo:
http://www.nzgeothermal.org.nz/Publications/Newsletters/NZGA-Newsletter-March2012.pdf
One reason given for geothermal’s popularity is that high capacity factors can be achieved, i.e. the geothermal energy can be harnessed continuously, unlike solar, wind, wave or tidal resources. However the fact that geothermal energy is available on demand can be further exploited by adding extra geothermal plant to a field and running the plant at less than full output. The geothermal energy can then be used much like stored hydro energy, meeting the demand during high-usage periods or when other resources are generating less power, and cutting down on the output during periods of low demand allowing the field to recover. As the installed generation cost is higher for geothermal than hydro, it is only worth adding a smaller amount of extra capacity and running the geothermal at full power much of the time, using hydro power to meet the peak demands.
Thus geothermal can help support intermittent resources such as solar power, but will always be more valuable as a resource than these intermittent resources.
Trevor.
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dbuckley – it isn’t the PV array itself that makes solar systems so expensive. Instead it is the batteries (for off-grid systems) or grid metering systems (grid-connected systems) and the invertors and regulators which take the cost up. Applications which can use the DC solar power directly when it is available can avoid these other costs and could be cost-effective.
It has been suggested to me that fitting a second heater element in a hot water cylinder and powering that off a solar array would be a cheap way of using the available power.
My suggestion was fitting solar panels to telephone exchanges and cell phone sites and other systems which run from float charged batteries or UPSs (Uninterruptable Power Supplies), where there is a constant load to use the solar power avoiding the need for metering and associated compliance costs, and where the power need is DC rather than AC avoiding the need for invertors and frequency synchronisation.
Trevor
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Damn – another posting into a black hole! Reposting without the link to yahoo news…
Meanwhile, Genesis have obtained consent for their Wairarapa wind farm.
But they aren’t going to start building it because “the market is well developed at the moment”. Instead, they are going to continue burning gas and coal!
The CO2 charges and gas mining royalties need to be pushed up to favour renewables over fossil fuels.
Trevor.
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And Genesis have just had resource consents for Huntly Power Station extended for another 25 years.
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The cost of solar PV is coming down as panel lifetime increases:
http://www.greentechmedia.com/articles/read/New-Study-Solar-Grid-Parity-Is-Here-Today/
Trevor.
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There are a lot of solar panels available today’s. The problem of the efficiency is the proccess of converting, these cells use the photons of the sun to react with the ( Si compound inside the cell) due to the little thing that cell’s are only a fraction of these energy is converted, remember that solar cells are paper thin and the really problem of these cells are the voltage not the amps.
A single 3×6 inches solar cells can produce 3.6 amps but only 0.5 volts.
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The National government has taken action to support solar power, giving Tokelau $7M for three solar power stations – one for each of their three main atolls – to replace most of their diesel-fuelled generation.
This actually makes sense, as Tokelau has fewer alternative renewable energy sources and pays more for its fossil-fuelled generation than we do in New Zealand. Also their lower latitude means less seasonal variation and I expect they get more sunshine than those living in the land of the long white cloud.
I wonder what will happen to their Kyoto credits?
Trevor.
PS: What is it with links to Yahoo News items that causes posts to disappear without a trace?
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