The solar revolution is here

New research just released has shown that solar installations in New Zealand have increased by 370% in just two years and the solar energy sector is currently worth around $40 million.

It’s a huge rise and highlights the real potential of clean energy in New Zealand. It also marks the beginning of a big change for electricity networks that have been built around a clumsy and centralised old model, towards a smarter, cleaner more distributed electricity grid. The phenomenal growth is all the more surprising because New Zealand has no support for solar and there are still many barriers to greater uptake. Similar increases are being seen in other countries with solar internationally passing the significant 100 GW milestone in 2012.



(Source Ren 21 Renewables 2013 Global Status Report)

With much less than 1% of New Zealand’s electricity coming from solar we have a huge opportunity to harness more of the sun’s power and save money at the same time. Generating power close to where it is being used from clean sources like solar reduces transmission costs and losses, increases resiliency and boosts regional economic development and generates jobs.

I recently proposed a clean energy law to help make it easier for households and businesses to generate their own power from solar. The need for a fair tariff for solar electricity exported to the grid is a key recommendation from a recent International Energy Agency report. Along with NZ Power we could build an electricity network that gives the power back to the people and encourages cleaner, cheaper and smarter energy.

Instead of looking for more risky oil deep off our coasts and coal that we know we can’t afford to burn if we want a stable climate, the Government should be looking at small scale distributed renewables like solar for New Zealand’s energy future.

19 Comments Posted

  1. There is significant emphasis on financial payback in these comments.

    My blog at asks the question “Its Payback time…..or is it?” Read more below.

    There’s such a thing as asking the wrong questions. My grandfather would agree. When he returned home a few years back and told my grandmother that he’d bought a car, the only question that she asked was “what colour is it?” Given that he had spent hours researching and selecting the perfect car, this question frustrated him.

    Anyone working in the sustainable industry will also have experienced their fair share of the ‘wrong questions.’ In particular, we all come up against the obsession with payback periods. If you introduce a new renewable energy or energy efficiency product, it’s likely that the first question you’ll face is: “how soon will my investment pay for itself?”

    At first sight, asking the payback question seems sensible. If your organisation is going to fork out a significant amount of money, you want to see that money back… right?

    Yes, of course, if the product in question is a financial investment, then you will consider its success in terms of its financial returns. If you buy shares, you want them to go up in value; if you open a bank account, you want to see interest on your savings. But it’s incredibly rare to see other products valued in terms of their payback.

    To revisit the car example: most people spend hours researching the purchase of a new car, making a whole range of decisions about what size to buy; which make and model; petrol or diesel; engine size; interior – and yes, even the colour. They choose cars based on a whole host of qualities, like style, comfort and speed. But one question you’re unlikely to hear at the dealership is “at what point will I make a return on my investment?” The concept of calculating the point at which the savings from an engine with greater fuel efficiency will pay back the original cost of the car is somewhat alien to us.

    If someone plants a vegetable garden, they are unlikely to calculate how many free vegetables they will have to eat before the initial investments of seeds, tools and fertiliser are paid back. Similarly, it’s unlikely that many will have asked, in the course of family planning decisions, about the time it will take to make back the £222,458 cost of bringing up a child in the UK.

    The truth is that there are a whole host of reasons why you might want to install energy efficiency or renewable energy measures. To make a decision about whether to install solid wall insulation purely on the basis of payback periods is to completely miss a whole variety of other benefits that the measure may bring, including improved air tightness, fewer draughts, increased soundproofing, a more attractive finish, less condensation and mould and improved internal comfort for owners or tenants.

    Incentives like the feed-in tariffs haven’t helped the cause. Yes, they have brought down the payback period of renewable energy technologies like solar PV, solar thermal and wind turbines. But in the midst of our manic recalculations of the payback periods of these renewable technologies every time the tariffs change, we’ve forgotten that organisations have been installing these technologies for decades to lower their impact on the environment, reduce their reliance on the national grid and protect themselves from inevitable energy price rises.

    Renewable energy offers a sound financial investment opportunity. And advances in technology, like the introduction of solar PV-T will make this opportunity increasingly attractive. But just like the colour of the car, the payback period of any technology should be just one of many factors in your procurement decision.

  2. Smart meters allow surplus to be sold back into the grid and also can help pricing to determine load. They form a PART of a solution that allows the grid to serve as a kind of “storage”. Yes?

    The potential for storage on a large scale (you can’t build your own pumped-hydro system all that easily) becomes real in that scenario.

  3. dave,
    I heard the price of solar is to expensive, as it costs like over 50.000 dollars to install good solar panels which will take you off the grid.
    when you calculate the cost of that vs say 30 years of paying electricity it’s the same. but then once you have paid off that panels, you need to replace them with new ones. so this is why solar is not working.

    what about generators? well the price of diesel is not much cheaper either.
    what solutions are there for the normal house owner?

  4. I hate my electricity bill.
    I install solar just to reduce that bill.
    If I could find appropriately priced storage and inverters I would attempt to be independent of other generators.
    This would not be so I could be in some way superior to my neighbours, I think they should be independent too.
    I do not allow anyone to tell me what I must buy and what price I should pay for those unwanted items.
    I do not expect to be able to tell others what to buy either.
    NZ currently has excess generating capacity
    NZ demand is reducing as people purchase energy efficient equipment
    NZ has no mechanism to dispatch electricity manufactured by “micro suppliers” and smart meters won’t do that

    My bottom line?
    Invest in power generation if it makes sense for YOU without expecting others to contribute to your cost recovery.

  5. the reason why households are not using solar is because the energy companies are controlled by the government,, they dont want you using solar!
    they don’t want your houses insulated. they want you to keep paying high prices for the governments energy!

  6. Gerrit – just because whoever might buy home contributed electricity doesn’t want it, that doesn’t stop the home generator from supplying it; the engineering of electrical generation and the commercial arrangements are not aligned on this issue.

    Of course, this may mean the home generator gets precisely zip for his generated juice he’s supplying…

  7. Gerrit – I don’t disagree with what you are saying. That is why I thing truly smart metering is needed, both for supply and demand. Microgenerators would only be paid what the power is worth at the time, encouraging them to store any surplus generation for later release. Consumers would pay more for peak time usage and less at other times, and their appliances could know when the prices are higher, so any opportunity to reschedule their power consumption to to avoid peak time prices could be taken. Also any applications for low cost power could be run when prices are low, such as when there is surplus power from microgenerators.

    The gentailers could take advantage of this e.g. by installing pumped hydro storage to store up that cheap daytime power and release it at peak times on the morning and evening.

    Industrial applications could also take advantage of cheap electricity, e.g. for hydrogen manufacture. (I am aware of two industrial applications requiring significant amounts of hydrogen – the ammonia/urea plant and the oil refinery.)

    However there doesn’t seem to be much chance of renewable supply exceeding demand during the day at the moment – the demand was just under 4GW during the afternoon. As global temperatures rise and cooling becomes more of an issue than heating, there will be plenty of air conditioners running to use up any spare solar power.


  8. Trevor29,

    Irrespective of who buys the electricity from the home solar (or any other source) power generators the fact remains that if the grid (through the retailer or the wholesaler – it does not matter) has no customers for the said electricity, they wont buy any.

    Hence there could be no income for a home micro generator.

    Maybe we are talking at cross purposes for that is the point I’m trying to make.

    Just because one installs solar (or any other) micro generator that through flash metering can contribute electricity to the grid, does NOT mean the grid automatically will want it.

    The electricity distributor (wholesale or retail) has other purchasing criteria along with price. Criteria to do with certainty of supply, steady contribution and fail-safe 24/7 operations, etc.

    Problem for the wholesaler/retailer is the micro generators could be very fickle and not being on contract impossible to count on 24/7 for steady electricity supply.

    Unless micro generator can become commercial and 24/7 reliable, it will be a fickle back up supplier to the grid. One the wholesalers/retailers may not be commercially interested in getting supply from.

  9. Gerrit – you seem to be confusing some roles:
    “As the grid operator and wholesale distributor of electricity…”

    The grid operator is not the wholesale distributor of electricity buying power from microgenerators. Instead the gentailers who sell the power to the consumers are the ones who should be buying back excess generation from consumers with microgeneration. Assuming that the price paid for this buyback varies with the wholesale price of electricity, these gentailers should be happy to pay for this generation as it saves them fossil fuels. Other consumers should also be happy as the average price of electricity will fall with increased cheap generation being available, do to there being decreased periods when more expensive fossil fueled generation has to be used.

    Also note that the smart meters I want to see installed include the IC (“chip”) to transmit price information to other appliances wirelessly so those appliances can operate when prices are cheapest and delay operation at peak price times.


  10. “Though it would be interesting to see how the grid would function with hundreds of microgenerators utilising the copper wiring of the grid to supply their neighbours.”

    But that is exactly what happens when microgenerators supply power to the grid. Decisions about who gets to pay the microgenerator don’t affect the flow of electrons.


  11. Trevor29,

    Gerrit – there will need to be a lot of uptake of home generation before the gentailers will need to cut off some home generation.

    No not at all, remember the home generator is in competion with the established generators to supply the grid.

    As the grid operator and wholesale distributor of electricity who would you consider to be the best supplier?

    It is a fallacy to think that a home generator will be able to automatically supply the grid.

    No grid operator and wholesaler will rely on trickle feed from a home generator over the feed from an esatablished generator.

    A far better alternative would be to bypass the grid wholesaler and let home generators supply their neighbours directly (via the grid but not through the wholsaler infastructure) through smart metering.

    Now that would make a lot more sense. Though it would be interesting to see how the grid would function with hundreds of microgenerators utilising the copper wiring of the grid to supply their neighbours.

  12. Gerrit – there will need to be a lot of uptake of home generation before the gentailers will need to cut off some home generation. If the price of electricity bottoms out (low cost supply exceeds demand), then that will encourage energy users to install electrical alternatives to oil, gas, coal and even wood to take advantage of those low prices. It will also encourage demand time-shifting. These measures only work if the price paid by these consumers varies with the wholesale price and their equipment is controlled by those price signals, i.e. if smart meters are used.

    As for whose electricity gets bought – smart meters and smart control systems should be able to reduce home supply proportionally, thus avoiding that minefield.


  13. Trevor29,

    Those smart meters are the easiest to source and install. What will be far harder is setting up the infastructure to utilise those meters.

    Whoever runs that infastructure has the ability to purchase the home generators’ electricity or not.

    There are going to be winners and losers in that game.

    People are going to be questioning the purchaser of domestically generated electricity, why buy my neighbours and not mine?

    Large mine field.

    For is the market going to set a “fair tarriff” or will a regulator, irrespective of the need and ability of the grid distributor, set a rate to payed?

  14. We need those smart metering units now, to implement better demand management, so we can make better use of the available power when the sun is shining (or the wind is blowing) and other demand is low.

    We need homes and businesses to move away from gas water heating to off-peak electricity for water heating (if the solar water heating isn’t enough), with that heating being turned on during the day if the spot price bottoms out.

    With low cost microcontrollers and internet and wifi connectivity, we have the technology to implement a smart grid, but it isn’t being rolled out.


  15. Trevor29.

    People investing in renewable home electricity generation may expect profits but they should also be prepared for no profit. One can envisage a time when so many people are feeding supply back into the grid that the grid owner cannot distribute the electricity due to lack of demand from customers.

    So whilst able to distribute into the grid, the grid must be able to turn off supply as well, depending upon consumption.

    Guess some pretty smart metering units will need to be installed at the supplier/grid interface.

    Grid owner then gets to decide which supplier it will pay for electricity generation. Probably create a spot market?

    IE. Low consumption today thus money offered to home generators very low. High demand high money offered.

    Going to require quite some administrative infrastructure to manage this market led electricity generation and distribution.

    Home generators will be in direct competition with major generators both on price, and probably more importantly, the ability to offer the grid guaranteed constant supply.

    Sunny day in Auckland today so the grid would be overloaded with home suppliers wanting to sell electricity, whilst yesterday the grid would have been under supplied from home generators due to the inclement weather.

    As a grid owner, who would you buy electricity from? One that can provide consistent supply at a price that reflect that consistency and volume or a home generator who is inconsistent and volume restricted?

  16. Because of distribution losses, a fair price for locally generated power should be a little above the wholesale rate – perhaps 10%.

    There is nothing actually wrong with people investing in renewable generation with the expectation of making some profit, providing the rate of return is not unreasonable. Someone at some point has to pay for the investment in new plant, and those that don’t own that plant can expect to pay for what it produces. It is better if the investment is local so the profits are accrued locally.


  17. Gareth notes:

    The need for a fair tariff for solar electricity exported to the grid is a key recommendation from a recent International Energy Agency report.

    I have skimmed that report, and the relevant section for this is page 66, in the section entitled “Grid parity”.

    What the report actually (and somewhat self-contradictorally in the same paragraph) says is:

    [STATEMENT ONE]If only a part of the electricity produced [by a home generator] can be self-consumed, then the remaining part must be injected into the grid, and should generate revenues of the same order as any production of electricity. [STATEMENT TWO]Today this is guaranteed for small size installations by the possibility of receiving a feedin tariff for the injected electricity.

    Statement one – “should generate revenues of the same order as any production of electricity” – I agree with, the utility should pay the same for home-produced electricity as it does from the wholesale producers. Ok, this is complicated by the wholesale electricity market making pricing decisions on a half hour basis, but given we now have the internet and remote metering, it is possible to measure a consumers grid contribution by the half hour, and pay home generators the wholesale rate for their excess, which averages about 6c/KWh, but varies between, well, nothing, and frankly, lots.

    The next sentence, Statement two, then contradicts that by talking about feed-in tariffs (FITTs). These are payments made to small generators for their supplied electricity well above the wholesale price, in in some jurisdictions, above the retail price. [Wikipedia].

    Feed-in tariffs are a policy encouragement mechanism, that by making it profitable for small generators to supply power. There are two problems with this approach.

    The first is it promotes a lie, the lie that it is cost effective to generate power using renewable energy. Or it would be promoting a lie if it were a lie; it is possible to generate electricity cost effectively from renewables, and FITs distort this situation.

    The second is that it is effectively wealth distribution, money flows from the ordinary consumer who pays his bills dutifully, to the person who can afford to finance a renewable generation system and then takes our money as his profit.

    Fortunately, New Zealand has never had a large FIT arrangement, and those it does have are being wound back, to the screams from those who have invested in renewable generation, not because it is the right thing to do, but because it provides a revenue stream.

    So, I’m a tad confused about exactly what Gareth is proposing. On the linked-to Green Party launches clean energy proposals it says:

    Many states encourage solar power through similar feed-in-tariff systems but this proposal doesn’t seek public subsidies or increase the costs of electricity for other consumers. I just want to reduce regulatory barriers and make it easy for people to generate their own power.

    I’m all in favour of reducing regulatory barriers, but quoting the need for “fair” tariffs suggests paying an unfair price, which we would all pay for.

  18. I’ve been living with solar for the last twenty three years.
    It’s been that long since I plugged into the national grid.
    And your revolution is now?
    What took it so long?
    I cannot understand why at least fifty percent of the country’s families are not plugged into their own solar systems.
    But I don’t understand a lot of things…

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