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LB: Greens’ Solar Sense and National’s Nonsense

Written By: - Date published: 4:00 pm, February 18th, 2014 - 28 comments
Categories: energy, greens, housing, russel norman, same old national - Tags: ,

 

The original of this post is here at Local Bodies. 

Russel Norman’s recent announcement of the Green Party’s solar energy initiative is a fiscally neutral, smart policy. Home owners will access cheap government loans that are attached to the house, not the person, and will be paid off through the rates bill. The policy is already being seen as a positive move by those who understand the benefits of solar energy. A $10,000 solar panel installation will save a home owner $28,000 over the 25 year life of the system.

Solar energy uptake has been slow in New Zealand compared to many other countries but it is by far the fastest growing energy sector. By having having a target of installing panels on 30,000 homes in the first term of government the Greens have set a realistic goal and allowed for a well managed growth of the industry.

The benefits of the policy go well beyond the 30,000 homes, it will also support the development of new businesses, in the same way that the home insulation scheme did, and will provide hundreds of jobs. Having an increase in demand for photovoltaic panels will support a reduction in manufacturing costs, so that future installations will become even cheaper.

For many households, especially those where winters are colder, power bills are a major part of their household budget. Although the average household power bill is around $2,000 a year it can be well over double that for those who live in the south.

Our own Invercargill home is pretty typical of many, it is a larger, brick and roughcast, character home built in 1932 (luckily it was built to face north as many weren’t). We have insulation above the ceilings, underfloor insulation, some double glazing and recently installed solar water heating. Despite also having a heat pump and wood burner our electricity costs over the last year was over $3,300. We have also shopped around and have changed providers a number of times, which has not always been an easy process.

My sister and husband have a modest income but are now the proud owners of a life style block and have their house completely off the grid with a high performance solar system of panels and storage batteries that cost them $25,000 including installation costs. They are now self sufficient for their electricity needs and after 8 years or so the system will have paid for itself.

Friends have recently built a new house and paid $6,100 for 24 panels, $2.800 for an invertor and $9,000 for installation. Over January they received a $70 credit from Meridian for their excess generation.

National have already been burnt by the reception of the Greens’ well received education policy when their own expensive education initiative received lukewarm support. Simon Bridges desperately suggested that the modest loans were somehow “magic money” and an unnecessary subsidy. Bridges incredibly didn’t believe that solar energy was necessary in New Zealand. John Key bizarrely claimed that the scheme woulddestabilise the current system and would cause companies to increase charges. National would rather see people dependent on the current flawed system that has seen a 22% increase in power bills over their time in office.

We are now seeing a stark contrast between a Government desperate to support the status quo of increasing charges and large company profits, while the future focussed Greens are truly progressive in their thinking.

 

lprent: Just over a week ago, I went down to see my parents in Rotorua. I spent some time looking around the rather neat solar array on the top of the garage feeding DC to a inverter and then into a smart meter supplying the house and the power grid.

While this was relatively small array, during summer it was providing 96% of the required power for the household. It cost $11k of capital to purchase and install.  It has room to expand if it isn’t enough in winter (my parents are still tweaking their power needs).  But the economics of it were pretty damn good because it was likely to save them somewhere close to $1300 per year out of their limited retired cash flow. That makes good sense for them and they’re expecting that it will add quite a lot ot the value of their property if they ever had to sell it.

It also made good economic sense for for me if I can find a way to put it up on the top of my apartment block. I think  that the Greens have a winner in this policy. Having to put up with the expectation of further major increases in power costs over the next decade as I head towards retirement and limited income make this an asset worth investing in. I think that a lot of people looking at their annual power costs and with the expectation of further rises as a result of National’s asset sales causing further profit mining will think the same.

28 comments on “LB: Greens’ Solar Sense and National’s Nonsense”

  1. Bill 1

    One thing I wonder about is folk like me who rent. Let’s say a landlord actually agrees to install. There goes the rent again, which, if unemployed, probably puts people even further beyond the max housing costs allowed by WINZ. So – correct me if I’m wrong – but as renters, we gain or save nothing…and possibly eat less.

    In conjunction with the ‘healthy homes’ policy, I can see rents spiral even more out of control unless a cap is put on the amount of rent landlords are allowed to charge. (A formula built around a %age of GV might work)

    • shorts 1.1

      your rent might increase to cover the rate increase/costs (incurred by your landlord)… but you would also enjoy the full benefits of the install by having vastly lower power prices

      I’d guess wildly that in most cases tenants might well be slightly better off

      • Disraeli Gladstone 1.1.1

        It’s not vastly lower energy prices, really. The cost incurred vs savings made isn’t a big gap. And it’s really sad that’s what we have to lead with (it’s not the Greens’ fault, they know the $ sign catches people’s attention).

        Because even if the effect was completely cost-neutral, we should all do it anyway for the sake of a cleaner, green planet.

        It’d be nice for Norman or Turei to go “yes, it might only save you a few dollars a week, it will also be you doing your bit to go some small measure for fighting climate change. Every journey has to start somewhere.”

      • lprent 1.1.2

        The difficulty is (as Bill was alluding to) that the landlord sees no direct benefit for any investment except in property values or increased rentals above the cost of investment.

        Fortunately for Bill’s budget I suspect that it will have a takeup like that of insulation in rental properties. It doesn’t happen.

        Unfortunately that means that tenants wind up with massive power bills and statistically an early death. One damn good reason to buy a property.

    • Naki Man 1.2

      Rents in NZ are low and usually don’t cover costs. Most landlords are hoping there will be a capital gain, that is the only way they can make anything out of a rental. If government try to interfere with rents you wont have anywhere to live. If you think you might get cheaper power as well as cheap rent I don’t think that is going to happen. The problem is that houses in Auckland and Christchurch are over priced due to supply and demand.

      • Descendant Of Sssmith 1.2.1

        Actually rents are high.

        It’s just that houses are over valued and you have to borrow way too much to buy one.

        Dropping the value of housing to more appropriate levels is the answer. Take capital gain speculators out of the market.

        • cricklewood 1.2.1.1

          Thinking about that I’m starting to think the best and fastest way to achieve that is to dramatically increase the rights of the tenant. If its difficult to rent for a year or two then flick it on to realise the gain I’d expect you would remove a large chunk of speculators from the market. Be far more effective then cgt etc.

          • Matthew Whitehead 1.2.1.1.1

            I don’t know that that’s necessarily the answer, either.

            I think landlords should have fair rights to expect their property to not be damaged, to be notified of damage or issues that tenants have noted, to be able to change tenants at the end of a lease, etc…

            The issue is that there are minimal standards to being a landlord. It would be amazing to see, for instance, a requirement implemented after a grace period where you would need to insulate a home in order to rent it out. (a grace period, and even some sort of subsidy, would help address the possible consequences of tenants getting kicked out so places could be insulated)

            That said, the only way to solve high rental prices is to solve the overvaluing of properties, which is best addressed with a comprehensive capital gains tax.

        • Draco T Bastard 1.2.1.2

          Dropping the value of housing to more appropriate levels is the answer. Take capital gain speculators out of the market.

          And that means banning offshore ownership and stopping the banks from creating money.

  2. Ron 2

    had a look at Greens policy and I agree it is certainly an area to look at. However I wonder about a couple of things.
    1. The scheme is a direct feed system with no way of storage which relies on power being generated in the daylight being feed back into the grid. When you want to use power you are required to pull it from grid.
    2. As far as I can see there are very few suppliers willing to participate in buy back of home generated electricity and in the last year the buyback price is decreasing. Users are absolutely at the mercy of power companies and if they refuse to allow buyback what then

    I think that any such scheme should provide a single point of contact/supply similar to the scheme Auckland City set up to encourage solar water.
    Also the law should be changed to ensure that all providers must enter into a buyback scheme and the price of buyback must be set maybe as a percentage of supply price.
    Its also pointless if one enters into such a scheme and then finds out that supplier starts fiddling with the supply price by upping the line charge to make the electricity supply more expensive.

    • lprent 2.1

      Also the law should be changed to ensure that all providers must enter into a buyback scheme and the price of buyback must be set maybe as a percentage of supply price.

      From memory there is a bill for that in the works and widespread support across parties.

    • lprent 2.2

      Also the law should be changed to ensure that all providers must enter into a buyback scheme and the price of buyback must be set maybe as a percentage of supply price.

      From memory there is a bill for that in the works and widespread support across parties.

      • Ron 2.2.1

        had a quick look for any bill and the only thing I could find is David Clark’s Energy Efficiency Amendment Bill which aims to improve efficiency of supply. It does have a paragraph under section 15 that states
        (i) to contract for market operations services (but see subsection 2) and system operator services

        not sure if that means compulsory buy back but it would need more specific statements if the proposed draft bill is ever to have the effect we want.

    • Draco T Bastard 2.3

      I suspect that the NZPower legislation would come with the necessary rules around solar power buy back and pricing. Technically, NZPower should actually remove the retailers in the electricity industry anyway.

    • weka 2.4

      “1. The scheme is a direct feed system with no way of storage which relies on power being generated in the daylight being feed back into the grid. When you want to use power you are required to pull it from grid.”

      Er, not it’s not. The loans will be available for either grid tied and battery systems. Did you read the actual policy?

  3. remo 3

    Its a great idea. no matter what way round I look at it. There will always be issues to be identified and resolved , but the direction is sound and progressive.

  4. Philj 4

    Xox
    COULD be a good policy. But it is too little and too late. Humankind is finally waking up. USA, Vice President, Kerry is seeking action from Indonesia?

  5. tricledrown 5

    12 volt systems are way cheaper to install although a 12 volt system will not replace everything you use it can reduce you electricity use.

    • Lanthanide 5.1

      ???

      You need batteries, or the power is being thrown away. Batteries are expensive and need to be replaced.

      The alternative, of wiring everything in your house to 12V, is also expensive.

  6. Lulu 6

    “National would rather see people dependent on the current flawed system that has seen a 22% increase in power bills over their time in office.”
    Fact: bundled retail electricity charges have risen 19.4% under Key lead government and rose 65.0% under previous Labour government. (May be more, can’t access Nov 99 data).
    MED as at: c/kWh (Nominal)
    15-Nov-00 13.99
    15-Nov-01 14.05
    15-Nov-02 15.07
    15-Nov-03 16.37
    15-Nov-04 17.95
    15-Nov-05 18.84
    15-Nov-06 20.26
    15-Nov-07 21.50
    15-Nov-08 23.09 +65% from Nov 00
    15-Nov-09 23.62
    15-Nov-10 25.28
    15-Nov-11 25.36
    15-Nov-12 26.78
    15-Nov-13 27.57+19.4% from Nov 08
    Which begs the question why didn’t price rises slow under Labour? They installed the Electricity Commission which was directly accountable to the Minster of Energy in 2004. They had a chance to deal with this then.
    Now price rises have slowed since national government replaced the Commission with an independent Electricity Authority operating under clear statutory objective in 2010.

    • Lanthanide 6.1

      “Now price rises have slowed since national government replaced the Commission with an independent Electricity Authority operating under clear statutory objective in 2010.”

      I think it probably has much more to do with the GFC and subsequent economic slump destroying demand than it does with any regulatory tweaking on National’s part.

      Just like the low interest rates Key likes to take credit for are actually a sign that the country was doing poorly and aren’t actually something to be proud of.

    • I won’t argue with the percentage of power increases, Lulu, because whatever it is (for some it will be much more depending on their company), it is still well above the rate of inflation and the cost of production. The real problem is still the commercial model set up by Max Bradford that saw an economic advantage of cheap power turn into another form taxation. For those living in poorly insulated rentals power bills are an unnecessary burden and for our manufacturers it limits their ability to compete with those overseas.

      With the cost of solar becoming ever cheaper and increased innovation in other forms of production, many will choose to produce their own power over connecting to the grid. It is also highly inefficient to transmit electricity over long distances as we currently do. I can see it possible in the future that the country will have to decommission some of our hydro schemes as demand drops and many power companies will go under before common sense cuts in.

    • I’ll grant you that Helen Clark’s government had other priorities than electricity prices, but John Key’s has done absolutely nothing to arrest the growth of power prices- if anything we should expect the trend to accelerate now more of them are privately owned.

  7. Richard Christie 7

    It’s one the most exciting policy initiatives I’ve heard in my lifetime.

    We haven’t had visionary infrastructural policies such as this mooted since the 1970s, and make no mistake, this is just the start to a significant alteration of electricity delivery.

    It reminds me of the early 20th century when the hydro schemes, and telephone were initiated.

    Nothing but good will result from its implementation.

  8. Draco T Bastard 8

    A $10,000 solar panel installation will save a home owner $28,000 over the 25 year life of the system.

    And if they’re well installed and cared for then you can expect them to last 40 years. The Greens are probably basing their calculations on the warranties that the panels come with which are more usually 20 to 25 years.

    It also made good economic sense for for me if I can find a way to put it up on the top of my apartment block.

    I’ve been thinking about putting solar panels upon apartment buildings and the only solution I can think of is a major installation (As big as practical) that belongs to the apartment building. You’d have a single power feed into the building which also connects the solar array to the grid. Feed to each apartment would then be taken from that single feed with the administration of the billing then being done by the building’s association.

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