Is Solar Power for Home Practical for NZ?

Posted on 04 January 2013 by JasonK

Many NZ consumers will be wondering if solar power for the home is a practical option. In simple terms despite New Zealand having mostly renewable energy our power costs to the home have continued to climb in the past few years despite low inflation.

In real terms power costs have pretty much doubled for me in the last 4 years and some of that is due to changing power use but most of it comes from cost increases made by the lines companies and the electricity retailers.

According to one source: Andrew Booth of Solar City re intelligent roof tiles

“The price of power in New Zealand is more than 70% higher than in Australia and the United States. There is very little point switching power companies in the face of such high prices. Homeowners would be far better off switching to solar.”

I suspect having an unprofitable aluminimum smelter sucking up huge amounts of power at a huge discount and a government hell bent on selling shares in power companies ( that we already own – double dipping anyone?) complicates the math on why NZ power costs are extortionate but having high power costs should incentivise us to investigate alternatives – shouldn’t it?

The argument in favour of the Tiwai Point aluminium smelter deserves a separate post but since it is losing money -it could be closed down and the surplus energy would lower power bills.( 572mw contract and 1000 direct staff which is between 12-14% of NZ’s national output -see Brian Gaynor background on Tiwai energy use. )

In addition Brian notes that “Closure of Tiwai Point would lead to an oversupply of electricity for some eight to 10 years and affect industry profitability.” ( And stop the political benefit fo the power company asset sales.)

Over a longer period of time the cost of PV (photo voltaic cells) has dropped dramatically and so has the cost of inverters and other related technology costs such as batteries.

solar-graph

The economist in a recent article The rise of solar energy – makes mention of Swanson’s law Note: the graph comes from the Economist article as does the quote below.

“SOLAR energy currently provides only a quarter of a percent of the planet’s electricity supply, but the industry is growing at staggering speed. Underlying this growth is a phenomenon that solar’s supporters call Swanson’s law, in imitation of Moore’s law of transistor cost. Moore’s law suggests that the size of transistors (and also their cost) halves every 18 months or so.

Swanson’s law, named after Richard Swanson, the founder of SunPower, a big American solar-cell manufacturer, suggests that the cost of the photovoltaic cells needed to generate solar power falls by 20% with each doubling of global manufacturing capacity. The upshot is that the modules used to make solar-power plants now cost less than a dollar per watt of capacity.”

So in simple terms when we have the cost of power to the home rising and the cost of solar generation technology decreasing – the question is – where is the tipping point at which it makes sense for most homes to start (at least partially) generating their own power?

Australia has reached the point where some 20% of dwellings have some form of solar power capability. Part of the reason for that has been supportive government policies and actual “feed in tariffs” so that power generated and fed back into the grid is credited at an artificially high rate.

For consumers connected to the electricity grid, being able to feed back any surplus power for a credit and to then “draw down” on regular power allows supply to meet demand when for reasons of weather there is a shortfall.

This also avoids another large cost area which is a container load or shed full of expensive batteries and capacitors that I have used for “off-grid” systems. Avoiding the cost of lots of batteries is very useful as it reduces the entry level cost for a home solar power system.

Besides solar panels, an inverter ( like a switch that converts power to ac for the house) and a place to locate the panels what other costs are involved?

It turns out that locating PV panels on a roof is very practical but may involve roofing and other installation costs that can add thousands to the bill.

From other research it seems like a 4kw system would be about NZ 15-20k installed. From a quick look at my power bills it looks like that even allowing for some economies of scale in the setup and installation a big enough system sounds expensive. Although see this story which mentions grid parity point has been reached.

Here is an example of a NZ based 4kwh grid connected system for NZ$16k installed. From other prices on their website for PV panels it looks like the PV cost per watt is NZ$2 which is double the US$78cents or equivalent to NZ $1/watt. In real terms this means 50% of the cost is the panels at $8k- now if that was closer to $4k NZ then  it becomes a $12k system and the payback looks much better.

In summary the NZ situation seems like it needs some continuing work on the business case and government policy to support the consumer. To win we need a combination of several factors

  1. PV panel costs to keep going down in price – although the $US1225 plug & play system with no installation costs is looking very smart. I suspect PV panels are the cheapest part of the installation now. Generation efficiency needs to be improved so that the same surface area can generate more power and that is happening. A local NZ equivalent is this 2KW system for $10k which looks like it is generating more than 2KWh
  2. Consumers need to be able to connected to the grid and to be able to at least get credits to reduce power costs for any surplus. This may need to be supported by government policy as power companies probably don’t want to be reverse metering and “buying” power from thousands of households. Contact and Meridian do offer buy back deals but the real benefit here is now $ from sales but rather avoiding the about 25cents / kWh cost ( depends on tariff & local pricing)
  3. To enable smart metering a cost effective system is needed. Splash Monitoring look to be a local NZ company to research. Link shows a Victoria Uni example of actual measurements.
  4. More transparent costing on installation. Most sources quote roofing and other costs in the order of a few thousand so that needs to change. PV systems 2009 article on Brannz is out of date on costs but it does point out that “per watt installed costs” might be a useful indicator. I’d say we are much closer to $1 per watt for teh PV part now so a 3kw system might be $3,000 + other costs which reflects back the “plug & play” costs mentioned in #1 above. One option for the installation process maybe to use the MySolarQuotes service to get 3 quotes and compare.

For other comparisons and background please check Photovoltaics

For one example of a combined approach check out the zero energy house project in Auckland. That house combines solar water heating, solar tiles and other smart design features.

C21e Solar Electric Tiles and Slates are used on the zero energy house. For anyone building a new house they should definitely look into those options as well as super insulation and other building techniques which would improve overall energy use.

Kiwibank also has some finance available but reading the comments over here suggests that consumers still need to be very careful and that the finance and solar deals may not be that great.

To me it seems like sizing up a solar power system for the home is not as simple as getting a couple of PV panels and an inverter although that does sound very good. What do you think – Is solar power a practical option for New Zealanders ? Is this a topic we should keep a watching brief on?

Notes: from reading some of the comments on other stories it seems that just because PV prices are less than $1 per watt doesn’t mean we can get that price in NZ yet. However with relatively high electricity costs ( and rising) plus the cost and efficiency of PV panels improving those two trends look promising.

  • http://www.dialogcrm.com/blog/ JasonK

    From further research it appears that cost per watt in NZ is about $1.60 which includes freight costs. While the manufacturing cost will continue to come down the overall impact is less than I thought.

  • http://www.dialogcrm.com/blog/ JasonK

    turns out if you want to investigate further with some specific numbers see http://www.whatpowercrisis.co.nz/sunaudit-on-site-inspection-and-report/

    It will allow you to calculate much better

  • http://www.dialogcrm.com/blog/ JasonK

    Recommend reading the full Economist article on solar costs for PV and power plants http://www.economist.com/news/21566414-alternative-energy-will-no-longer-be-alternative-sunny-uplands

    In essence – as solar power PV costs go lower it becomes more competitive to build them. And a key advantage is that there are no fuel costs once they go live. Yes – still work needed on storage which is continuing but the Swanson effect is very positive for energy futures. As they say below…

    “Progress is particularly likely during 2013 in the field of flow batteries. These devices, hybrids between traditional batteries and fuel cells, use liquid electrolytes, often made from cheap materials such as iron, to squirrel away huge amounts of energy in chemical form. “Grid-scale” storage of this or some other sort is the second way, after Swanson’s law, that the economics of renewable energy will be transformed.”

  • http://www.dialogcrm.com/blog/ JasonK

    This is impressive – a 3kw system with live stats looks like on a good day it would hit 100% of my current usage http://whatpowercrisis.homeip.net:81/

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