Alastair Frizzell: The Dysfunctional Solar Market

The recent demise of Solar Zero has highlighted some of the problems that exist in the New Zealand solar market. While I do not know the specifics of the Solar Zero failure I would not speculate that the Company may have been stripped of assets, including the hundred and ten million dollars the tax payer bucketed into the company. Solar Zero’s problems indicate wider problems within the industry.

The Government aims to significantly increase solar generation. The chances of that happening are, I believe impossible in the current climate, no pun intended. The reason, our love of bureaucracy and our abhorrence of long-term investments. Let me explain.

Slapping half a dozen solar panels on the roof of a house is our preferred investment in solar generation. It makes the home owner feel virtuous, the Banks can grant low interest loans and claim to be clean and green, and the public can see clearly those that are reducing carbon emissions. This end of the market has some problems.

Houses typically use power in the mornings, in the evenings, and to a greater extent in the winter. Demand does not match supply. Trading energy reduces returns, the small scale of the arrays means cost per kilowatt is high, domestic solar installations typically have initial returns as low as one or two percent per annum on investment, depending how you cost depreciation and other costs. The low returns are compounded by, surprise, surprise, our regulations.

To hook up your solar panels to the mains supply you need permission from a lines network company. The Vectors, Wellington Electricity, and Orions to name a few. The powers that be have determined that, to encourage solar installations, the lines companies cannot charge lines fees for power that is produced from solar arrays and sent to the grid. The lines, transformers and the rest of the gear is already inplace, a bit more energy transferred costs them little.

Because they get no return from the installation of solar arrays there is no incentive for them to encourage solar installations. The Electricity Authority thought of this and decreed that unless the lines company had good reason they have to allow domestic consumers to install up to five kilowatts of panels. A typical five kilowatt array on a house roof will produce a bit over five thousand kilowatt hours of energy a year. An average New Zealand household consumes about seven thousand kilowatt hours of energy a year.

If you are an average household or use more than the average amount of electricity and want to produce all your own energy you need to install more panels. It’s easy, apply to the lines company for a larger installation, I wish you well.

Remember the lines companies cannot charge you for transporting the power you export. From our experience the excuses for not allowing installations of more than five kilowatts are varied and many. The transformer will not cope with the extra energy, the transformer was fifteen kilowatts, the house was fused to draw twenty kilowatts, transformers are dumb, they work the same both ways. More than five kilowatts will cause the network to become unstable, hey you have Benmore shoving power in from the other end. The main feeder line will not cope with it, you have fifty houses drawing power on this line.  And then they get smarter with their excuses for rejecting larger systems.

To simplify solar installations, we have an Australian/ New Zealand approval system for mains connected inverters, the smart bit of electronics that connects the panels to the mains. If your inverter is on the list you just hook it up. In the regulations Lines companies can demand customised parameters for their network. Lines companies can demand that you reconfigure the settings in the inverter from the approved setting, often voiding manufacturers warranties and adding extra cost.

You can apply to the electricity authority to put a larger array on your roof than the five kilowatt one approved by your lines company. You will get this approval unless the lines company objects. If putting solar panels of a roof is difficult and costly then maybe large solar farms are the way to go.

Good luck with that. Resource consents, electrical and physical infrastructure, delays, objections. There has to be a better way.

Maybe there is. Across the Country we have farms with irrigation systems. Irrigation consumes about 3% of the countries power. The transformers, lines are already in place. The installations have scale, often many hundreds of kilowatts, no resource consents or planning approvals are needed to install solar arrays. Economics far exceed domestic installations.  Surely the banks would be happy to fund these projects. Adding solar arrays to irrigation systems has the potential for a more than five hundred percent increase in solar production.

Just remember the local Bank manager never got fired for buying IBM. You want twenty million for another dairy farm, no problem. You want a hundred thousand clean energy loan for a solar array, that sounds a bit dodgy. Know any one wants to invest in Agricultural solar, come and see me.

Alastair Frizzell is a mostly retired farmer, who should have also learned that fighting bureaucracy to help farmers with technology is a lost cause.