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Will New Zealand learn from Australia’s rooftop solar mistakes?

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rsz_resizephpWhat’s happening in New Zealand mimics what happened in Australia 5 or so years ago. The question is, will they learn from our mistakes?

PV uptake in New Zealand has increased dramatically since 2013, is now averaging about 1 MW a month, and has reached about 11,000 systems (45 MW). This is shown below using two different data sources, where the MBIE data from 2014 onwards was based on projections.

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As occurred in the Australian market, uptake has mainly been by households (about 78% of installations), followed by small to medium enterprises at 9%, industrial at 7% and commercial at 6%.

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Also as occurred in Australia, a greater proportion of households in regional areas install solar compared to their city counterparts.

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This increased uptake has started a backlash from incumbents, with discussion about the costs solar is imposing, restrictions on uptake, ‘solar tariffs’, and so on. ITP Renewables was commissioned by a collection of individuals and businesses (coordinated through the Sustainable Energy Association of NZ, SEANZ) to write a report on the impacts of solar PV in NZ.

Although 80% of NZ electricity is from renewables, resulting in an average emissions intensity of 0.14 tCO2-e/MWh, the installed PV largely displaces open cycle gas turbines (OCGT), which are the predominant marginal generators (in NZ, wind, geothermal and hydro are considered to be baseload).

The currently installed PV systems are expected to generate about 53 GWh in 2016, and so avoid the production of 29,000 tCO2-e with a value of around $NZD 560,000. This value is based on the current spot price for GHG emissions in the NZ emissions trading scheme, which has been operating without controversy since 2009.

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Of course, the uptake of solar in NZ has been much slower than in Australia, in part because of the lower insolation but mainly because of the lack of government incentives. The currently installed capacity in NZ is 9.2W per capita, whereas Australia’s is 190W per capita.

This all means that NZ is in a unique position, in that solar uptake is starting to take off at a time when batteries are becoming financially viable, and other technologies such as the Power Genius, a NZ invention which enables diversion of loads to soak up PV generation, are coming to market.

The figure below shows the APVI chart of PV uptake in Australia, with the equivalent installed capacity for NZ, and the installed capacity at the same watts per capita as currently in Australia. Although NZ is unlikely to have the same absolute uptake as Australia, the figure does show there is significant scope for increase.

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Of course, as occurred in Australia, the reaction of most of the incumbents has been to try to maintain the status quo (rewind about 5 years in Australia) rather than try to benefit from the new technologies (as many, but not all, incumbents in Australia are focussing on now).

There has even been the usual reports attempting to claim that PV will impose unfair costs on other customers and even increase GHG emissions. Such reports miss the point that the customers who take up PV will likely be the same customers who take up batteries, which can be used to flatten the demand profiles and therefore network costs for all.

Opposition to PV also ignores the widely observed consumer technology adoption curve (below), illustrating the typical trajectory. As it has done in other countries, this trajectory is likely to be followed in NZ for PV, battery storage, energy efficiency and DSM. Uptake is being enhanced by availability of management via mobile apps.

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The NZ Ministry of Business, Innovation and Employment recently modelled a number of scenarios, including one termed the ‘Disruptive’ scenario, which has the highest uptake of PV, and concluded that “Solar and battery systems reduce the evening peaks by around 490 MW in 2040 and 800 MW in 2050” – which is about 40% of the rated PV capacity in those years.

The simultaneous uptake of batteries in NZ will also mean that PV continues to offset OCGT electricity (rather than ‘eating down’ into the contribution from existing renewables), and as a result emissions would be reduced by an estimated 8 million tCO2-e, worth $NZD500 million, between 2016 and 2040.

It remains to be seen how quickly the NZ electricity industry and regulators will recognise and benefit from the opportunities that PV, batteries and the host of new energy technologies have to offer.

Rather than selectively penalising new technologies, specifically PV, the focus should now be on how to make the most of the coming opportunities driven by increased customer choice, and in enabling the existing electricity industry to transition to the ‘new normal’.

Integrated distributed energy systems present a significant opportunity to provide broad-reaching social benefits. Leasing options and solar PPAs can help overcome the capital cost barrier. Community-owned systems are proving popular for renters or people who have little solar access. Government housing is a prime opportunity for lower income households to reduce their costs, and of course, the interest in PV presents the perfect opportunity to also implement energy efficiency and load management options.  

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  • Rod

    “This value is based on the current spot price for GHG emissions in the
    NZ emissions trading scheme, which has been operating without
    controversy since 2009.”

    Hmmm, funny Frightenberg and Mighty Turncoat haven’t held that up as a good example for Oz to follow like say NZ GST increase, welfare cuts and IR laws.

  • Rod

    “This value is based on the current spot price for GHG emissions in the
    NZ emissions trading scheme, which has been operating without
    controversy since 2009.”

    Hmmm, funny Frightenberg and Mighty Turncoat haven’t held that up as a good example for Oz to follow like say NZ GST increase, welfare cuts and IR laws.

    • George Darroch

      NZ’s ETS had no floor price and was diluted by the introduction of fake foreign credits. It has since increased in price a little, but the lack of controversy has a lot to do with how ineffective it was.

      • Rod

        Thanks for clarifying.
        I always thought our starting price on carbon was about right but in hindsight we should have started lower. (For political purposes)

  • john

    Considering Vector Energy had more foresight than any Australian distributor of power i find the story rather strange.
    Vector Energy would put panels and battery storage into your home with the covenant that they could use it to mitigate high cost of power during the day and any power left over that was yours to use free.
    So how can it be slanted that they have to learn off us?
    Other than the very high FIT that was put in place granted.

    • Rob Passey

      Hi John, you’re absolutely right, and we discuss that in the report. Since what Vector has done has been discussed at great length in RE, I needed to come up with a different slant for this article. What really struck me was that, in terms of uptake of PV and the kickback that is just starting to appear from regulators and some network companies (eg. one network operator has successfully implemented what is essentially a solar tax), there is a real opportunity for them to realise that such opposition is ultimately futile and they’d be much better off taking advantage of the transition to DG. Rob

      • john

        Thank you Rob and yes DG is of advantage definitely.
        In Australia this would be a huge cost benefit.
        Both to the distributor and especially to the State Governments who subsides power to a value of $450 million in some states.

  • Ian

    Why would NewZealand’s utilities get flustered by such a small uptake of solar? 1MW a month that’s paltry by anyone’s standards. The shift from power hungry desk top computers to power sipping tablets and from plasma TV’s to LED TV’s has probably reduced consumption from the utilities more than a few watts of solar panels per person.

    New Zealanders would probably better benefit from Negawatts than from household solar. Home insulation, ground source heat pumps for hydronic heating and hot water. The energy saved would be costed at the import tariff.

    they have tremendous renewable resources in terms of wind, hydro and geothermal, why even bother with gas power generation?

  • hfrik

    As a utility, it would be logical to add some more tubines to existing hydropower plants, to allow them running in load following mode, and retire OCG-Plants as they age or need some repair.
    Costs for PV materials are so low now on the world market, that the trend will not stop. And once installations have started to some level, installationcosts will drop as installers get experienced.
    !MW per month is really a too lowe level for a country with the size and insolation of new zealand. Even Greenland had a installation rate of 0,5MW in 2016, with worst possible insolation and a negible population.

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