Solar power for wealthy poses risk to low-income Kiwis

Renewable electricity from hydro, wind and geothermal sources currently produce about 85 per cent of the country's electricity. Picture / Richard Robinson

Energy Minister Megan Woods has told a major electricity industry conference the government is watching to make sure low-income consumers don't end up facing higher electricity costs caused by wealthier people installing solar power units.

Commenting for the first time in detail to an industry audience on the electricity sector review promised in last year's coalition government agreement, Woods said the review would focus on whether the current regulatory framework remained appropriate "as we look to the future".

"This is particularly in the context of the rise of emerging technologies like solar panels and distributed generation which mean that more people who can afford to are able to draw less electricity from the grid, pushing the price of electricity up for everyone else - often the people who are least able to afford it.

"I want the review to consider whether current regulations in place allow consumers, especially those in lower socio-economic areas, to fully realise the potential benefits of emerging technology."

Her comments place her at odds with the Green Party, which supports the government on supply and confidence votes in Parliament. Its energy spokesman, Gareth Hughes, is a long-time advocate of subsidised solar rooftop installations as a way to increase renewable electricity generation in New Zealand. Renewable electricity from hydro, wind and geothermal sources currently produce about 85 per cent of the country's electricity.

The government is committing to New Zealand achieving 100 per cent renewable electricity by 2035, based on a year with average inflows to the country's hydro-electricity storage lakes.

Woods also signalled a focus on the Low User Fixed Charges Regulations, which were introduced by the previous Labour-led government and were intended to reduce electricity charges for households consuming little electricity. However, they had no benefit for large, low-income households and have allowed high income, low-user households to access cheaper power.

"Participants in the electricity sector have been highlighting their ongoing concerns on the regulations and the review is an opportunity to assess their role in the wider context of supporting New Zealanders to afford their energy bills," she said.

Woods acknowledged newly published research by several electricity network owners warning that rapid uptake of electric vehicles could place severe peak-load pressure on the electricity system and require costly upgrades unless carefully planned for.

"One of the critical roles of the Climate Commission will be to chart a transition path that ensures we have security of supply without pushing prices sky-high as a result of the required levels of over-capacity that a 100 per cent renewable energy system will require," she said, referring to the government's plan to create an independent commission to advise on national carbon budgets required for New Zealand to meet its 2030 greenhouse gas emission reduction targets.

Woods also cited the potential for hydrogen produced from renewable electricity to be used as both a transport fuel and to produce electricity instead of using natural gas.

"The global market for hydrogen technologies is growing and costs of production are coming down. Our government wants to ensure that the domestic market grows," Woods said.

Also on the agenda is an industrial process heat conversion investigation, which the Ministry of Business, Innovation, and Employment is developing with the Energy Efficiency and Conservation Authority.

Woods said innovation in any of these areas could be assisted by the government's intention to introduce a new form of research and development tax credit, with public consultation due to start next month on their design.