Solar panels are becoming more popular around the country. Photo / Getty Images
OPINION:
Those who have rented, scrimped and saved, and then eventually bought their own house know how good ownership feels. Rising house prices have made that more difficult in recent years but, despite the costs, many New Zealanders still seek that sense of responsibility, achievement and independence.
So why don't we think that way when it comes to electricity?
The vast majority of us in New Zealand are simply tenants, forced to keep paying big electricity landlords exorbitant rent, even though there is an option that would allow us to own our power: solar energy.
On August 9, these big electricity landlords - and the institutions that ensure we have a reliable supply of electricity - were found wanting when around 35,000 households had their power switched off without notice on one of the coldest nights of the year.
In a developed nation where electricity should be considered a basic human right, it was shambolic. But it was also symbolic of the issues with the sector and it may have been something of a tipping point because the discontent around the current structure and the market power of the companies that generate and retail our electricity now seems palpable - whether from consumers, businesses, independent retailers or politicians.
Residential power prices have gone up by 48 per cent since 2000, far in excess of the rate of inflation; the wholesale price of electricity has tripled in the past year (and hit ridiculous levels on August 9), forcing some businesses to limit production; and the profits of the 'big five' are looking embarrassingly healthy: the power firms have been reported to have posted a combined annual net profit of $821 million for the year to the end of June, up from $653m the previous year. So, deeply ironically, they're well in the black.
In complete contrast to the price of electricity generated by our big electricity landlords, solar continues to decrease in price while its performance continues to improve. Computers have Moore's Law and solar has Swanson's Law, which suggests "the price of solar photovoltaic modules tends to drop 20 per cent" every time production volumes double. At present rates, costs are going down 75 per cent every 10 years and, in New Zealand, the upfront costs of systems with batteries can be paid off in as little as five years.
I'm biased, of course. I run a solar energy company called Lightforce that is responsible for around 20 per cent of the country's installs - and we're growing fast. But don't take my word for it. Transpower NZ released a report in 2019 predicting a range of scenarios for the future of New Zealand's electricity sector. One of those scenarios, which was focused on creating the cleanest possible energy system, estimated that 70 per cent of New Zealand's 1.8 million homes and 40 per cent of the 300,000 businesses would have solar by 2050.
Some thought that was overly optimistic, but since that report was released, the price of solar has come down even further and innovations that allow solar panels (or even paints and nano-particles) to harvest more energy from the sun are continuing at pace. The International Energy Agency has admitted it has significantly and consistently underestimated the speed of adoption for renewables around the world and Transpower openly admits its forecasts will probably be wrong, too. We're hopeful the prediction will be too conservative as the economic and environmental benefits of solar continue to stack up.
In many countries, this S Curve is obvious. Germany, for example, generated more electricity from solar in June than any other source, even though there's not as much solar energy to harvest as there is in New Zealand, and Australia is investing heavily in large public batteries and has around 2.7 million homes with residential solar due in part to attractive subsidies.
We are starting to see some large-scale commercial solar operations being announced in New Zealand. That's a good step to ensuring adequate, lower-carbon supply, but that solar energy will just be tipped back into a big mixing bowl of electrons and transported inefficiently through the network.
When homes, businesses and farms are producing, using and storing their own energy internally, that provides a seriously effective and achievable solution (Lightforce will be installing solar on 5000 homes as part of Winton's bold Sunfield development in South Auckland). Just as we snuck into the booze cabinet and topped up mum and dad's vodka with water, we should be topping up our electricity system with solar and reducing pressure on our already strained grid. If we had more solar panels and batteries, it would allow us to use our hydro dams like big batteries, saving the cheaper generation for winter when we need it most and when solar production dips.
More solar will also help us electrify the economy and reach our net zero carbon goals. Depressingly and unfathomably, we've burned more coal for electricity this year than in the past decade and Statistics NZ said recently the electricity generation sector increased its carbon emissions by 13 per cent in the year to the end of March, the only sector to record a rise. That is embarrassing and quite simply unacceptable and shows how badly lacking the investment in new renewable generation has been.
The Government has been willing to get creative with the Clean Car Programme, where high emissions vehicles will be forced to pay their true cost and will eventually pay for a rebate on the purchase of low emissions cars (in Norway, 85 per cent of new car sales in June were EVs because the market has been designed to incentivise their uptake). If the price of electricity continues to go up (which seems likely, at least in the short term) and we need to burn more coal to charge our cars and trucks and run our industrial processes, it could become a false, polluting economy. So how about charging all those electric cars with subsidised solar on the roof? Abundant, affordable energy, generated during the day, stored by a battery (either small ones in each house or, in the future, industrial sized storage at businesses or in the neighbourhood), and called upon when needed.
When it comes to adapting to climate change, the things we need to do are often seen as sacrifices. But in some cases, you can flip that around and look at what you gain. With solar, you gain independence, you gain money and, in our experience, you gain knowledge. Just like those who own their home, those who purchase solar systems are more likely to care about it and tend to become far more connected to their power consumption. They can see their generation and consumption happening in real-time on an app, so they start looking for ways to use it more efficiently and, in some cases, they can even make money by selling that excess energy back to the grid.
Our big electricity landlords, most of them generating electricity cheaply from assets paid for long ago out of the public purse, have understandably done their utmost to protect their property and profit from it. But, as the famous philosopher Jimmy McMillan said, the rent is too damn high. We back the calls from Flick Electric and others to split up the gentailers, in the same way that Chorus and Spark were split. By all means, sign the petition, but know that even if something does change, the cost of electricity will still largely be out of your hands.
If you own a home or a business, however, choosing solar power is your call. So it's time for more New Zealanders to stop renting their power and start owning it; to become electricity makers, rather than just electricity takers. It's time for more New Zealanders to do what they can to help the country reduce emissions. And it's time the Government did something to reform the electricity market and help speed up the adoption of solar.
- Luke Nutting is the managing director of Lightforce.
Legacy gas assets will give way to a focus on solar electricity generation.