People who install solar power panels may be able to sell their unwanted energy back to their power retailer. Photo posed by a model.
When a friend installed solar power at his house, Del Amman took notice.
The retired friend had worked out that he'd get a better financial return on buying solar panels than investing the $10,000.
Not many weeks later another friend did exactly the same thing in Sandspit and Amman once again chewed over the figures.
Amman and wife Lesley were on their way to installing panels on their own roof in Beach Haven.
The hardest decision was choosing the panels and inverter for the 3kW system from the wide variety available, says Amman. In the end he chose Chinese panels over the German equivalent. The Ammans expect their solar system to provide up to 80 per cent of their power needs.
The cost/benefit equation was really important to Amman and his partner -- they both work in the IT industry.
The couple is nearing retirement and wanted to cut costs before going on to NZ Super. Generating their own power makes a lot of financial sense to the Ammans.
A solar power system works best financially for people such as the Ammans who use power during the day. They work from home, so use a lot of electricity during the day, heating and cooling the home with heat pumps. People who use clothes driers will also benefit.
Solar King supplied the system and installed a timer switch so the hot water system is heated almost exclusively from the solar panels. Any extra power is fed back through the grid to Meridian Energy.
Overnight their home switches back to taking electricity from the grid.
And if he gets bored, Amman can track the money savings by seeing how many kilowatts of electricity his system is generating.
Amman is yet to get his first power bill since the system was installed in March. He is expecting, however, to recoup the cost of the system within four to five years.
The economics of solar power rely on a number of factors. They include install cost, the lifespan of the equipment, the amount of electricity used from self-generation and the buy-back rates from the power companies.
One issue is that power companies can unilaterally reduce what they pay for power from home systems. Control lies with the electricity companies.
Meridian Energy and Contact reduced their buy-back rates in December dropping the amount paid from 25c/kWh to between 7c and 10c depending on the season.
The reduction in buy-back rates means that it's more economic to buy a smaller solar generation system than a larger one. The larger ones cost more, but were worth it when buy-back rates were 25c/kWh.
Beware, says Consumer NZ chief executive Sue Chetwin, that quotes for solar power don't always include all the extras, such as travel costs, fixing to different roof types and constructing frames to mount the PV panels.
Inverters will often need to be replaced after a decade or so.
The good news, however, is that the panels should have a 30-year lifespan.
Chetwin recommends asking your supplier for a net present value (NPV)of the economics. Watch out for the person selling the system telling you what you want to hear, she adds.
Anyone who wants to go off the grid completely will have to use additional systems to solar power such as wind turbines, a battery bank, and possibly a diesel-powered generator for back-up, which of course costs money to run.
There is a risk that people over-extrapolate changes in the data.