Meridian alters buyback rates for solar customers

00:55, May 04 2013

Meridian Energy says it will start promoting solar power generation now that it has changed its buyback rates.

The company has ended its one-for-one pricing for its solar customers with grid-connected systems, which had allowed them to buy and sell the energy at the same rate.

Meridian said it was making a substantial loss from doing so, and this month moved to a two-stage pricing system. Its buyback energy rate for customers is now 25 cents a unit - a kilowatt hour - for the first five units exported each day, and 10c a unit after that.

"We are committed to supporting solar, and now that we are no longer making a substantial loss from doing so, we will be able to start promoting it," said Bill Highet, the company's general manager retail.

An increasing number of consumers are investing in grid-connected photovoltaic (PV) solar panel systems as the cost has reduced and the price of power had increased.



Highet said Meridian's analysis showed that most customers with on-site renewable generation would not see a significant difference in their power bills with the staged pricing, because their real savings were made by reducing the amount of electricity they bought from the company.

However, if they had installed major solar systems, the economics of their installation would be affected, as the 10c rate to buy back units in excess of five a day was more reflective of the wholesale rate that Meridian paid when the sun was shining.

"On cold days when the sun is not shining, the wholesale rate is much higher than 10c and regularly much higher than 25c but, unfortunately, solar panels are not much help to the customers or us at those times."

The change came into effect on April 8. Highet said it had been explained to existing and prospective solar customers who had contacted Meridian.

"But regrettably, we do not know all of the contractors and solar suppliers who may have led customers to believe that our old one-for-one pricing would continue."

TrustPower rubbished suggestions that energy retailers should be required to pay one-for-one rates.

Its community relations manager, Graeme Purches, said local network and transmission charges came in two parts - a fixed component, which formed part of the daily charge on a bill, and a variable component, which formed part of the unit charge. In some regions there are also capacity and congestion charges.

"So if a retailer was to pay back home generators the same unit price as they charged for power, they would effectively be paying the local network company for the variable line charge and paying the same charge to the consumer as well.

"While some may argue that because they have solar, they don't use the lines as much and therefore should pay less, that is reflected in the lower number of units they consume due to their solar offsetting some of their consumption, and if they are exporting, they still need to use the lines to get the power out anyway - so little has changed," Purches said.

This was why Meridian had reduced its buyback, and TrustPower believed that its current rate was too high, he said.

TrustPower, which pays an average 7c a unit, has fewer than 10 solar PV customers.

Purches said the company was not in the business of subsidising home generators, and it could buy power cheaper off the ASX or on the spot market than it could paying the prices some competitors had been paying to solar PV customers.

If there were to be subsidies, they needed to come from government sources, he said.

Such schemes had fallen over, as in South Australia, where the projected benefits of government subsidies for solar were not being realised, Purches said.

However, TrustPower had a massive test system operating now to develop technology to get a better capacity factor from solar PV, he said. This would ensure that the company was in the best position to take advantage of the technology when eventually it became financially viable without subsidies.

"When it is viable, there is a real advantage for consumers and the payback period is reasonable, we expect to be a major player in the market."

Contact Energy has for the past five years kept the same 17.28c a unit rate for excess energy generated. It said that while it was interested in monitoring developments in the solar area, it was not a key area of focus.

"We have seen a small rise in the number of residential and SME solar customers over the past year, but our solar customer base remains modest."

The Nelson Mail