Sussing out the payback of solar power
In a sense, Wellingtonian Michael Gould has his kids on pre-pay - by the time they are teenagers, much of the extra electricity they suck will have been paid for long ago when the house was renovated with solar panels.
Wellington will not be claiming any "sunniest" prizes this millenium, but even rain-soaked city-dwellers can make solar panels work out cheaper than bog-standard grid power, according to small-scale renewable electricity lobby group Seanz.
Government Energy Efficiency and Conservation Authority (Eeca) is dubious, saying solar is still "uneconomic or marginal" for most people.
There are dozens of variables, but it is fair to say Gould's north-facing ridgetop home is about as good as it gets for the capital.
On the other hand, a leafy pad on the south side of an outcrop is no solar panel installer's dream build. More important, though, is when you're home.
Photovoltaics - the cells that convert sunlight into electricity - have suddenly plunged within reach of the average punter. Manufacturers of good quality panels for Europe have a glut since solar subsidies shrivelled, says Seanz chairman Brendan Winitana. As of October, Seanz calculates solar has been cheaper per unit of electricity than buying from the national grid.
The strong dollar helps, says installer and PV design lecturer Jeroen Brand of Alphatron Pacific, who estimates solar works out at roughly 10 to 15c a kilowatt hour (plus GST) during a system's 25-year life span. This compares with an average 27c a kWh cost for conventional electricity. Seanz says solar is cheaper even after factoring in the cost of not using the money to pay a chunk of the mortgage (6 or 7 per cent a year) - especially given the pace of power price hikes.
It sounds like a bargain. So why does government agency Eeca want to rain on the party? This is where we get to the fine print.
All the cost of a solar panel is upfront - from then on, the power it makes is free. So the payback depends on how well the investment compares with the cost of retail electricity over the life of a panel. Eeca says retail power price hikes should slow from now on, after structural shifts that put more burden on householders. But the biggest difference between its sums and Seanz's is that Seanz assumes all solar power will be used on the spot.
This matters because homemade electricity looks likely to sell for less than the retail price of power. Nobody knows how much retailers will pay for homemade power in future but Eeca estimates a sustainable price is 5 to 10c/kWh (because solar offsets the generation cost but not transmission, distribution and metering).
Like sunshine, solar electricity is a fleeting beast and most homes do not use a lot in daytime during the working week. So Eeca assumes at least a quarter of solar power will have to be sold back to the national grid.
If homes end up having to sell solar-generated electricity back to the grid, it will be at a much lower price than standard power - possibly as low as 3c a kWh. This makes a big difference, because you're getting back less on your investment than you would be saving if you were using the power yourself.
If you sell between a third and half of your power back to the grid at 10c a kWh, it puts the effective cost of solar up to to about 35c/kWh to 45c/kWh for a typical house, says Eeca. The other option - storing the surplus in batteries - can cost the same again as solar panels.
Right now Gould gets a great deal, with Meridian buying his surplus at the full price it sells it for. But Meridian is losing money on the deal and plans to change to a lower tariff later this year. It wouldn't tell us the new rates but told the Otago Daily Times the price was "likely" to drop to about 10c/kWh after the first 100 kWh per house a month.
Brand suggests that to avoid fickle prices people install panels that generate less than a house's daytime power use. "Look at your records from your retailer and keep an eye on when you use power. If it's all during the night time then it becomes hard [to justify] but if you consume a lot during the day . . . you can design a system which doesn't go over your consumption," he says. Another option is to shift more consumption to daytime by using timers. Often solar is more viable for office or commercial use during the day, says Brand.
Not all houses are suitable for sun-harvesting. The best case remains out in the back-blocks, living the self- sufficiency dream. Assuming you're stuck in the rat-race, the most solar-friendly towns are those with a mixture of high regional power prices and sun - broadly, the further north, the better. Northland, Gisborne and Greymouth look promising, according to calculations for Seanz. Modern PV generates electricity under cloud cover, so Wellington is only about 1c/kWh less efficient than Auckland, says Brand.
The best roof is north-facing with no shade from trees, hills or houses and an angle between 27 and 35 degrees, says Winitana. Installers can tilt the angle with framing for about $500, says Eeca.
Gould has already taken the capital's best spot, catching rays high on the top of a ridge. The Jasmax architect has 12 panels facing due north at a perfect 32 degrees. Ten supply his family of five, one is insurance for when the kids become teenagers, and one he hopes will cover Meridian's fixed connection costs. In their first year the panels will make more than 3600 kWh. That's less than half what an average household would use, but more than enough for his gas-cooking, insulated, double-glazed dream house. On hot summer days the system feeds power to the street, to be claimed back for credit for winter power.
Costs vary a lot, but a basic 2kW system - about a third smaller than Gould's - can be purchased for about $10,000, excluding framing, says Eeca. That includes panels, cables and an inverter box, which takes the AC electricity the panels generate and turns it to useable household power. Most inverters have wi-fi, so you can log into a web page and see how much they are generating, says Winitana. Bigger systems work out cheaper per unit of electricity, says Brand, but you don't want to have to sell back to the grid.
Winitana's advice is to use well- known brands and a Seanz-member installer (listed at www.seanz.org.nz) to give access to reliable long-term warranties and Seanz's dispute resolution process.
Eeca says affordability is getting better all the time. Meanwhile a few hundred households take the plunge and install solar panels each year - either because it works out cheaper or they don't give a fig. Gould points out that nobody asks him to justify the payback period when he buys a plasma television. He feels good that his house makes as much power as it uses, with enough for three future teenagers. "In effect you are just bulk-buying power in advance. I've also protected myself against any increases in price."
The Dominion Post