Industry questions solar economics

The head of New Zealand's largest renewable energy company is dismissing the economics of home based solar, saying he "can't follow" the numbers put forward by proponents.

Last week, ahead of the Green Party announcing a major loan scheme for solar schemes, which subsidises the devices through low-cost loans, Meridian chief executive Mark Binns said he could not understand why people installed them.

"I can't follow the economics that are put forward by proponents of household solar in terms of returns as an investment," Binns told Parliament's commerce select committee.

"On our numbers, in our analysis, it is still probably not viable if you went to an accountant."

Greens energy spokesman Gareth Hughes, who is part of the committee, defended the economics, asking Meridian management "it's still cheaper than buying from a retail provider, isn't it, over the lifetime of the solar panel?"

Binns and Meridian chairman Chris Moller replied simultaneously "no".

While Green Party co-leader Russel Norman said the major obstacle for people investing in solar was the up-front cost, Binns said the major challenge posed by solar was that after 25 years the panels were worthless.

"The thing people don't realise is that [if] you invest in solar facilities, you get nothing back at the end of 20 or 25 years," Binns said.

"It's not like investing in a government bond or a bank bond, where at the end of the period you get your capital back. You don't with solar. It's written off.

"Our view is that the answer is no, it's not currently viable if you are hard-nosed about it."

Binns added that consumers might be interested in investing in the schemes for reason of energy independence, but that accountants would probably not sign off on the investment.

Ewan Gebbie, executive director of the Energy Management Association of New Zealand (EMANZ) said that while there were areas where better efficiency gains could be made, it was possible the Greens' scheme could be cost effective.

EMANZ largely represents contractors who advise companies on how to improve efficiency.

The organisation has said in the past that apart from areas which faced grid constraints, such as Northland and Gisborne, installing solar panels "doesn't work, or at least, it's not cost effective".

But Gebbie said part of the present problem was around the lack of professionalism in the industry. He knew of houses where there was little study conducted into how often the panels were exposed to the sun, or instances where the panels were fixed to roofs with cable ties.

If the programme came with training to improve professionalism, the size of the programme could improve the economics.

"If we can scale up we will drive economies of scale, and we will drive the business processes and the cost of installing down," Gebbie said.

Any programme would need "quite strong criteria" about which houses were eligible, Gebbie said, with many sites immediately ruled out.

Overall, Gebbie said there were still better ways for the money to be spent.

"It's not just about being energy efficient, it's about being capital efficient as well," he said.

"If it was me, I would still be focusing on insulating houses with that money.

"I wouldn't be putting flash, conspicuous PV [photo voltaic] systems on houses, just because it tells everybody you're a greenie."

Politicians focusing on home solar are ignoring the broader problem of cold, damp and poorly ventilated homes, says Bruce Gordon, chief executive of West Auckland-based home ventilation company HRV.

"The World Health Organisation tells us you should insulate well, ventilate well and then look at your heating,"  he said.

Gordon said his company visits up to 1500 homes a week and many were obviously unhealthy places to live in.

"We are seeing leaky homes, dampness and mould - even in some very nice suburbs."

Gordon said that substituting solar power for other forms of energy was missing the point and was "secondary to the needs of most of the population".

- additional reporting Michael Foreman

Fairfax Media