A solar tax makes it harder to go green in the short term, but could drive more customers off grid as the appeal of solar power grows

I was astounded to learnt the Hawke's Bay power lines company, a monopoly called Unison, has announced increased line charges for households generating their own electricity. This "solar tax" runs counter to New Zealand's attempts to reduce its greenhouse gas emissions and is one of the most stupid business decisions I've heard of in a very long time.

Around the world, governments from Algeria to Ukraine and dozens of countries between them in the alphabet have been encouraging “distributed energy generation”, like solar panels on houses, to reduce their reliance on fossil fuels and CO2 emissions.

With the government looking the other way, New Zealand’s privatised electricity generators recently moved to deter distributed generation by slashing feed-in tariffs. Feed-in tariffs are the prices power companies pay to buy excess electricity generated by households, farms and businesses and are an encouragement for power consumers to generate their own electricity.

In August 2015 The Green Party revealed that Contact and Meridian had reacted to the growth of household solar power generation by slashing their buy-back rates by 50-72 percent. My mate who installed a solar powered beach-house at Waimarama, only to see his feed-in tariff heavily reduced to the point that any duplicate of what he’d done became uneconomic was an early victim of this trend.

With New Zealand’s electricity generators now partly or fully privatised their focus on profit ahead of New Zealand’s best interests is comprehensible, but these decisions by the generators and now lines company, Unison, are sure to be ultimately destructive to their business models and their profits.

Here’s why.

Some years ago, my family bought a rural bolt-hole in Waimate North. It was an extraordinary property consisting of a huge house constructed from scoria boulders on twenty acres of paddocks and regenerating bush.

It had been developed over many years by a Swedish hippie couple who sold when their relationship broke down. It was very definitely off the grid. The only wire in was joined to the telephone. Water was collected on the roofs and heated by big gas bottles. Warmth came from wood fires. We decided that we needed radio, music, television, lights and a cell phone charger so I purchased a small solar kit.

This consisted of one solar panel, an inverter and three large golf cart batteries. My memory is that this now very outdated system cost less than $2000. This scheme supported eight one hundred watt equivalent light bulbs, radio, the CD player a TV and an essential cell phone charger.

Even on cloudy days, we never ran out of power, and when we sold the property to a friend, he upgraded and extended the system so that more electricity could be stored and appliances like refrigerators, dishwashers and washing machines could be powered. The new owner also installed solar hot water and got rid the big gas bottles.

My electrician neighbour in Waimate built an off the grid house from scratch and as well as a sun-tracking solar array, installed wind generators and put a mini-hydro in the creek we shared. The windmills proved almost useless and mini hydro ended up somewhere in the Pacific Ocean after a flood, but his solar generation was a huge success.

My point is that with the generators heavily reducing feed-in tariffs, and Unison charging extra for properties generating their own power, it will become increasing attractive for consumers to be off the grid altogether, just as we were in Waimate North.

In recent years two developments have made solar energy much more attractive than when I dabbled years ago.

Thanks to massive production in China, the price of solar panels has plummeted from $76.67 cents per watt in 1977 to 74 cents per watt in 2013. At the same time they have become much more efficient.

Alongside this trend has been a huge increase in the efficiency of batteries with the development of lithium-ion technology.This means that not only is electricity much cheaper to generate with solar panels, it is much easier and cheaper to store in large quantities.

The electric car company Tesla, in 2012, advertised the Tesla Model S with a stated range between charges of 426 kilometers, enough to drive from Auckland to Hastings.

A friend, based in China and constructing an off the grid house in Northland, believes that it won’t be long before any home owner will be able to become self-sufficient in electricity for as little as $10,000. This would give many consumers the option of thumbing their noses at their power generators and lines companies. They’d lose their power bills get their money back when they sold their properties.

Unison’s “solar tax” is a very silly move which will lose it customers in the long run. This company is no longer the indispensible monopoly it used to be.

Comments (32)

by Ian MacKay on May 14, 2016
Ian MacKay

In some parts of USA even houses right off the grid are still charged a fee.

Aluminum storage batteries may be cheaper and safer than lithium-ion batteries. Technology coming.

The complaint from the Lines companies is that solar panel owners do not pay their fair share of development and repair. But the more that houses are alternatively powered the less stress there is on the system. Therefore they are saving money/costs.

There is a move to take line charges right off the bill and instead make every house pay line charges through Property Rates.

To me the benefit of solar panels is the more solar energy that comes into the house, the fewer number of expensive Kw we have to buy.

by Chris Morris on May 14, 2016
Chris Morris

No Mike and Ian MacKay

You have it wrong. Lines companies have to size their equipment for the peak demand which is about 8pm on winter evenings. Solar installations make no contribution to lowering this peak. They actually make operation of the grid a lot harder because of the duck curve, which means generally water will be spilled and gas turbines will be built to run. The lines Companies seek to recover their costs by a combination of  daily line charges and a charge per unit. Under the current charging system, the solar installations (effectively the rich) are subsidized by those without solar (the poor). The better charging model for them could be to totally remove the charge per unit and put it all on daily charges. Then the solar installations would be welcome to go off grid.

The average household uses 20-30kWh a day. As most of this is in the evening, and one has to make allowance for gloomy days in winter, that needs about 8kW of solar panels and 50kWh of batteries. To this has to be added inverters, voltage control and the like. That will cost you more than the prices you quoted. And it would need complete replacement every 5-10 years. Even  with significant lifestyle changes (like wetbacks and minimal appliances) the installation would need to be significant. If it was cost effective, people in suburbia would go of grid. It isn't so they don't.

by Megan Pledger on May 15, 2016
Megan Pledger

If NZ goes to electric cars (and buses) than the call on power is going to shoot up.  At that point people being on solar will seen to be a good thing. 

Electricity producers should be pushing electric cars to increase demand rather than piss off it's customers with penalties.   

 

 

by Murray Grimwood on May 15, 2016
Murray Grimwood

Actually, it is easy to go off-grid,and 'cheaply'. Our system cost around $5,000 back in '04/5, and has cost less than $1 a day since then.

But this isn't about 'cost'. Or Power Companies. Or peak load - the old stand-by of the spin-doctors.

This is about the fact that all the ingredients for solar panels, batteries, inverters and transmission are dug, processed and transported to you by fossil fuels. The economic system - requiring endless growth to underwrite profit, dividend, interest and other 'charges' - won't survive the point where the supply of fossil energy starts to decline. At that point, all bets - and future debt is a bet - are off.

I doubt we'll have access to the stuff, doubt it'll be manufactured.

Electric cars - only viable in NZ, Iceland and Norway, everywhere else they're coal/nuclear cars - are a first-world hope that they can continue their cafe lifestyle with just a minor change or two.

That is an unlikely scenario.

Solar is the best interim measure we can indulge in, though. It's essentially saving fossil fuels so we can have energy when we don't have access to them any longer.

 

by Alfie West on May 17, 2016
Alfie West

Chris Morris: "...the solar installations (effectively the rich) are subsidized by those without solar (the poor).

Sorry Chris, but it seems that you've fallen for the power companies' PR which unfairly demonises solar users. While they would like you to believe that we're all rich bastards, that's far from the truth. We live very modestly in the Blueskin Bay area just outside Dunedin, which incidentally has the highest uptake of solar power in the country. But in socioeconomic terms it's a poor area and most people I know have increased their mortgages to pay for their solar installations.

When we moved here we were paying a fixed charge of almost $100 a month, before we used a single unit of power. We made the decision to invest in solar to bring our annual usage below the 9,000Kwh threshold and qualify for the low user daily charge. While we have achieved that, my per unit cost has shot up from 32c to 44c per unit. When most people in cities are paying closer to 15c per unit, that's expensive. More importantly, that higher rate guarantees that neither the power supplier nor the lines company are missing out on any income from us nasty solar users.

Dunedin is not renowned for its sunshine hours and over the year my system covers roughly a third of our electricity needs. Almost all homes with solar installed still require power from the grid, but we pay a substantial premium for every unit of electricity we import. The small quantity we export to the grid is onsold to our neighbours with a 150% markup for the power company.

I invite you to consider solar in a slightly different way… as an energy saving appliance.

Say you fitted a couple of low energy appliances, or added better insulation and maybe changed your lighting to LED throughout your home. Would you consider it fair if your power company said, "Your usage has dropped. You were using $x of electricity per month but now it's only $x, our profits have dropped therefore we're going to tax you the difference." Would you happily pay that extra tax? Of course you wouldn't. What you are advocating is a little like anyone buying a Prius being "taxed" by petrol companies because they're using less of their product.

At the end of 2015 there were just over 5,000 installed solar units in NZ – a fraction of one per cent of all households. While other countries such as Germany provide incentives for homeowners to install solar, nothing like that exists in NZ. Instead, we're going in the other direction with this insane "tax" based on the premise that lines companies should be able to maintain excessive profit margins, regardless of whether they supply a service or not.

Thanks for your commonsense article Mike. The Unison "tax" is as unfair as it is morally repugnant.

 

 

 

by Ian MacKay on May 17, 2016
Ian MacKay

@Murray. "Our system cost around $5,000 back in '04/5, and has cost less than $1 a day since then." Presumably you have a battery storage system. Be interesting to know hat sort.

@Mike. Good column Mike. Shows imagination and initiative is not dead. Thanks.

@Alfie. Well done. A good rebuttal. Comfitting to know there are such answers. Specially liked this bit.Well worth repeating.

" Would you consider it fair if your power company said, "Your usage has dropped. You were using $x of electricity per month but now it's only $x, our profits have dropped therefore we're going to tax you the difference." Would you happily pay that extra tax? Of course you wouldn't. What you are advocating is a little like anyone buying a Prius being "taxed" by petrol companies because they're using less of their product. "

by Megan Pledger on May 17, 2016
Megan Pledger

Alfie West said: The small quantity we export to the grid is onsold to our neighbours with a 150% markup for the power company.


I think it's even worse than that because your electricity that is going to your neighbours is close to 100% efficient (I'm guessing) - what you send they receive.  For electricity companies their efficiency is something like 33% which means for every 1 unit you send to your neighbours the electricity doesn't have to send 3 units.  


I'm not a lawyer but if the solar people took the lines company to court they should be able to fight that excess charge.  There is no way that it's possible to charge for a service that isn't being used.  It may be possible to do so in small claims court if the person disputes one bill.



by Murray Grimwood on May 17, 2016
Murray Grimwood

Ian - our batteries have always been second-hand (from outfits which need power-outage backup). They replace these always-charged never-used batteries at some age - still with lots of life left in them.

Ultimately, batteries may well become unobtainable in a post-oil or in a fight-over-what-oils-left scenario. At that point, water at height - pumped storage - will be the best battery.

 

 

by Chris Morris on May 17, 2016
Chris Morris

No Alfie

If you think you are better off without the grid, leave it. If you want it there for when the sun isn't out, then you need to pay the cost. That is where the expense is, because everyone wants the most power about 8pm on winter evenings. The power companies have to size their equipment for that. Or would you prefer it to be like 3rd world countries where you have brownouts, or just switch suburbs off when there is a mismatch?

 As the Commissioner for the Environment noted in her report, solar generation does not make sense in NZ. There are a lot of very good technical and engineering reasons for that, but it appears you haven't bothered reading the reports.

by Chris Morris on May 17, 2016
Chris Morris

By the way, Mike's original assertion about PV being "green" is very much in doubt. Ferroni and Hopkirk found for temperate latitudes (read Dunedin), the ERoEI was only about 0.85. That means more energy is used to make the PV panels than will ever be recovered from them during their 25 year lifetime. PV means industrial wastelands have been created in China so that people can make believe they are reducing CO2 emissions.  Even for sunny places like Spain, Prieto & Hall had it at about 2 which is just at subsistence levels.

The perception does not match reality. 

by Rich on May 18, 2016
Rich

@Chris: as this informative site shows the North Island occupies the same (southern) latitudes as Spain does in the Northern Hemisphere.

by Chris Morris on May 18, 2016
Chris Morris

Solar power relies mainly on sunshine hours for a given incidence angle. What is the difference between coast Spain (where much of the PV is installed) and say Auckland?

by Megan Pledger on May 22, 2016
Megan Pledger

If the problem is that solar power users contribute to the daily peak power usage then price it for that problem.  Don't price it for line charges because that just looks like you're trying to gouge a group of users solely for profit.

 

by Chris Morris on May 23, 2016
Chris Morris

No Ian.

But the more that houses are alternatively powered the less stress there is on the system. Therefore they are saving money/costs.

That is just plain wrong as has already been explained. All the PV owners are doing is sponging off those people who don't have solar and pay the grid charges. It robbing from the poor to pay the rich.  

by Megan Pledger on May 23, 2016
Megan Pledger

@Chris Morris

What about all the natural gas users?  Aren't they sponging off the grid users?  Most people use gas to power their hot water cylinders which pretty much run continuously and use electricity at peak time to run their tvs, their computers, their washing machines, sometimes their home heating and sometimes their ovens.   They are also contributing to peak power usage so where is the outrage and extra charges for them?  

 

 

by Chris Morris on May 23, 2016
Chris Morris

No Megan. I gather you have no idea of actual power consumption do you? Almost everyone on natural gas has to have at least two items on gas. Most have hot water, stoves and home heating. They are the big three consumption items, especially in the 6pm to 10pm on winter evenings peak period that the distribution network has to be sized for.    

by Murray Grimwood on May 24, 2016
Murray Grimwood

Quite the arguer for the status-quo, Chris.

No thought that things are about to change, societally?

That 'peak load' is because people do what has, for the last less-than-hundred-years, been seen as 'work'.

That can't - and therefore won't - continue.

So who says 'peak' will continue?

All folk are 'sponging off' Chris. But it's fossil fuels we're sponging, and it's off 'future generations'. Solar and wind technologies are using oil while we still have it, to create a substitute. In the post-oil scenario, profit/dividend/interest are no longer underwritten (no growth) unless they displace something else (make the middle-class 'poorer' is my guess). So the Power Co's 'business model' - like all others - won't work.

 

 

by Chris Morris on May 24, 2016
Chris Morris

I see you are still on peak oil, doom and gloom, anti -1%, fact free crusade Murray.  Have a day off.

Last night was the first time the grid went over 6000MW this year It peaked just after 1800 and didn't drop below 5000MW until after 2115. By that time, about 60% of the load was domestic.

 If we imagine every household in the country had 3kW of solar cells and a Tesla Power wall, how much would that have reduced the load? the answer is 5/8 FA. The North Island was in heavy overcast conditions most of the previous three days so there would be nothing in storage. That is why solar sponges off the grid. It isn't there when the peaks occur and that is what the lines company have to build for. 

 

by Megan Pledger on May 25, 2016
Megan Pledger

I guess I know a different bit about power consumption than you do since we only have one of those items on gas.

The local school generated 4, 11 and 5 kWh over the last three days.   And that's a school at the north end of a valley.  So not even close to FA.  http://www.schoolgen.co.nz/schoolgen-schools/miramar-north-wellington

It's not solar sponging off the grid,  It's about the electricity companies not wanting to adapt to a changing market.

by Murray Grimwood on May 25, 2016
Murray Grimwood

The use of a finite resource at an exponentially (till it can be done no longer) increasing rate. only ends in one place, Chris.

Accusing people of having emotions (thus somehow altering the facts?) won't change any reality.

We will have to get by on a lot less, soon. The sooner we prepare, the better. We are already way too late, and way overshot.

Megan is right, above, too. What's your vested interest, Chris? There's always a reason for that kind of angst, and it's usually the job/career/peer thing.

We should contemplate what different lifestyles and incentives might do to the herd-mentality peak thing.. That would need leadership - which we won't see anytime soon.

by Chris Morris on May 25, 2016
Chris Morris

Megan

Looks like you had more sunshine hours than most of the population,(The local paper put it as 5.5h yesterday) but your data still proves my point. . Firstly, the school probably has larger area in solar panels than most domestic installations but we say it is the same.  This time of year, the average household uses about 30kWh a day, most between the hours of 4pm and 9pm. That means on even the best day, the batteries would have run out about 7:30 so the school/household will have still been loading up the reticulation network during the peak hours. I note on several days this month it was down around 1kWh as well. Are they not going to use any electricity on those days.?

by Megan Pledger on May 26, 2016
Megan Pledger

The school has a 4kW system and terrible geography.  I would have thought 5kW for a typical home.  Given a school runs between 8ish and 4ish, I think you can let them off contributing to peak hour problems. 

We use about 10-15kWh a day - 30kWh seems really high.

Dams are a battery.  When solar power is at it's peak, use it to pump the water back into the dam.   I can send one unit of power next door at close to 100% efficiency.  This saves the power company  3 units because they have only 33% efficiency to get from the dam to my neighbour.  Therefore, they can use the bonus 3 units to refill the dam and use it at peak time.

Actually, if peak demand is really a problem, you should be talking to the tv stations.  They are the biggest cause of spikes in electricity usage at peak time.   Although I guess that it's waning with the advent of entertainment on the 'net.

by Chris Morris on May 26, 2016
Chris Morris

Megan

The AVERAGE household runs about 8400 units of power a year according to Statistic Dept. There are other sites that give the split between summer and winter.

With regards the rest of your comments, I can see the engineering/physics competency is not one of your skills.

by Murray Grimwood on May 26, 2016
Murray Grimwood

No need for that kind of comment, Chris.

It doesn't matter what the average - induced to consume, fooled into thinking that tomorrow will be a repeat of today - consumption is. That will alter when it's forced to.

You remind me of the old NZED geezers who projected 2% growth forever, plotted it forward, threw up their hands and said 'nuclear'.

Which in itself is no answer, given that if it took over from oil, we know of only 40 years' worth......

What's your vested interest, Chris? Do you work for a Power Co?

 

by Alfie West on May 26, 2016
Alfie West

It's good to see so much common sense amongst commentators, with one obvious exception. Murray Grimwood has twice asked Chris if he has a vested interest, with no response. In his Pundit profile Chris describes himself as a "power station engineer from Taupo". Nuff said.

And those personal attacks do you no favours, Chris. Even if we can't agree that the world is changing, surely we can at least try to be civil. Please?

by Megan Pledger on May 26, 2016
Megan Pledger

Dams as a battery are an old idea.  There is one used in Wales to power the spike that occurs during the Coronation Street ad break in Britain.  It pumps water back during the day and let's it go just before the ad break.  

https://en.wikipedia.org/wiki/TV_pickup

The point I was making is really Murray's - that the change in viewing habits and increased of use of the internet is changing the profile of energy use.   When electric cars come in then it's going to change the profile as well.  

The latest domestic batteries/inverters can store power from the grid at non-peak times to use at peak.  So if there is a day with no sun, the battery can discharge during peak time and recharge overnight.    If peak time usage is the problem then, as I said before, you should be costing for the problem (higher rates at peak time) rather then selectively charging one group for the problem - it looks like you are gouging one group because you know they are rich (because they could afford solar panels).

I may not know much about electricity and engineering, I never proclaimed too, but I've educated myself and I don't have tunnel vision.

 

 

by Chris Morris on May 26, 2016
Chris Morris

Megan

The original post was about lines companies, the distribution network. You expanded it into the generation and pumped storage. I don't know where you got your 33%efficiency from but it is just plain wrong. Each step through a transformer is between 95 and 99% efficient, depending on the load, and there are maybe 4 steps from generator to your home..

If you are talking about Dinorwig, yes, that is a grand place. I was there about 30 years ago. It works because the large thermal plant in Britain works best as base load. They have next to no hydro there. That means they have surplus power at night which is very cheap. That is used to fill the top lake. It can then discharge during the day peaks. It would be very stupid to have the same system in NZ as we don't have the thermal baseload.
The Tesla Powerwall is supposed to be about 6.8kWh and costs $3k US. It would also be good for maybe 1000 deep draws going on standard Lion battery literature. In the operation mode you are suggesting, that means replacing the battery pack maybe every 3 years. All to avoid what lines cost?

How bout you read the Consultus report and the Commissioner for the Environment's report on the issue of solar generation. You might learn something.

 

by Chris Morris on May 27, 2016
Chris Morris

Further to the above post, I note that despite the Wikipedia article, Dinorwig over the last 30 days has been running as a two shift hydro station, generating about 500MW during the day and pumping at night. There isn't enough detail visible in the annual data, but it looks like the pattern has been the same over that time.

It is the renewables like wind and solar that are the cause of the "TV pickup". This is because their output is synthetic AC from asynchronous or static sources. The only big surge we had recently in NZ was during the RWC final when the grid picked up 385MW at half-time, but the grid managers here didn't seem to do anything special. Looking at the rest of the load data, there is no evidence of any other sudden changes.

When you have large generators like thermal and hydro on the grid, you get governor droop and inertia to smooth you through frequency swings. Don't have them, and you have no stabilization. If the frequency drops down to 47Hz, (In the last year or so it has been below 48Hz a couple of times) then New Zealand goes black as the protection systems trip units, and it will take a day or so to come back.  With the wind/ solar, you also don't have low voltage ride through for faults. That is why Britain and Germany is now dispatching wind off, and paying coal fired power stations to stay on.

 

by Megan Pledger on May 27, 2016
Megan Pledger

95% efficiency through 4 transformers is 81% efficient -  ok, it isn't 33% but it aint 100% either.  

If you have solar and a battery/inverter (& electric car for that matter) that can charge over night from the grid when solar is not enough or, not looking like being enough, then the battery isn't going to have deep draws every single day.  

The Miramar North School solar set-up only had two days around 1kWh and 5 days under 5kWh during May (and May is their worst month).  

Are you similarly against home wind and hydro power?  Are they going to be hit with the same costs as you want to impose on solar?  And gas users?   

And why don't you price for the problem (for the third time)?  If there is excess usage at peak time then make peak time use more costly.  

How much input did the solar industry have in the Commissioner for the Environment's report?  How much input did the lines companies?

 

 

 

by Megan Pledger on May 27, 2016
Megan Pledger

OK so I skimmed the report - 

"The more surprising feature is that the growth in peak grid demand is the same in the basecase and high PV uptake scenarios (both show a demand growth of around 1,500 MW). "  Bottom of page 22.

The base case is effectively zero PV uptake (i.e. what it was in 2014) compared to a linear increase with time in PV (60% of households), EV (80% of households) and battery (60% of households) by 2040 (e.g. 24 years).    

[Given home ownership is heading below 50%, I don't see how PV uptake is going to get anywhere near 60% of homes.  Landlords aren't going to install PV so their tenants can save on their electricity bills!!  And the turnover rate in homes is something like 3 years as well i.e. people on average live in their homes for 3 years before buying another.  PV is a 15 year investment that doesn't add a lot to the value of the home so you're only going to do it if you're in for the long haul.]

 

 

by Chris Morris on May 27, 2016
Chris Morris

That 95% is only when they are heavily loaded. Bigger transformers and those with thermostat controlled cooling are a lot more efficient. Trouble is, Megan, if you take power off the grid, put it into a lithium battery, then take it out again, it is less than 80% efficiency.

Dr Ian Mason,  a research fellow at Canterbury University  Civil and Natural Resources Department presented some interesting numbers at this year's Downstream: By his reckoning, for a 10,000 kWh per year customer in Christchurch to go off grid using only solar and batteries would require 27kW of solar panels and 256kWh of battery storage. Sure people can change their lifestyle to live with a reduced electricity supply, but who is going to buy into that? Who has got 200 square metres of north facing roof? And with Ferroni and Hopkirk showing the ERoEI of solar cells at a Wellington type latitude is less than 2, it doesn't even meet subsistence existence.

by Alfie West on May 29, 2016
Alfie West

@chris: By his reckoning, for a 10,000 kWh per year customer in Christchurch to go off grid using only solar and batteries would require 27kW of solar panels and 256kWh of battery storage. Sure people can change their lifestyle to live with a reduced electricity supply, but who is going to buy into that?

What bizarre figures you quote, Chris. Let me provide a real world example to put things into perspective.

I visited an off-grid house recently which is just north of Dunedin, so enjoys even less sun than your ChCh example. With a modest 5kWh system using 20 panels and two 10kWh lithium batteries, they have less than a fifth of the panels and less than a tenth of the battery storage you quoted. By your reckoning they'd run out of power daily in the winter, right? But they don't. 

They've lived in the home for two years. While they have a backup generator, they haven't had to use yet. And there's a rather classy and super-efficient Polish triple-insulated boiler providing backup for their water heating. They only fired that up 4 times last winter. Run it for two hours and it keeps the water hot for 4 days.

Not only are they powering their entire home on that system, but they're running underfloor (water) heating to every room in the house. Sure, the house is well-designed and beautifully insulated, but it's a very comfortable, almost new house that's completely off-grid.

"Solar-doesn't-work" stories are all very well, but when they fall so far short of reality, they're actually only tall tales.

 


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