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Friday, 26 September 2014

If solar energy is booming, why does it need subsidies?

Solar uptake in New Zealand. Source
I discovered on the campaign trail that quite a lot of politics these days is simply picking a winning trend, crafting a policy that sounds like you're doing a lot to make that trend happen, then taking credit for what's already happened.

That's the Greens solar energy policies in a nutshell. The other day Gareth Hughes claimed "National eclipsed on solar energy", (ignoring the work done by the government in aid projects across the Pacific) pointing to a report recently by Otago University which shows that the take-up of small scale photovoltaic (PV) cell systems in New Zealand is up 330% in the last two years.

This is great news and a winning trend for New Zealand. The report notes that this increase is in absence of government subsidies for PV installations, which is what the Greens propose.

The report concludes:
This level of interest currently exists with no support from the Government via subsidies and feed - in tariffs, and mostly under business models that require a large upfront investment. New types of business model such as that currently being trialled by Vector may remove some significant barriers to entry and increase the level of interest in installing PV.
Vector is running a lease based system in Auckland, which apparently has strong uptake. Which begs the question: why does solar need subsidies? If uptake is to continue at this rate, will subsidies actually accelerate the trend or simply be pocketed by people who are going to install solar systems anyway? The report doesn't go into these questions, but it does finish with this note:
High levels of grid - connected PV would contribute to renewable generation and may require new approaches to the management of the electricity grid to ensure that New Zealanders continue to have access to safe, reliable, and affordable energy.
I know from friends working in the sector that this is in fact the biggest challenge we face with the introduction of solar energy. According to Transpower, New Zealand's electricity grid was not built to manage a lot of distributed generation of electricity - it was built to facilitate the transmission of electricity mainly from one area (the South Island's hydro stations) to another (north of the North Island, where 50% of New Zealanders now live). So accelerating growth in solar energy is likely to lead to further costs down the line for consumers.