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Thursday, 6 November 2014

Solar energy growing regardless of buy-back

Meridian Energy has announced that because of the massive growth in home solar electricity generation, they're reducing the "export rate" (what they pay you for your electricity) and changing the way it's paid. As you'd expect, when it's sunnier they'll pay you less than when it's winter and demand is higher.

I'm a fan of the technology and previously looked at the claims it needs to be subsidised to grow here.

Here's the detail:
Meridian’s current export rates are 25 cents for the first 5 kWh per day and 10 cents thereafter. The new rates will be 7 cents/kWh in summer (1 October to 30 April) and 10 cents//kWh in winter (1 May to 30 September).

Meridian External Relations Manager Guy Waipara says the current rates were set at a time when solar uptake was in its infancy and it was financially viable for Meridian to offer good rates to those exporting into the electricity grid.

“Meridian solar customer numbers have gone from about 50 customers in 2011 to just over 2,500 customers currently. This year alone we have grown our solar residential customer base by about 1,000 customers,” says Guy.

“Unfortunately we can no longer sustain rates that provide huge incentives to sell back onto the grid and that are far greater than wholesale market rates for electricity. Unlike other overseas markets such as Australia, the New Zealand residential solar market is not subsidised. Under the current rates, those who don’t want or can’t afford to install solar are effectively subsidising those who can.
So, more people are installing solar electricity systems on their houses. Great. The downside of  supply increasing is that the price paid for the electricity will fall. This apparently isn't so much of an issue when people consider buying a solar system - according to this article from The Press, they mainly look at the money they save from not drawing electricity off the grid.

Much like subsidising the installation costs of solar systems helps those who can afford them anyway,  keeping the price electricity companies pay for the solar energy high only penalises those who can't afford to install solar systems. But that's what the Greens are proposing to do: legislate over the top of the electricity companies to force the buy-back price up.

There doesn't seem to be any evidence that decreasing the buy-back price will slow the incredible rate of growth solar energy has seen over the last few years. Even the Greens note that the price of Photovoltaic panels falling through the floor has driven demand. There is no sign that that trend will come to an end any time soon.