So­lar en­ergy re­turns need to match up

Auckland City Harbour News - - OPINION -

I’ve al­ways han­kered af­ter a so­lar ar­ray on the roof.

I find cli­mate change hard to deny, but I recog­nise that liv­ing a mod­ern life makes it tremen­dously hard for a fam­ily to re­duce its car­bon foot­print.

That’s why a so­lar power sta­tion con­vert­ing the sun’s rays into elec­tric­ity is such an at­trac­tive idea.

But I’ve been scratch­ing my head ever since the Green Party an­nounced its cheap loans to buy so­lar.

You see, I’ll be darned if get­ting the ‘‘about’’ $100 a year sav­ings on my elec­tric­ity bill is go­ing to tempt me to in­vest ‘‘up to’’ $15,000.

OK, the num­bers are a bit fuzzy and would need to be nailed down by the home­owner be­fore com­mit­ting to a sys­tem but get­ting a re­turn of 0.66 per cent on a $15,000 in­vest­ment feels to me a bit like giv­ing money to char­ity. It’s worth­while, if your aim is a char­i­ta­ble one.

One of my big­gest con­cerns about re­turns of that level of paucity is they can van­ish very quickly.

Be­fore the Green Party’s launch, I had a look at re­ports on the old so­lar hot wa­ter heat­ing sys­tems that were sold around the sun­nier bits of Auck­land, which the Govern­ment used to sub­sidise.

What they said was that peo­ple had been over-sold the pos­si­ble sav­ings from the tech­nol­ogy, some of which was prone to break­ing down so the home­owner never made any sav­ings at all.

The rea­son I was read­ing those re­ports at all was that I was pre­par­ing a story on Vec­tor’s SunGe­nie sys­tem, which it is cur­rently mar­ket­ing around Auck­land.

It, too, would seem to be of­fer­ing sav­ings of ‘‘about’’ $100 a year but in­stead of the ‘‘up to’’ $15,000 cost, Vec­tor was ask­ing for a $2000 in­stal­la­tion fee fol­lowed by on­go­ing ‘‘lease’’ pay­ments.

Most im­por­tantly, Vec­tor would re­tain own­er­ship of the gear and liability to fix it if it went wrong, some­thing it should be able to get in early on as it mon­i­tors it re­motely.

In other words, the risk of the van­ish­ing ‘‘re­turns’’ some so­lar hot wa­ter sys­tem own­ers suf­fered is trans­ferred to Vec­tor.

I can’t see any re­tailer of house­top so­lar ar­ray giv­ing a 15-year guar­an­tee on the equip­ment and even then, if it did start break­ing down, one won­ders how long it would de­cide to re­main in busi­ness.

By con­trast, Vec­tor is un­likely to go bust.

A home owner com­par­ing the two of­fers, would need to think very care­fully about this big dif­fer­ence.

This il­lus­trates a very im­por­tant issue about ‘‘in­vest­ing’’.

You need to be paid an ad­e­quate re­turn for tak­ing on the cost of do­ing it and that in­cludes a ‘‘risk mar­gin’’ which ev­ery busi­ness per­son would de­mand.

That there ap­pears to be a lack of risk-mar­gin here may in­di­cate that the Green Party’s so­lar scheme is, whether con­sciously or not, some­thing of a char­i­ta­ble af­fair.

The re­turn to the home­owner is not what the scheme is re­ally about. The re­turn is re­ally for the en­vi­ron­ment.

As a re­sult, the num­bers are not very per­sua­sive.

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