Solar energy returns need to match up
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.