Shedding light on the solar panel debate
Last week’s column on the Green Party’s power policy, which proposes government loans to homeowners to install solar, didn’t go down well with some readers.
In a nutshell, I opined the $100-a year projected return over the period a homeowner was repaying the government loan (with repayments collected alongside council rates), was not enough to cover the risk of it breaking down and the homeowner having to fix it.
Many readers disagreed and felt there were points I should have included in the column.
First up, reader Dan Carter, who says a $15,000 investment in solar saving $1000 a year in energy bills was a 6.66 per cent return tax free.
‘‘Better than money in the bank,’’ he says, and worth the low cost of borrowing from the Government under the Greens’ proposal.
Mr Carter felt that solar installations are now very robust and can be expected to last for a good 25 years, and I should have pointed out that, once the government loan was repaid: ‘‘You are profiting $1000/year on reduced electricity bills.’’
My column last week talked about the alternative to owning solar yourself which is to get Vector to put up one of its SunGenie arrays, which it retains ownership of, with the homeowner leasing it.
The strong point of that is that if it breaks down, Vector fixes it.
In past years, some solar hot water systems installed in homes in New Zealand turned out to be less durable than was hoped, wiping out the returns homeowners had hoped for. Mr Carter says: ‘‘As you point out however the risk aspect differs greatly. A large rise in government borrowing costs and a large fall in the electricity price could see the gains wiped out. However it’s far more likely that electricity prices will keep on rising, in which case the $100 gain will increase.
‘‘With Vector, they are covering the borrowing costs, which you payback via lease arrangements. So with the Greens scheme you are exposed to any gain or loss, with Vector they bank any gain or loss.’’
With such good returns, he concludes the only reason nobody is investing in solar that people don’t stay long enough in one house.
But he says that’s the real glory of the Greens policy with the loan passing on to the new owners of the home, if it is sold. ‘‘So the new owner will pay the remainder of the loan and profit from the reduced power bills.’’
Next, Dr Mark Titchener, who has invested $13,800 in a solar system for his home ‘‘with the idea of experimenting as to how to achieve the best return’’. Dr Titchener, who is not impressed by some of the solar products being sold in New Zealand and imported his equipment, concludes: ‘‘For the investment to work effectively here one needs to consume as much of the power on site. The obvious sink for this energy is the hot water cylinder and it doesn’t need an inverter. It’s effectively like a battery.’’
Solar technology was now sufficiently cost competitive and robust to be used this way, he says. ‘‘Our panels were in by July. As of today, total savings $648.50! An average of about $80 a month, peaking as you would expect in the summer months at over $120 a month.’’
And, like Mr Carter, he says: ‘‘As electricity prices rise . . . our pay back will increase accordingly.’’
And as a last nugget of food for thought, he says: ‘‘Germany would not have invested so much in this industry if the numbers did not stack up. We ought to be taking note!’’