Solar's bright future

Over the last three years, the price of solar panels – or photovoltaic (PV) panels as they’re properly called – has fallen sharply.

On the other hand, home electricity prices in New Zealand have risen at four per cent a year for more than 20 years, a trend that suggests they are likely to keep rising. Most households are now paying between $1800 and $3000 a year for electricity.

So does it now make financial sense to generate your own power from PV panels? It certainly makes environmental sense – making electricity this way produces no greenhouse gases.

The answer is a qualified yes. It depends a little on the pattern of your daily power use, but in short doing your bit for the environment with solar power has become financially sensible – and possibly even profitable.

How does it work?

Solar power is essentially ‘use it or lose it’ electricity. With the simplest and cheapest sort of home solar power system you can’t store electricity – you can only use whatever power you’re generating in any given moment. And obviously you only generate power in daylight hours.

So because people need electricity both day and night, rooftop solar panels are usually connected to both your home and the national grid. On this type of setup you buy power from the grid at night when the sun is down, while in the daytime when the panels are producing lots of power but only the refrigerator is using it, you automatically sell any excess back to the grid. These systems are called ‘grid tie’ or ‘grid connected’.

Make it work for you

Unfortunately power companies sell electricity to you at higher prices than what they’ll buy it back for. So the way to make a grid tie system pay itself off quickly is to use as much of your ‘free’ electricity as you can, rather than buying and selling with the grid.

In other words, the trick is to shift your power consumption as much as possible to daylight hours. Time switches on your plugs, for instance, can help you run dishwashers, washing machines, dryers etc in the middle of the day.

Another option is to store your home-generated energy in special batteries. These can make you entirely independent of the grid (called ‘going off the grid’). However, batteries are expensive – think $10,000+ – and they require battery chargers and more elaborate (and expensive) electronics, making these systems less financially viable.

That said the way of the future will be a grid-interactive PV system, which adds modest battery storage to maximise the use of self-generated power, but retains a grid connection to sell excess power and buy extra when needed. Such systems are still expensive and complex, but will fall in price as they become more common. Lines company Vector currently has an offer where Auckland customers can rent a grid-interactive PV system from them (see The Vector SunGenie system below).

Basic requirements for grid-tie solar

Firstly, you need a roof that faces north and slopes 15-35°. A roof facing NE or NW is okay, but you’ll require 20–40m² of unshaded space. Any shading disproportionately reduces output. If you have an unshaded backyard, panels can be mounted on a ground-based frame, but that may require resource consent whereas roof mounting generally doesn’t.

Secondly, you need solar panels. How many (and therefore how much roof they occupy) depends on the amount of power you want to generate. Panels are mounted on sturdy aluminium racks that resist gales and yet don’t cause leaks where they penetrate the roof to attach to roof framing. These panels will generate DC electricity all the time they are exposed to sunlight – including in overcast conditions – and must be carefully wired together in a safe way. Safety cut-outs and an earthing system will likely be needed. The wires then feed into an inverter that converts the DC electricity into the AC that powers your household and the grid. An electrician will need to connect the output from the inverter to your switchboard and he’ll likely have to oversee wiring of the panels.

Finally, you’ll need a special meter that measures exiting as well as incoming power, and feeds what you don’t use back into the grid. Various power companies will buy this power – currently Meridian Energy and Contact Energy offer the best prices (between 17 and 25 cents per kWh).

Future-proofing your power costs

• Total cost of an installed 5kW system: $16,000-$23,000
• A retired couple might only need a 3kW system: $9500–$12,000
• If you got a 5kW system for $16,000 (a good price), the cost of your electricity over 25 years works out at 15 cents per kWh
• That’s about half the current cost – let alone next decade’s!

The Vector SunGenie system

Auckland-based lines company Vector is offering an alternative path to PV in a pilot scheme for 250 Auckland homeowners. The cost is $3000 upfront for an installed 5kW PV system and then $115 a month for the next 12.5 years—a total price of $20,250.

The real plus of the system is that it includes a 12.3kWh lithium battery. So after sunset, an inverter will turn the battery’s stored DC power into AC to power the house, and by day, sun power will charge the battery, run refrigerators etc and export excess power to the grid (for which you will be paid).

So how does this stack up financially?

As it stands, it means paying $20,000 for 70,000kWh of power, which is 28.5 cents per kWh – or about the same as the current price. So if power rises in cost you’ll save that way. And as you get to keep the panels at the end of the 12.5 years it becomes a much better proposition, as they should last another 15 years.

And there’s another consideration. In the future, power companies could lower their buy-back prices for electricity, so Vector’s battery gives you some protection should that happen.

As we went to print there were about 60 places left on the pilot scheme. Contact Vector via www.vector.co.nz/solar if you’re interested in joining.

Sizes and costs

Solar arrays are measured in kilowatts, and the size you need depends on how much power your household uses. The bigger the system, the greater the cost.

For example, to generate a decent proportion of your yearly electricity needs, and thereby pay off the cost of the system in a reasonable time, you will likely need a 5kW system comprising 20 rooftop panels covering about 35m².

The total installed cost of a grid-tied 5kW system will vary from $16,000–$23,000 depending in part upon whether the panels are an expensive brand.

And it probably is better to go for a better brand, because although an industry-wide standard output warranty exists on PV panels—after 10 years they must produce 90 per cent of rated power and after 25 years, 80 per cent—it’s likely many manufacturers (most of whom are Chinese) won’t last long enough to honour these warranties.

That’s for average power consumption, though. A retired couple, say, might be able to get away with a 3kW system that will only need 20m² of panels, costing $9500–$12,000. (These figures are based on Auckland light levels. South Island output is 5–15 per cent less, so you would need more panels to get the same output.)

So clearly, the up-front investment is sizeable. Yet long term there are considerable savings to be made. Spread over the expected 25+ year lifespan of the system, the cost of your power should be between 50-70 per cent of current prices. And that’s to say nothing of the possible future price of power: if costs continue to rise, home solar households will be sitting pretty.

What about the environment?

As with any manufactured product, making PV panels generates some one-off greenhouse gas emissions (which are known as the embedded costs). However once installed, they are a ‘clean’ and renewable energy source, with no emissions –which means that switching to solar reduces the demand for ‘dirty’ energy generated from coal and gas.

Of course, New Zealand’s electricity supply is already very green, with 77 per cent generated from renewable energy (mostly hydro), so the environmental benefits of home generated solar is not as marked as in other countries.

Put in real terms, New Zealand solar users can expect to save about 14.5 tonnes of CO₂ over the 25+ year life of their system. That’s the equivalent of cutting out 92 car trips between Auckland and Wellington – or 3.6 trips per year. It only takes two years’ generation from solar panels to pay off the embedded cost of producing them.

Where to start?

Many companies are now selling PV systems, so making a start is simply a matter of choosing a reputable company with competitive prices. They should be able advise on the right-sized system, and co-ordinate the connection with your existing preferred electricity company.

Many just give prices for complete installed systems, so investigate the quality of components before you commit! You also require the permission of your lines company to connect a PV system to the grid.

Altogether, taking the leap into solar power can seem dazzlingly complicated. Yet realistically generating your own power at home is straightforward, and can even be profitable.

By running your appliances in the daytime you can maximise use of home-generated power and make some serious long-term savings.

The current cheapness of PV power even means that, unless your home uses particularly large amounts of hot water, these days it’s better to install solar panels than invest $5000+ in a solar hot water system.

Power by numbers – how we calculate the savings

• Today’s average PV panel weighs around 20kg and measures about 1.6m x 1m
• Each panel produces 250W in full sun, and in overcast conditions perhaps 100 (which is less but still very useful. You don’t need direct sunlight to generate power)
• The average New Zealand household uses 9000kWh of electricity each year
• A 5kW grid-tie PV system (ie. 20 x 250W panels) should generate 5000–6000kWh annually
• Panels will work for 25+ years, albeit with reducing output
• If you paid $16,000 for your system (a good price), plus, say, an extra $2000 for a replacement inverter after 10 years, the cost of your electricity over 25 years works out at 15 cents per kWh. That’s about half the current cost —let alone next decade’s!