Renewable Energy

Working Towards 100%:Part 3

When doors open at the end of the school day, kids spill outside, hoping to catch a few last minutes with their friends. Even on the shortest day of the year they tumble out into daylight. Solar makes up a tiny fraction of New Zealand’s electricity supply. In December 2014 New Zealand’s total installed capacity was only 18.8 MW, approximately 2% the capacity of our largest hydro power station at Manapouri. While we’ve got plentiful sunlight hours we’re even more blessed with other renewable resources such as wind, hydro, and geothermal.

Accordingly solar power is unlikely to be competitive with New Zealand wholesale electricity rates in the medium term. However, since solar power is ideally suited to installation at the point of demand – on residential and commercial properties – it is already competitive with retail electricity prices. The most obvious example is customers whose need perfectly matches sunlight hours; schools. Other strong candidates are locations that enjoy high sunlight hours but are remote from New Zealand’s grid scale electricity generation. For example, under the Electricity Authority’s proposed changes to its Transmission Pricing Methodology, Northland customers are facing dramatic increases in their line charges. Solar energy could be used to create distributed electricity generation thereby reducing the dependency of remote locations on expensive transmission infrastructure.

The high retail cost of imported petrol and diesel means that solar energy in New Zealand is also competitive as a transportation fuel. The average New Zealand car travels 12,000 km per year with a fuel efficiency of 10km per litre. With the March 2015 median fuel cost of 91 octane petrol at $1.79, the average annual fuel cost is approximately $2,148. By replacing a fossil fuel sedan with a Telsa S electric car and charging exclusively with solar energy (even in the depths of winter), the solar panels and battery would pay for itself within 10 years, after which the car’s fuel would be free.

Few countries enjoy New Zealand’s rich array of renewable energy sources and yet the sun provides enough energy in one hour to meet the world’s energy demands for an entire year. Consequently solar energy plays a much larger role in other countries’ efforts to reduce their carbon emissions. More than 1.4 million homes in Australia have installed solar panels since 2001. This is the largest per capita installation rate of any country and was promoted by government guaranteed feed-in tariffs. Even without these tariffs solar photovoltaic energy is now cost effective in all major Australian cities other than Melbourne.

Germany – which has the same amount of direct sunshine hours as Alaska – also promoted a wave of solar installations by offering priority feed-in to the grid for surplus generation. Because Germany offered feed-in tariff guarantees to businesses as well as consumers, more than 85% of Germany’s solar photovoltaic generation comes from systems larger than 10 kilowatts whereas most Australia solar generation comes from residential systems of less than 5 kilowatt capacity. This German policy has been the single biggest driver of the Swanson rule over the past decade as Chinese factories expanded to meet strong German demand.

Path to 100 Renewable Electricity-Solar-1

Cumulative Installed Global Solar PV Capacity (Gigawatts). Sundown, Sunrise, Grattan Institute, May 2015


In the long term, solar will become competitive even at wholesale prices in New Zealand. As predicted by Swanson’s law the price of solar panels have fallen precipitously over the past three decades. Swanson’s law is the renewable energy equivalent of Moore’s law which suggested that the cost of computer processing power would half every 18 months. Richard Swanson, the founder of SunPower, a major American solar manufacturer, projected that the cost of photovoltaic cells would fall by 20% with every doubling of global manufacturing capacity.   Thirty-five years ago solar generation cost US$30 per kilowatt hour. Today solar photovoltaic generation is one hundred times cheaper. Modern photovoltaic generation now costs less than US$0.30 per kilowatt hour. By comparison, natural gas-fired plants cost approximately US$1.00 to build in the United States before the cost of fuel is added.

Path to 100 Renewable Electricity-Solar-2

Price History of Silicon Photovoltaic Cells. Bloomberg New Energy Finance, 2015

International research is seeking to increase the proportion of solar radiation converted into usable energy. One promising technology under development at the Swiss Federal Laboratories for Materials Science and Technology creates extraordinarily thin iron oxide and tungsten oxide films within Photoelectrochemical (PEC) cells. The iron oxide absorbs visible light while the tungsten oxide absorbs ultraviolet. As it turns out biomimicry could have fast-tracked their research. The microstructure of the PEC cells mirrors the inside of a moth’s eye. Moths have evolved the ability to collect as much as light as possible to see in the dark, and to limit reflected light which could alert predators. Technological advances such as these have not yet entered large scale manufacture which means that Swanson’s law still has many years to run.

Solar energy is driving growth in high tech green jobs close to home. Seeking to capture engineering talent at Canterbury University, Silicon Valley based company, Enphase Energy, recently announced the expansion of its global engineering facility in Christchurch. The new Middleton facility will support the design, development and testing of its microinverters which convert the direct current (DC) generated by a solar panel into the alternating current (AC) used by home appliances.

Entrepreneurs are also innovating financial models to promote solar energy. For example New Zealand’s Solarcity, offers rooftop leases whereby it purchases and installs solar panels. Its consumers then make monthly payments (of less than their previous grid-connected electricity bill). Similar companies in the US then on-sell the future income streams as bonds to outside investors achieving a cost of capital in the US of 2% to 3% lower than that for mainstream utilities.

While wind and geothermal provide our strongest path to 100% renewable energy at grid scale, solar energy offers New Zealand easy wins in distributed generation. Let’s install solar panels in every Kiwi school. Starting in Northland.

About the author

Belinda Storey

Belinda Storey

The Founder of Nouveau Eco, Belinda has 20 years experience advising multinationals in New Zealand, Australia and the United States. Her work has been covered by Radio New Zealand, the New Zealand Herald and Harvard Business Review. Belinda is Chief Consultant Rural Climate Impacts for Aotearoa and is a Board Member of ShelterBox New Zealand. She is a Member of the Institute of Directors.

1 Comment

  • hi
    I really appreciate your information and as a solar engineer since 1990 in Europe , and since 2006 in NZ, I would like to support the renewable energy trend that you help creating. However it looks promising to dream about more renewable energy , I would like to put a few things in perspective. The first problem of NZ is energy efficiency! Centralised power plants still have huge transport and distribution losses. Even renewable sources like hydro and geothermal create air pollution and other eco problems. On top of that almost 80 % of NZ buildings use electricity in a very inefficient way for cooking, hot water and heating> this must change first before investing in more renewables . NZ is lacking behind 15 years in solar hot water (my passion) and has known decades of low energy efficiency ! Building more renewable power plants only makes sense if we first reduce energy needs without loss of comfort > The GOVT should have an ambitious plan , not a BAU scenario, with energy efficiency as priority. Some European countries show how you can create growth of economy without the need for more energy or electricity . My house is a positive energy house and produces twice as much energy than needed. We use 3-5 kWh/day. The average kiwi house uses 25 kWh/day or more !!!! This is what surprises me unfortunately. so please don’t only spread the message for more renewables …but first energy efficiency is needed on all scales !
    Always welcome for my ideas on Repower NZ plan 🙂
    eric jansseune- master environmental solar engineer – resident from Europe
    cell 021 022 31 700

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