The head of New Zealand’s largest renewable energy company is dismissing the economics of home-based solar, saying he “can’t follow” the numbers put forward by proponents.
Last week, ahead of the Green Party announcing a major loan scheme to subsidise solar installation through low-cost loans, Meridian chief executive Mark Binns said he could not understand why people installed them.
“I can’t follow the economics that are put forward by proponents of household solar in terms of returns as an investment,” Binns told Parliament’s commerce select committee.
“On our numbers, in our analysis, it is still probably not viable if you went to an accountant.”
Greens energy spokesman Gareth Hughes, who is part of the committee, defended the economics, asking Meridian management “it’s still cheaper than buying from a retail provider, isn’t it, over the lifetime of the solar panel?”
Binns and Meridian chairman Chris Moller replied simultaneously “no”.
While Green Party co-leader Russel Norman said the major obstacle for people investing in solar was the up-front cost, Binns said the major challenge posed by solar was that after 25 years the panels were worthless.
“The thing people don’t realise is that [if] you invest in solar facilities, you get nothing back at the end of 20 or 25 years,” Binns said.
So you need to be pretty certain the savings from electricity will be greater than the cost of both the capital and the interest.
An academic is also cautious:
University of Canterbury engineering lecturer Dr Alan Wood said there were 1250 New Zealand households with solar panels installed, with predictions this would increase to 30,000 by late 2018.
Whether there was a benefit in cost-savings to the consumer depended on how they used the solar-generated power, Wood said.
“Early adopters should be people that consume electricity during the day.
“For them it does stack up but only just.”
Wood thought the Green Party’s predicted savings to households of $100 a year were over-estimated.
“They have assumed you use all the power yourself, which is not the case.”
I’m willing to bet a very large amount of money that even if the Green Party policy is implemented, there will not be 30,000 new solar installations in three years. A 1.9% reduction in the interest rate on a loan saving $2 a week is not going to increase take up by 2000% as they claim. Their numbers are more dodgy than a used car salesman.