Will a $2 a week saving increase uptake by 2000%?

February 17th, 2014 at 12:00 pm by David Farrar

The Green solar energy policy of a slightly lower interest rate on loans for would reduce loan repayments by around $2 a week.

I am very sceptical that a huge number of people will decide to take out a $10,000 to $15,000 loan to save $2 a week.

But let us be generous. Let’s say that the $2 a week saving will result in twice as many people deciding to install solar power. What sort of increase is that?

Well currently there are 40 to 50 installations a month. So we will be generous and say an extra 50 a month or 600 a year.

Yet the claim there will be an extra 10,000 a year. Yes they claim their $2 a week reduction in interest rates will result in a 2000% increase in solar panel installations.

If you believe that, I have a bridge for sale.

 

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43 Responses to “Will a $2 a week saving increase uptake by 2000%?”

  1. Harriet (4,614 comments) says:

    No more needs to be said.

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  2. Colville (2,165 comments) says:

    Why would anyone go $10K into hock to save $2 a week? FFS.

    You are playing the futures game.. saying that the tech will not improve/get cheaper in the future… its just fecking nuts.

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  3. Pete George (23,270 comments) says:

    And that $2 a week interest rates happens to be what the Greens say you will save per year, $100, so it’s necessary to make their scheme seem worthwhile. But that’s hardly compelling, and there are too many uncertainties about actual effectiveness of solar and life expectancy of the cells.

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  4. tvb (4,240 comments) says:

    I though Simon Bridges response was feeble when he went on about the costs of this policy. Indeed if the uptake is so low then the costs will be relatively insignificant. His response should have said that for the Government to borrow money and lend it at a subsidised rate the public benefits are unlikely to be significant enough to make the policy worthwhile, even though solar power is a good thing.

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  5. Camryn (551 comments) says:

    The technology just isn’t good enough… trying for mass adoption of solar right now is like trying to force mass adoption of personal computers in the 1960′s. There is enough interest that R&D is being conducted, so just *wait* for it to result in an economically feasible product instead of spending money putting junk on people’s roofs.

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  6. igm (1,413 comments) says:

    These tossers think they have economic ability . . . take a look at their personal situations, none of them have anything other than what they leech from taxpayers, ratepayers, and unionists . . . they really are fiscally dyslexic losers, along similar lines to Parker of Labour infamy.

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  7. Pete George (23,270 comments) says:

    Plus, Greens themselves say that increasing the numbers of solar installations will bring prices down through volumes.

    So who would install now when they are promising the price will come down later?

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  8. Nigel Kearney (913 comments) says:

    The hard part of analysing this is not the mathematics. It is deciding whether Green policies will blow out interest rates faster or slower than they blow out power prices.

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  9. queenstfarmer (754 comments) says:

    As almost all additional power generation in NZ is hydro/renewable anyway, the Greens’ plan does nothing to reduce carbon emissions.

    All it amounts to is a taxpayer subsidsy for wealthy property owners (who own their own homes and want to borrow $10K+) to reduce their own power bill by a few dollars a month.

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  10. Pete George (23,270 comments) says:

    But queenstfarmer, it will get them out of poverty, why don’t you think of that. Some of them will have kids too, think of the kids.

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  11. Bovver (150 comments) says:

    Don’t panic, expert Molly Melhuish says it’s all good and that the Greens are accurate in their costings and savings, this being the same expert that opposed every other energy policy of the Government. Thank Gaia for a totally unbiased view from the watermelons.

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  12. Mobile Michael (430 comments) says:

    Solar panels are made from materials that are *shock* mined. (Silicon, iron, rare earth materials, etc) Are the Greens promoting a hypocritical policy?

    Having weighed up the costs, likely average interest rate over 15 years (I used 6%) and maintenance required, it’s not worth it.

    If I was going to borrow $15k for energy efficiency, I would double glaze, insualte the walls, and upgrade all heating to more energy efficient heat pumps.

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  13. RRM (9,630 comments) says:

    Mrs RRM is an industrial electrician, and when we bought our house she priced up a solar system that would average about 100% of our daily consumption: $15k + gst + installation. Tempting… but we want to reduce our mortgage a bit first…

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  14. queenstfarmer (754 comments) says:

    Another point: aren’t the economics of solar power going to get even worse if the Greens & Labour implement their Stalinist power model and artificially lower the cost of electricity?

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  15. radvad (693 comments) says:

    Has Metira got solar in her castle? No, thought not.

    Really though, if solar is so great then why does it need a subsidy?

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  16. Graeme Edgeler (3,274 comments) says:

    I know of a petrol station, a few years ago now, that used to sell chocolate bars for $1.

    When they put a display near the checkout, with a sign that said “2 for $2″ sales increased. Not just by double, but by quite a bit more than that.

    I’m not saying a 2000% increase would happen. But if advertising of the low cost loans, and the possibilities of savings are widespread enough, those two things combined could play a big part in any increase. The process that exists now – of getting an extension to the mortgage for solar panel reeks of effort. If someone else will do all the work for a loan that attaches to the property, and not to the person, that could potentially drive up demand by itself, irrespective of the savings difference.

    Not saying it’s a good idea, or that it will work as widely as claimed, but I don’t think the $2 difference is as important as you think (or don’t think) it will be.

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  17. RRM (9,630 comments) says:

    Meanwhile, that govt home insulation scheme lets you repay your local council at 9% (iirc?) over a few years instead of market rates, and I understand the guys installing that are booked up months in advance…

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  18. Simon (710 comments) says:

    30,000 houses at $15,000 is $450 million which is 22% of GDP for 1,000 jobs. Fuck. Thats $450 million sucked out of other existing areas of the already productive economy for the Greens solar.

    Then these bozos intend to regulate “power prices” thus defeating their own rational for pissing this money away in the first place.

    Green fast tracking the NZ economy to ruin.

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  19. Sir Cullen's Sidekick (828 comments) says:

    Since you are hell bent on attacking this policy, I think this is a great policy and this will create huge number of green jobs. Give me one job scheme National has announced that will create this many jobs.

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  20. tvb (4,240 comments) says:

    Yes are the panels made from renewables and how long do they last. The batteries in those dreadful Toyota Prious cars are made from Nickel which is quite toxic to dispose of. Nothing Green about that.

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  21. srylands (392 comments) says:

    “I think this is a great policy and this will create huge number of green jobs.”

    That is the only thing I got out of this. I now know what a “green job” is. You obviously do not realise that nations become prosperous by REDUCING the resources (including labour) required to generate goods and services. …. Like electricity. A government policy that subsidises an uneconomic activity to attract labour and capital and hence “create jobs” is a BAD thing. It is not good.

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  22. NoCash (256 comments) says:

    AFAIK we don’t actually manufacture solar panels in NZ. So the likely source is China, which is now a world leader in solar technology. Is Dr Norman happy about sending more NZD to the regime that took his flag?

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  23. redqueen (517 comments) says:

    There are three further points which I think have been missed here:

    1) Beyond adding additional operational risk (in the form of future technical improvements) this also adds significant additional financial risks through the variable interest rate proposed (over a decade+).

    2) This also adds market risks, as electricity prices are not fixed, but the upfront capital input is. If electricity prices fall, or remain flat / are diminished through inflation, than the owner bears this risk.

    3) There does not appear to be any assumptions or allowance for maintenance / repairs. A 25 year life for electornics, with no need for an maintenance sounds a bit unrealistically and simply adds to operational risk being assumed by the owner.

    So it appears our old Watermellon comrades are up to the same ‘go for the headline’ nonsense. Also, the cynic in me has a niggling suspicion that they’ve realised NZ Power won’t work at reducing prices, so are looking for a way of saying they’ll save us even more (if it did work, and would reduce the suppositionary ‘super-profits’, then why would they be proposing for us to purchase of an alternative source of electricity).

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  24. Chuck Bird (4,748 comments) says:

    We elect MPs or political parties to do what is best for New Zealand not save the planet.

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  25. Monty (966 comments) says:

    As usual the greens leave out a whole bundle of required information.
    1. Annual maintenance costs. If there is 15,000 worth of product there will be a maintenance requirement to get an electrician in to check things will be $200 per annum minimum. Annual certification is a probable requirement.
    2. Repairs. In NZ we have harsh sunlight which will deteriorate parts of the installation. Such as conduit, electrical cables and roof penetrations, and cleaning of the panels. Let’s say a mimumum of $100 per annum may be much more some years, especially after ten years.
    3. insurance. An extra $15,000 of product will have an insurance implication. Not sure what that would be but I would guess the risk of equipment getting blown off or damaged could be quite high. So allow an additional $100 per annum for insurance.
    4. I also think the buy back figures that Russell has given could be wrong. he said it would be somewhere between wholesale and retail. Bullshit. No way a power provider will pay retail. That will mean no profit ( no doubt he thinks no profit is a good thing in his warped socialist mind) with the lack of guarantee of supply – and no supply on cold wet winter days when demand is highest, the price paid must be very low.
    5. 75% of out power is already sustainable. Our comrade wants to get that to 98%. The last 25% will be extremely uneconomic as the law of diminishing returns comes into play. Sustainable energy requires massive capital outlay but has cheap ongoing costs. Therefore as a country NZ uses sustainable power first, and when demand is high the thermal power kicks in. If we went 98% sustainable then much of the power supply will be sitting idle for significant portions of the year.

    Quite simply solar is good where you want to have a hobby supply. As usual the green policy is poorly thought through and will cost much more than the green comrades ever will admit. Idiots

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  26. corrigenda (142 comments) says:

    I don’t need to borrow $15,000 to save on hot water costs. We have a wetback so don’t pay hot water power charges anyway!!!

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  27. kiwi in america (2,465 comments) says:

    Monty
    The buyback potential from surplus power resale represents thin gruel for the Green’s scheme because the solar panel owner is offering power from an intermittent source – power companies the world over discount their power purchase price by on average 2/3rds accordingly. It’s why sustainable energy sources like wind and solar are not financially viable without subsidies – because the power generated can’t be sold for the same price that hydro, nuclear, geothermal, gas, oil or coal produced electricity can be sold for because these power sources produce what utilities need – power 24/7 on demand not when the wind blows and the sun shines.

    Furthermore there are costs to enter the electricity market as a supplier. You have to pay to have a meter to enter the market unless you can interest an electricity wholesaler which no household producer of a small surplus of power could ever do. Essentially the Greens are asking taxpayers to stump up for a new green energy subsidy under the guise of installation loans. The scheme will be rife with the same sorts of corruption we saw with a similar scheme in Australia and will be dogged with loan defaults (that the taxpayer will have to pick up) as people figure out the economics are marginal to lousy. I suppose its what you’d expect from an economic spokesman with a PhD in Political Science!

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  28. burt (7,988 comments) says:

    queenstfarmer

    Another point: aren’t the economics of solar power going to get even worse if the Greens & Labour implement their Stalinist power model and artificially lower the cost of electricity?

    You are on the right track, just heading in the wrong direction. Once they have control of retail pricing it will be cranked up to a level that makes solar competitive. Tax payers will fund it – nothing to see here – move on.

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  29. alloytoo (462 comments) says:

    $2 per week (Weather permitting)

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  30. NX (603 comments) says:

    Hmm, $10K on Solar power system… or a nice ski/boarding holiday to Japan. The latter!

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  31. Weihana (4,496 comments) says:

    Simon (567 comments) says:
    February 17th, 2014 at 12:44 pm

    30,000 houses at $15,000 is $450 million which is 22% of GDP for 1,000 jobs…

    GDP is slightly more than 2 billion? Bill English might want to know about this. :)

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  32. burt (7,988 comments) says:

    Just out of interest – has there ever been a Green Party policy that isn’t predicated on wealth exchange ?

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  33. alwyn (399 comments) says:

    @Graeme Edgeler
    “2 for $2 sales increased”. I’ll bet that that service station was in the Aro Valley, or some other Wellington suburb where there is a serious infestation of Green Party supporters. That is the sort of economics that would appeal to them.

    @Simon
    “is $450 million which is 22% of GDP for 1000 jobs”
    I suggest that you get a new calculator. The NZ GDP is of the order of $200 BILLION/annum so $450 million is around about 0.22% rather than the 22% you quote. The $450 million is also over three years so the annual amount is around 0.07% of GDP.

    @Monty
    “No way a power provider will pay retail”
    Why on earth not? Do you really think it would worry Comrade Russel that he had to order a company to do something that would reward his voters and would stuff the rest of the NZ economy? He will simply make them accept any power that is generated and pay the producer any stupid rate he sets. It is quite common in Europe for Governments to do that. What are the producers supposed to do? The Green Party expect to rule remember.

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  34. emmess (1,393 comments) says:

    It’s not a terrible policy per se but the worst thing is those Green idiots will then start proclaiming that this is the solution to all the worlds problems, we don’t need fossil fuels anymore and will create green jobs for all the unemployed, blah blah blah

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  35. Harriet (4,614 comments) says:

    83% of kiwis sort their rubbish – while the Carbon Tax stands around doing absolutly nothing.

    Truthfully……..83% of kiwis would be fucken stupid enough to sign up to this! :cool:

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  36. Bruce Forbes (5 comments) says:

    The Green’s simplistic analysis ignores some important issues. One is that the value of electricity generated during sunshine hours is usually less than that generated during non-sunshine hours. Another is the need for expensive back-up generation, which does not seem to have been considered. The price of photovoltaic panels seems likely to rise, as many of the Chinese companies (that make most of them) will fail as their massive government subsidies fade and much needed pollution controls eventually begin to bite.

    The most cost efficient generators are large-scale thermal generators. The left/greens don’t like them because they burn carbon containing fuels and supposedly cause dangerous manmade global warming. In short, this would be a very expensive “solution” to a non-problem. Remember that the globe hasn’t warmed for more than 15 years, while humans have emitted more carbon dioxide than ever before. Where is the global warming we were promised?

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  37. Mrs Trellis (34 comments) says:

    If the Greens got into power, as Mrs Brown would say, “We’re fucked”.

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  38. Alan (1,077 comments) says:

    I spent a lot of time doing the numbers on this last year; I couldn’t make it stack up in Auckland with a 5KVA unit on a north facing roof. Anywhere with less sunshine, don’t even go there.

    The payback figures were marginal, assuming a 25 year life for the product, it only went cash positive in year 22.

    I assumed 5% increases in power and financing at the rate of my mortgage.

    They whole thing was marginal, I really wanted to do it, the concept of free money from the sky appealed to me, but I couldn’t justify the cost of the capital. The opportunity cost was too high.

    Of course if you assume power price increases of 7% the maths become compelling and installation worthwhile, but the greens have promised us that they’ll regulate to keep the price of power down, so what problem are they trying to solve.

    It’s almost as if they accept that the single buyer solution isn’t going to work.

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  39. burt (7,988 comments) says:

    Alan

    The single buyer solution will work extremely well for encouraging people to opt into the solar plan. Once Labour/Green special friends (the unemployed ) get given free power, low earners are released from paying any tax and given free power – The rest of us will be happy to spend $15K to avoid the 3,000% hike in power bills.

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  40. Harriet (4,614 comments) says:

    That’s right Alan…….the Greens want a market based ETS…….but without the electricity market.

    Well that’s the message they’re sending out.

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  41. wreck1080 (3,794 comments) says:

    I looked into solar while building 5 years ago — and, remember there are completely differing solar products out there — but, none stacked up financially — not even close. You never even break even by the time the equipment needs replacing.

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  42. infused (644 comments) says:

    The biggest issue with solar when I researched it, was the maintenance. You need to replace it all in 15-20 years. So what’s the point?

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  43. Anthony (785 comments) says:

    The Greens try to say their policy has no cost as the government will borrow the money at the govt rate. However, what about the cost of administering the scheme? Can banks lend money out at the same interest they borrow at? Of course not or they’d go broke! This is another weakness in their logic that no one has bothered to point out.

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