The great solar riddle: Saving money, the planet, or energy independence?

By Giles Parkinson on 25 August 2014

So why do people want to install solar? Is it to save money? Is it to save the planet? Or is to have greater independence from the local utility?

It is a subject of intense debate in the electricity industry. Business models and executive careers depend on it. To briefly summarise the position of most Australian utilities, the likely motivation is to save money, and that can be fixed by well, fixing the tariffs. It is really a matter of price. And in any case, most people couldn’t be bothered stuffing around with the new technology.

It is a curious view to take in a market where nearly one in four houses already has solar, and where 16,000 households are adding rooftop solar systems across the country each month.

And there are signs that the major retailers are losing the courage of their convictions, or simply waking up to fundamental trends. All three have recognised the potential for households to either leave the grid, or simply demand to have more control over their energy system.

And it’s probably just as well because, according to New Zealand energy network operator Vector, which runs the poles and wires –and  increasingly, the solar and storage – in that country’s biggest city of Auckland, the theory that price is the only motivation is  not correct.

Vector CEO Simon McKenzie, who pioneered the company’s groundbreaking solar and battery storage leasing scheme, says customers want solar and storage because they value the environment, and they value their independence. And they are tech-savvy enough to get on and do it, in much the same as they gotten their heads around the move from landlines to smart phones.

“Solar panels and associate technology are maturing to the point of mass market appeal. The balance of power is shifting from the utility service providers to he consumers,” McKenzie said in a presentation to analysts and media on Friday.

“New distributed generation (and storage) and technology allows them to switch from the grid (if they want to),” he said.

“So they are demanding choice and the highest level of service from utilities. They are targeting energy consumption as an area to save money; they are environmentally conscious and they are willing to adopt technology such as solar panels which allow them to generate own electricity.”

McKenzie says most people in the “traditional” energy markets thought hat the attraction of solar was primarily one about economics.

But he argues that customers are only looking at price as a third order issue. Mostly, he says, they are motivated  by the desire to take charge of their own energy requirements, and by environmental issues. “They want to embrace solar as a solution (to those issues),” he said.

And it need not be so bad for traditional utilities. Vector last year trialled its “Sun Genie” program, offering to install rooftop solar and storage for consumers under a leasing arrangement.

Vector says it cuts down on network costs, and help engage the consumer. Happily, people who go solar and storage tend to consume more, McKenzie says.

“You have got to ensure that the environment is such that solar can be integrated into the network and that customers have the ability to manage those solutions,” he said.

“There is no doubt that a lot of people are looking to embrace solar.”

McKenzie says Vector is currently reviewing where it goes next with its Sun Genie product which recently completed trials that identified the benefits of battery storage and how to integrate them into networks.

McKenzie sees strong opportunities in Australia, particularly in NSW and Queensland where the electricity networks will be either partially privatised or will seek co-investment.

Vector is looking to roll out both its smart meter and its data management products in Australia, and is talking to utilities in Australia to set up new partnerships.

McKenzie lamented the fact that the regulatory regime is not keeping pace with new technology developments. The regulators, he says, set their pricing points on the assumption that assets will have a life of 40-45 years, as they have done for the past century. But there is no allowance for the fact that techno logy is now changing rapidly and hat these assets could be stranded or made redundant.

That criticism was directed at regulators in NZ, but it could equally apply in Australia, where regulators are struggling to keep up with the fundamental move towards distributed generation.

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