My Account
Householders considering switching to home solar and battery storage combinations may be motivated by environmental concerns, but economic factors are important, too, including the prospect of being able to sell back excess power to energy suppliers
Homes typically use most power between 7 and 9 am and then again from early evening until bedtime, with little consumption through most of the daylight hours. Exporting excess power is, therefore, particularly worthwhile in the case of homes whose occupants are out during the daytime – the time when the most power will be generated by the sun.
There are no regulations in NZ setting “buy-back rates” – the amount an energy company will pay for each unit of solar electricity going into the grid. They can vary widely depending on the company and conditions. Additional costs may apply for equipment and import-export meters.
Recently, Powershop was offering 13 cents per kilowatt hour (c/kWh), on a plan with no fixed term. Meridian was offering 17c/kWh, but with a five-year contract (and 12 cents for other plans, with terms ranging from none to two years).
Electric Kiwi buy-back rates ranged from 8-12.5 cents, depending on plan, Genesis was offering 12.5 cents, Octopus Energy 13 cents and Contact Energy 8 cents on most residential plans. Mercury/Harrison Solar had a standard buy-back rate of 8.5 cents but was offering 18 cents to customers whose solar is installed by Harrisons Solar and sign up to a two-year contract.
There is evidently a gap between buy-back rates and the cost of power charged by suppliers – usually around 22-24 c/kWh (depending on company, customer plan, location and other factors).
Power companies say what they charge customers includes network charges, levies and the costs of installing and reading meters. Buy-back rates, by contrast, include just the wholesale cost of energy.
“Consumer electricity prices include the cost of generating electricity, getting it to customers and other costs such as metering and government levies,” a Genesis spokesperson says. “Solar buy-back rates reflect only the cost of the energy that is being sent into the grid.”
“Each electricity retailer considers a range of factors when calculating their solar buy-back rates,” Contact’s chief retail officer Matt Bolton says. “Timing is particularly important because when solar energy is available in the summertime or during off-peak periods, prices will be low because there’s less demand.
“Home solar generation can be a great option for some of our customers, so we believe it is important to offer a range of options to suit different customers’ needs and lifestyles,” he says.
Meridian chief customer officer Lisa Hannifin explains that most people who have solar still need to access power from the main electricity grid when their panels don’t produce enough. They also need to be able to export electricity back to the grid when the panels generate more than needed.
“Because of this, the cost of using the grid needs to be covered as part of the solar tariff, in the same way that a tariff for non-solar customers reflects the costs of getting electricity to their home.”
Hannifin says while many people think there’s a big difference between buy-back rates and how much electricity companies pay for power, Meridian pays customers more than it costs the company to buy off the market. The aim is to actively encourage solar uptake.
“Comparing household electricity charges and solar buyback rates isn’t apples to apples,” a Mercury spokesperson says.
“The charges you see on your household power bill cover multiple costs such as generation, distribution, transmission, metering and the retailer’s charges. Solar buyback rates, on the other hand, simply cover paying for any surplus solar electricity generated that goes into the electricity network, so retailers set their rates based on things such as the long term average price of solar electricity and the competitive market.”
Household solar take-up rising
The price of household rooftop solar systems has dropped dramatically over the past decade, and adoption rates in New Zealand – while still low compared to Australia – are rising.
The Electricity Authority (EA) reported last May that rooftop solar on residential buildings in NZ accounted for around 200 megawatts (MW). Transpower forecasts that this will rise to 300 MW by 2025 and to 535 MW by 2030.
(This figure refers to “distributed” solar – power that feeds into networks near where it is produced, rather than connecting directly to the national grid. Transpower predicts the take-up of grid-scale solar will rise much more significantly, to 7360 MW by 2030.)
EA Electricity Market Information figures for February 2024 show that the Northland region has one of the highest percentage residential adoption rates for solar in the country – 4.9 percent (behind only Nelson and Tasman regions), up from 2.4 percent four years earlier.
The Auckland region on the other hand has one of the lowest, at 1.9 percent (only Southland and West Coast are lower). the Auckland rate is up from 1.03 percent four years ago.
Taken by network reporting region, Kaipara and Whangārei (Northpower) reports a 4.3 percent residential solar uptake rate, while Auckland (Vector) reports a 1.5 percent residential solar uptake rate.
EA data showed by the end of 2022 the number of solar installations had reached 42,793, equating to roughly 2.3 percent of all Kiwi households. New Zealand has a long way to go to catch up with Australia where 33 percent of homes have rooftop, with some communities exceeding 50 percent.
Despite this, New Zealand ranks well internationally for the proportion of its energy generated from renewable sources, driven mainly by hydroelectric and geothermal.
According to a 2023 MBIE energy report, a little over 80 percent of New Zealand’s electricity comes from renewable sources and around 30 percent of its total energy consumption is renewable.
NZ has an aspirational target of 100 percent renewable electricity by 2030 and aims for 50 percent of total energy consumption to come from renewable sources by 2035.
Sources for information on these pages:
Electricity Authority – Electricity Market Information (EA/EMI) | Transpower | NZ power companies | MBIE | Power Compare | ProfileSOLAR.com
