The bidding war on solar

Last month National announced its solar power policy. It was the bare minimum, a version of the Ratepayer Assistance Scheme expansion advocated by Rewiring Aotearoa, but with the problem that no sane person would trust them to actually deliver on it. Because while they want the positive PR from announcing a solar policy, they don't actually want to spend any time on implementation when they could be doing more important things, like climate change denial and culture war bullshit, instead.

Today it was Labour's turn. And they've announced the same core policy - the Ratepayer Assistance Scheme - backed up with additional loans through lines companies, support for community batteries, and support for renters to get plug-in solar. Which is all good, and unlike National there's no doubts about implementation. Labour will actually do what it promises, at least if there's still a public service to do it with. Not least because their expected coalition partners, the Greens and Te Pāti Māori, will hold them to it (and push it further).

Speaking of the Greens, while they haven't yet announced their solar policy, their 2023 version was twice as generous as Labour's. I'd expect them to be starting from that baseline, and then adding on extra support for renters and community ownership. In the meantime, they're pointing out that with the three largest parties in parliament all supporting the Ratepayer Assistance Scheme, the House can and should just legislate the required tweaks to allow it to be used for solar, rather than making people wait until after the election. But then, that might make National actually deliver on their promise, rather than treating it as a meaningless soundbite.

The bare minimum

Household solar power is having a moment at the moment, and encouraging it is looking like a total no-brainer for any government. Even National has got on board, announcing a loan scheme as an election policy:

National has promised to help households shift to solar power through low interest loans, if it's re-elected.

It planned to introduce a Home Energy Fund offering low-interest, long-term loans that are repaid through rates so households can invest in solar, batteries, insulation and heat pumps, without big upfront costs.

Which sounds good, and it is, but it is also the bare fucking minimum now. Low-interest loans are something offered by every major bank. Handling them through rates allows broader access and easier repayment, and that will boost uptake, but you could also get more (at higher cost) through direct subsidies, or by regulating for higher payback rates or net metering. And of course there's still landlords to tackle.

There's also serious doubts over National's actual delivery on its promise. Councils have been asking them for this exact policy since last year, and National has stalled them, apparently so it can cynically announce it as an election policy. They considered, then chucked solar incentives last year, so there's a real question of commitment. And of course lurking in the background is their "promise" last election of 10,000 EV chargers, which due to a complete lack of implementing policy has resulted in fewer than 500 extra actually being built. Its easy to imagine this promise going the same way - once they've got the headline, they simply won't pass the legislation, won't allocate the trivial amount of money required, and so won't do the thing. Other parties are likely to be more committed.

What it does show is how comprehensively the Greens have won the argument on this. They've been advocate solar loans for a decade, and now even National has to pretend to agree with them. Which just goes to show the value of advocacy - and invites the question of how Labour could have changed the political landscape if they'd bothered to argue for anything, rather than hiding and triangulating.

National's "investment boost"

I've been thinking a bit about National's "investment boost", the centrepiece of its dogshit budget. Its pitched by the government as encouraging big capital investments which will create jobs for the future. But I don't think there's much chance of that. The problem is that the policy just won't last long enough for that sort of investment.

The first reason for this is politics. We're due an election in the next 18 months - maybe sooner if the increasingly irritable Winston throws a tanty when Rimmer takes his job - and at best its a crap-shoot for National (and those odds will only have gotten worse after they stole $13 billion from women). A future Labour-Green government may toss the whole policy simply to make fiscal space for their own policy choices. At the least, they'll limit it to promote better investment, and rip out the bits promoting mining, fossil fuels, and farming, because they don't want to subsidise them. The second is that poor policy design means there is no cap to government exposure for this depreciation, meaning it runs the risks of a huge cost blowout and turning into another film subsidy disaster. So even if National somehow clings to power, they'll need to change it to stop the financial bleeding. They'll be slow about it, because they won't want to admit they made a mistake, but eventually it'll have to be limited, probably after three or four years.

What does that mean for the policy? Most obviously, it is not going to result in the sorts of big new capital investment National is talking up, because there's simply no time to get something conceived, designed, consented, and built (and so paid for) before the tax break gets changed. Planning a big, multi-year project around this tax break is a great way to lose money (though people may plan in hope, then shelve projects and whine for a handout when the inevitable happens. NZ businesses apparently love whining, and its almost as if that is their real business model).

So what will we get? Small, quick, cheap stuff. Utes and computers, obviously, which don't really do shit to boost productivity, and are effectively consumer spending for businesses. National is probably hoping that that might give them a quick economic juice before the next election so they can say "things are getting better". For bigger projects, it'll be either short planning cycle stuff - again, small and quick - or stuff which is already consented and planned for, which can be brought forward. And on that front, there's an obvious type of project which has plenty of pre-consented stuff sitting around, and which can be built in two years from saying "go": solar farms. Yes, National may just have strengthened our solar boom. Their farmer-cronies (who want rural land "protected" from more productive uses so they can instead use it to pollute) will be spitting.

(It may also help with wind farms - which again have a lot of projects pre-consented and waiting - but they take longer to build).

Which also brings me to how a future government could use this policy: use it solely to push decarbonisation. Building a renewable energy project, electrifying a factory and getting it off gas, switching your fleet of delivery trucks to EVs? Have a depreciation break. Want to keep buying old, fossil infrastructure? Fuck you. We need to decarbonise quickly, and this seems like an excellent way to bring that investment forward and make it happen.

Gas is dead

The Herald had another announcement today about a new solar farm being officially opened - this time the 63MW Lauriston solar farm in Canterbury. It is of course briefly "NZ’s biggest solar farm", but it will soon be overtaken by Kōwhai park at Christchurch airport (168MW) and Tauhei (202MW), both of which are currently under construction and should be complete next year. And looking further ahead, the 400MW Te Rāhui farm near Tāupo should be building soon, along with a number of other big projects.

None of this has any form of government assistance. Instead, the government is still blathering about gas as a "transition fuel". Which is the thinking of twenty years ago. The last major gas-fired power station in Aotearoa was commissioned in 2007. While there have been a couple of "peaker" plants added since, they're much smaller and not intended for baseload generation. And there are no plans for any in the future: the last "live" gas project - Todd Energy's proposed peaker plant at Ōtorohanga - was cancelled years ago (though the consents for it have not yet expired). The market has spoken: the future is solar, and wind, and batteries. The gas industry is dead; it just hasn't realised it yet.

We don't need the fast track to kill fossil fuels

RNZ has a story this morning about the expansion of solar farms in Aotearoa, driven by today's ground-breaking ceremony at the Tauhei solar farm in Te Aroha:

From starting out as a tiny player in the electricity system, solar power generated more electricity than coal and gas combined for the first time over summer, albeit only for a few days, according to the Electricity Authority.

Overall, solar farms generate just 2 per cent of the country's power now, but by 2030 Meridian Energy thinks it will be 7 to 8 per cent.

Which is roughly what we generate with wind ATM. Or gas. In fact, solar will overtake gas in terms of generation capacity within two years. Here's MBIE's breakdown of generation capacity to 2023 (excludes hydro):

Source: MBIE, Energy in New Zealand 2024, p24.

Look at that beautiful exponential curve for solar! And it gets better: total solar capacity in December 2024 was 573MW. There's another 463MW currently under construction, and 130MW which will start building in August, all of which will be built by the end of 2027. Throw in a couple of hundred MW of distributed generation, and there will be more solar than gas. The same is also true of wind, which has 262MW under construction and scheduled for completion by the end of 2027, and there's 300MW of batteries under construction to remove the need for peaking power. All of which means that we're going to be burning a lot less gas in a couple of years.

And the kicker: this has all been done without National's fast-track bill. The government has claimed that its corrupt, Muldoonist, anti-environment law is necessary to boost renewable energy, but clearly it is not. So when big generators claim that the world will end because their latest big stupid project has been rightly refused resource consent, they are lying. We don't need to allow corruption or compromise the rule of law in Aotearoa to get a green future; the market is pushing that perfectly well. Instead, Contact is fighting over who gets the money from that revolution: them or someone else. And none of us should really give a single wet shit about that. There's plenty of other wind projects waiting to be built, and we'll just build them instead.

The power cartel's nightmare

Aotearoa is currently suffering from one of its regular electricity crises, thanks to systematic underinvestment by the power cartel. Meanwhile, in Europe, electricity prices have gone negative:

European power markets are experiencing a notable shift as renewable energy sources, particularly wind and solar, become a larger part of the energy mix. On Wednesday, power prices in several European markets, including Germany, dipped below zero due to a surge in green electricity production.

In Germany, wind generation is expected to hit 22.7 gigawatts, the highest level in four months. This spike in renewable output has overwhelmed the grid, leading to negative prices during six separate hours on Tuesday, as recorded by Epex Spot SE. Negative pricing occurs when there is more electricity supply than demand, a scenario becoming more frequent as Europe continues its aggressive push toward renewable energy.

Why? Because energy companies have invested in renewable generation, driving expensive fossil generation out of the market and producing an oversupply. And its a similar story in California.

This is the power cartel's nightmare: free power! Which means no profits for them. And with more renewables and batteries being installed, its only going to get worse (though likely become merely very cheap, rather than negative).

So while NZ businesses are shutting down because power is too expensive, and National talking about expensive imported LNG as a "solution" (a "solution" which means a permanent rise in electricity prices for both industrial and residential users), think about the future we could have: a future where the government uses its control of the power cartel (or just a new SOE) to rapidly roll out solar panels and batteries to permanently lower power prices and bring cheap power to everyone. A future where it builds energy storage to end the dry year problem. A future where instead of shutting down, companies can use that power to make cheap, clean, goods. But there's no lobbyists for that future, and plenty of lobbyists for shortages and energy poverty. So we won't be getting it from National.

Muldoonism, solar farms, and legitimacy

NewsHub had an article yesterday about progress on Aotearoa's largest solar farm, at "The Point" in the Mackenzie Country. 420MW, right next to a grid connection and transmission infrastructure, and next to dams - meaning it can work in tandem with them to maximise water storage. Its exactly the sort of project we need to decarbonise the country and Electrify All The Things, but there's a problem: the entire Mackenzie basin is (for good reason) designated an "outstanding natural landscape". And its easy to see how a giant solar array would interfere with that landscape.

Other companies have obtained resource consent for similar sized solar projects by the simple expedient of not trying to put them in an outstanding natural landscape. But rather than doing that, or attempting to convince the district council or EPA that their project can fit into the landscape, these developers are considering applying for "consent" through National's corrupt Muldoonist "fast-track" legislation, so they can just drive a bulldozer through the whole thing. I'd urge them not to, because by doing so, they would fundamentally delegitimise their project, and invite a future government to not just fully review any corruptly-gained "consent", but potentially legislatively cancel it and impose a make-good order for any work done. Meaning they'd need to tear down whatever they build and restore the landscape. Which is obviously a suboptimal outcome for the developers, and for Aotearoa.

There's an obvious parallel between this project, and Project Hayes, Meridian's plan for a giant wind-farm in Central Otago, or the Turitea Wind Farm, which was built in a designated reserve. In both cases the choice to try develop a valued and protected landscape made the projects highly doubtful from the outset, and made the default response "nice, but maybe somewhere else please" - its not like we're short of great sites for wind or solar farms, after all. And in both cases the RMA process explored the environmental impacts and what could be done to mitigate them, and the appeals process tested that process and ensured it met accepted standards. Hayes was abandoned during the appeals when Meridian accepted that they could just build somewhere else. Turitea meanwhile won its appeals, and gained public acceptance as a result. Which highlights a key value of the slow, participatory RMA and appeals process: it legitimises the outcome. No political party threatened to cancel the consent, and no protestors tried to occupy the site or sabotage the project. While some people (including myself) may have disliked the outcome, it was the result of an obviously fair process, and so basically legitimate.

Muldoonist Ministerial fiat does not impart any of this legitimacy, especially when it comes with an accompanying whiff of corruption (how much has NZ First been given by interested developers through its secret bribe foundation? We don't know.) Which is why it is legitimate to review and if necessary cancel "consents" obtained through such a process.

We need more solar farms. But we need them consented by a legitimate process which fairly assesses environmental impacts and mitigations. Sometimes "not there" is the proper outcome of such a process. Developers should accept that. If they don't, and if they instead resort to corruption, they have only themselves to blame when they face the consequences.

A pallid shade of Green II

Last month, the Greens introduced their clean power policy, promising loans and grants to upgrade homes to add solar panels and be energy efficient. Two weeks ago Labour released their response - a weak "pilot scheme" of energy efficiency grants, which I described as a pallid shade of Green. Today, they've followed that up with an incentive scheme for rooftop solar panels and batteries. And like their earlier energy efficiency effort, its good to see, but also a bit meh, offering too little money and too little ambition. And the latter is really on display in their plans for state houses: the Greens had promised a full refit scheme, with panels and batteries (and consequent zero summer power bills and massive improvements in tenant welfare, plus pressure on the private rental market to offer the same) for 30,000 state homes. Labour is promising to do a mere one thousand. Why? Because they'd rather loot the ETS funding which would pay for that in the name of "fiscal responsibility". Which, when we're facing a $24 billion bill if we fail to meet our climate commitments, seems to be the opposite of "responsible".

As with Labour’s previous offering, I'm left with the question: why vote for bullshit half-measures, when I could vote for the real thing instead?

The Greens' clean power policy

Over the weekend the Greens released their clean power policy, promising a "clean power payment" of up to $6000, interest-free loans of up to $30,000, deductibility for landlords, and a massive investment program in putting solar panels on state houses. Unlike the current Warmer Kiwi Homes programme, it won't be means-tested, and it will fund a much wider range of upgrades: not just insulation and efficient heating, but also solar panels, batteries, double-glazing, and fast-chargers for EVs. So basicly, if you own your own home, the Greens will make it much easier to make it warm and efficient. And if you live in a state house, the Greens are going to make sure you get free power in summer.

Looked at just as a solar energy programme, its obviously not the most efficient way of installing panels. Take the state housing upgrade program, which would see solar panels installed on 30,000 (of 67,000) state houses: putting them on rooftops would cost ~$525 million for ~150MW, about five times the cost of an equivalent-sized array stuck in a field. But this is about encouraging distributed home generation for home use, for the direct benefit of the people who live in those homes. State house users not having to pay power bills for a quarter of the year or more is going to significantly improve their welfare, and that is going to have flow-on effects elsewhere. And the same is going to apply to homeowners who use the grants and loans to install panels and batteries.

And of course, its not just a solar energy programme, but about insulation, heating, transport, and the elimination of fossil fuels as well. Aotearoa needs to make a massive transition in the next two decades to a cleaner, more efficient economy, which means upgrading all of those things. And this is about pushing that. Banks are already offering similar loans for these upgrades. But government grants will push things faster, and interest-free government loans will keep the banks honest.

But while this is excellent news for people who own their own homes, that's an ever-declining proportion of us. The big problem for the national upgrade is landlords, who face very weak incentives to provide solar panels, heat pumps, and EV chargers for the benefit of their tenants. Tax deductibility may help a little, but its probably better to see this as a carrot to go alongside the stick of the rental WOF scheme. And its not hard to see that being eventually extended to require such things alongside insulation, heating, and ventilation. And of course I'd like to think that if state houses provide them (at income-related rents, too), private landlords will feel some pressure to compete. Alternatively, i am more than happy to see the government build, buy, and upgrade more state houses, and put the private landlords who won't compete out of business.

Solar panels on car parks are a no-brainer

The Guardian reports that France is going to require all large car-parks to be covered by solar panels:

All large car parks in France will be covered by solar panels under new legislation approved as part of president Emmanuel Macron’s renewable energy drive.

Legislation approved by the French Senate this week requires existing and new car parks with space for at least 80 vehicles to be covered by solar panels.

The owners of car parks with between 80 and 400 spaces have five years to comply with the measures, while operators of those with more than 400 will have just three years. At least half of the area of the larger sites must be covered by solar panels.

The French government believes the measure could generate up to 11 gigawatts of power.

This seems like a total no-brainer. At the moment car parks are big, empty spaces which just turn solar energy into heat. Solar panels will provide shade for users, while turning that energy into usable, zero-emissions electricity.

Its an obvious measure to adopt here. But we should also be going further and requiring solar panels to be installed on all large buildings which receive decent sunlight. Malls and warehouses are obvious targets, since they have large roof areas. But ultimately we should be amending the building code to require them to be installed on new homes, and retrofitted to old ones (starting with rental properties). We're going to need a lot more power to decarbonise industry and transport, and to kick fossil fuels from our electricity network. This is one obvious way to do it.

More solar

Newsroom reports that Nova Energy is planning Aotearoa's biggest solar farm, and its truly massive:

A 400 megawatt solar farm planned for the Taupō region could produce 190 times more electricity than New Zealand's current largest grid-connected solar facility, Newsroom can reveal.

Nova Energy, owned by the Todd Corporation, has applied for two resource consents from Taupō District Council to construct the project in three stages over six or seven years. When completed, it will involve more than 750,000 individual solar panels and could power 100,000 homes – more than one in every 20 houses across New Zealand.

To put that in context, 400MW is the size of a standard gas power station (like Stratford, or Huntly 5), and just under the size of the Clyde Dam. So its a massive chunk of generation which will make a real difference. But it gets better, because there's mention of another 300MW farm in the South Island buried in the article. And just like that, the entire pipeline of solar projects has doubled.

This is obviously great news for emissions. While solar only generates during the day, every GWh it generates is one that won't be generated by coal or gas. Which means it will help push dirty fossil generation out of the market, and push it further into the cold winter peak load and backup roles. Daytime summer load will also allow more water to be held in the dams, rather than used to generate power, which will help smooth our seasonality. And since they can be built quickly, we'll start seeing the benefits in a year or two.

More solar

Back in November, RNZ reported on the scale of changes we needed to make to decarbonise the economy. One of those changes was to increase the amount of solar generation by 180% by 2025, and 2200% by 2035. The good news is that we're well on the way to doing it: in 2021 three projects (Lodestone, Kōwhai Park and Waiterimu) were announced which would meet the 2025 target by themselves. And today another one was announced: a 147 MW project in Te Aroha:

A new solar farm proposed in eastern Waikato could generate enough electricity to power 30,000 homes if its application under the Covid Recovery Act is successful.

Harmony Energy New Zealand has unveiled plans to construct 329,000 solar panels on 182 hectares of a 260-hectare site at Te Aroha West.

The UK-based company has been granted approval to speed up its application under the Covid-19 Recovery (Fast-Track Consenting) Act 2020 but is yet to hear if the project has been approved.

Harmony director Pete Grogan said the solar panels could produce up to 147 megawatts of power at peak times. All the electricity would flow directly into the national grid for use by homes and businesses.

As with other recent rural solar projects, its dual-use, with sheep pasture beneath the panels (it will however displace cows to do this, so that's a definite emissions reduction as well).

The speed grid-scale solar is taking off in New Zealand is surprising - 500MW announced in the last three months. We're already well on the way to meeting that 2035 target, and hopefully we can exceed it quickly enough to drive dirty generation off the grid.

More solar

The other day I posted about the renewable energy challenge if Aotearoa is to meet its climate change goals, arguing that we can do it. Today, Christchurch Airport has stepped up, providing another big chunk of what we need to get to a greener 2035, in the form of a 150MW solar farm:

Christchurch Airport is committing 400 hectares to create a renewable energy park with a solar farm that will generate enough to power 30,000 homes.

Kōwhai Park will be located on the airport's Harewood campus, with hopes it will help businesses to transition away from fossil fuels.

The park will scale up over the next 30 years with the first phase dedicated to a solar energy farm capable of generating 150 megawatts of electricity. That is about 20 percent of Christchurch's current residential electricity use.

The park will support future development of green fuel production for land and air transport, green data centres and green vertical farming.

The latter is interesting. Airlines are going to have to decarbonise, and they have a number of technological options available (electricity, hydrogen, and straight-out synthetic fuel are all on the table). But all of those options will need electricity, and the airport is basicly signalling that they're ready to provide it to help the transition.

Climate Change: We can do it!

RNZ reports on the other story to come out of the government's emissions budget Cabinet paper: the scale of the changes we need to make:

The massive scale of the nationwide changes needed quickly to cut climate gas emissions is laid bare in newly-released government documents.

[...]

The number of cyclists needs to increase by half in three years and by 340 percent by 2035, while public transport use needs to go up 60 percent and 210 percent over the same timeframes.

In three years, the amount of electricity generated from wind and solar needs to increase 106 percent and 180 percent respectively.

By 2035, wind will have to have increased 360 percent, while solar will need to increase 2200 percent to make up the 6 percent share of total energy needed.

While I can't talk about cyclists (which sounds like a job for the transport experts at Greater Auckland), I can run the numbers on renewable energy. And they're quite promising.

First, solar. According to MBIE's electricity statistics, this is estimated to generate 159 GWh a year (estimate because they don't actually know how many rooftop solar installations there are). 180% of that is 286 GWh, which is about 70% of the 400 GWh of new solar plants announced earlier this year by Lodestone Energy. All of which are meant to be up and running by the end of 2023. So, we'll beat the expected first budget target, and if the industry can sustain that pace, then we might make the 2035 one (and on that front, its only likely to get cheaper and easier).

As for wind, according to Wikipedia we have 817.7 MW of installed generation (this excludes Turitea, which is half-built; including the northern half would take it to 936.7). So we basicly need another GW of new generation installed by 2025, which is a big ask. The good news is that there's already 416 MW (including the unbuilt part of Turitea) of that in the construction pipeline for the next two years. So the market is already going to provide about 40% of what we need. What about the other 60%?

The good news is that there's plenty of projects consented and waiting to go. And one of them - Castle Hill - would solve the whole problem in one hit (for the next budget period). But Genesis doesn't want to build it, because it would reduce the need for Huntly and so drive power prices and profits down. The government could solve that by using its majority ownership of Genesis to force them to do, by paying them to do it, or just by buying the project and doing it themselves. The latter option would cost ~$1.6 billion, which is a hell of a lot of money. But its less than three years of the social cost of the 4 million tons of carbon the electricity industry emits every year. In other words, if the government took its own $150/ton carbon price seriously, it would spend that money directly to reduce emissions and avoid incurring it.

In the longer term, we need to quadruple the amount of wind power in Aotearoa. The market clearly is not going to provide that by itself. But the government can, and should, step in to address this market failure, using tax and ETS revenues to pay for it. At its own social cost, its cost-effective to do so.

As for the how, until recently New Zealand had a publicly-listed company whose sole purpose was to build more windfarms (ironicly, it got bought by one of the big gentailers to add to its portfolio). The government should establish a new SOE for this purpose. This would also give it direct leverage on the electricity market, letting it counteract the more sociopathic impulses of the major gentailers. The problem, as with so many other things, is to get them to start seeing it as an investment, which saves them money in the long-term, rather than as a short-term cost.

The future finally arrives

Over the past few years I've been watching the price of solar energy fall, to the point where it now outcompetes fossil fuels, and wondering when it is finally going to take off in New Zealand and give us the clean, green future we need to survive. And now it looks like that future has arrived, with plans announced for five solar plants in Northland and Bay of Plenty:

A new company has unveiled plans to build five solar energy farms in the upper North Island at a cost of $300 million, which will together be capable of providing about 1 per cent of the country’s electricity supply.

Lodestone Energy has secured sites near Dargaville, Kaitaia, Whakatane, Edgecumbe and Whitianga for the solar farms which it describes as “a massive turning point for the country’s energy production”.

Energy Minister Megan Woods said she was “hugely excited by the new, independent, entrant to the renewable energy market”, which she forecast would bring about cheaper power bills, as well as reduced reliance on fossil fuels.

These are small facilities, collectively the size (and cost) of a single normal-sized windfarm. But at the same time its a massive shift. Meridian wasn't expecting to do utility-scale solar farms for five years yet, and now they've been beaten to it. Its also a shift towards local generation, rather than relying on the national grid, which should provide some regional backup in the event of grid failure. And the joy of solar panels is that if you need some extra power, you can just add some more (it helps that they're building them in a way which also allows the land to be used for farming). Hopefully we'll be seeing a lot more of these in the future.

More solar

A group of solar panel installers has applied for resource consent for a new PV solar farm in Northland:

A massive 12ha solar panel farm – enough to power 2750 homes – is planned for the top of Northland, in what would be the largest of its kind in the country.

Far North Solar Farm, a company of New Zealand and Australian solar installers, has applied for resource consent for the 16 megawatt solar farm at Pukenui.

The site is on the Far North’s Te Aupōuri peninsular, a narrow landmass at risk of drought, where intensive avocado farming has raised concerns by locals worried about spray-drift and the demand for water.

While Stuff is calling it "New Zealand's largest solar farm", there are much larger ones planned: Refining NZ gained resource consent for a 26MW farm in 2019, and Genesis is planning a 300MW farm in Waikato. But it all helps, and every Joule we generate from the sun is coal and gas we don't have to burn and water we can store.

Solarise all the things!

If we are to avoid dangerous levels of climate change, we need to decarbonise the economy and shift our energy supply completely to renewables. The good news is that the International Energy Agency thinks that that is going to happen. The reason? Interest rates have dropped. And this means that solar in particular (which has a long lifetime and low operating costs) is suddenly really cheap:

What happens in the extreme case where interest rates fall to zero? In these circumstances, the notion of a payback period ceases to be relevant. All that is required for an investment to be justified is that its lifetime returns should exceed the cost of construction.

Once a solar module has been installed, a zero rate of interest means that the electricity it generates is virtually free. Spread over the lifetime of the module, the cost is around 2c/kWh (assuming $1/watt cost, 2000 operating hours per year and a twenty-five-year lifetime). That cost would be indexed to the rate of inflation, but would probably never exceed 3c/kWh.

There is, then, a real possibility that solar PV and other renewable technologies could fulfil the promise made decades ago by the promoters of nuclear power: that they will deliver electricity “too cheap to meter.” (Even with access to cheap capital, nuclear power never delivered on that promise.)

New Zealand has lower operating hours per year, so different costings. But we're still looking at electricity prices significantly lower than that provided by the grid. Our interest rates are already basicly zero, and the Reserve Bank is saying they will go negative next year. Which suggests that we should be using this moment to stick solar panels everywhere, to permanently shift our energy supply. As for how to make it happen, direct government funding like that used for the insulation scheme, and cheap loans to businesses would seem to be a good place to start from.

The Greens' energy policy

Yesterday the Greens released their second big election policy - on energy. The short version is "more solar, less coal". They'd stick solar panels and batteries in every state house, and network them together to form a virtual power plant. They'd use grants to fund rooftop solar installations just as they did for insulation. They'd ban new thermal generation and coal-fired boilers, and sunset existing ones. And they'd throw money at training and community grants to push things even further.

Looking at the solar part of the equation, its a no-brainer. While people complain about clouds and latitude, it turns out that New Zealand's solar resource is better than southern Germany or the south of France - parts of Europe with high solar uptake. Its already cheaper than coal in those places, and since coal is our marginal generator and sets our electricity prices, that means that it is probably cheaper than coal here as well. So why aren't people installing it already? The same problem as insulation: lack of information and capital costs. And that suggests the same solution: grants, and a public campaign to normalise it, followed eventually by building standards which require it (because really, if you're building a new house, why wouldn't you put solar panels on the roof? Its the cheapest time to do it). The virtual power plant idea also means that this will gradually lower power prices for everyone, not just the households with solar panels. And with batteries as the default, its going to make it much easier to smooth demand and cope with all the electric cars they'll no doubt be pushing in their transport policy.

The community energy projects fund is also a good idea. We're already seeing solar panels pop up on schools, and there are multiple companies offering finance to help them do it quicker (essentially they front the capital and its paid for by a long-term electricity supply contract). Weirdly this sort of arrangement doesn't seem to be being used much for things other than schools, which looks to be a case of market failure, and government funding or financing is a way of fixing that failure.

In terms of paying for it, the important thing to remember is that this is an investment, which generates ongoing revenue and savings. Those benefits accrue primarily to individuals rather than the state, but the government should still see substantial benefits in the form of lower health and welfare costs and better social outcomes for state housing tenants. I guess we can work out how that stacks up against a negative BCR road.

On coal, what they're suggesting is pretty conservative, and was actually floated late last year in an MBIE discussion document on Accelerating renewable energy and energy efficiency [PDF]. Transpower and the Climate Change Commission have also been doing work in this area, looking at why businesses aren't electrifying even when it is profitable to do so. And the answer seems to be a mix of ETS subsidies, having no clue about their energy costs, conservatism and stupidity. Announcing a phase-out is a way to actually get them off their arses and force them to change. They go further than MBIE in applying the phase-out to gas (which MBIE thought would be required in the future, but too expensive now, so the Greens have taken them at their word and given gas a few more years), and of course they couple it with support to help cover the costs. As for the thermal ban, its another no-brainer, especially after the Tiwai shutdown, and will ensure that once Huntly and the rest close, these dirty fuels will be out of our energy supply for good.

More solar

Genesis Energy is planning to build the country's biggest PV solar farm:

Power generator and retailer Genesis Energy says it is in advanced discussions to build New Zealand's biggest solar farm in northern Waikato.

The company, which earlier reported a 15 per cent decline in operating earnings to $167.2 million, said its "future-gen" programme was aimed at transitioning it away from baseload thermal generation and delivering on its commitment to ditch coal by 2025.

The 300 megawatt solar farm will dwarf Refining NZ's 27 megawatt solar development, which is aimed satisfying 10 per cent of the Marsden Point refinery's requirement.

For context, this is about the equivalent of one of its dirty coal-fired units at Huntly. And hopefully by providing cheap energy during the day, it will reduce the need for fossil fuel generation and accelerate its shutdown. At the moment we have the ridiculous situation that we burn fossil fuels while the sun is shining; the sooner we engineer our way out of that dirty waste, the better.

Solar beats coal

As the climate crisis escalates, it is now obvious that we need to radically decarbonise our economy. The good news is that its looking easy and profitable for the energy sector. Wind is already cheaper than fossil fuels, and now solar is too:

The levellised cost of solar PV has fallen so far that all across Europe it is now beating spot wholesale electricity prices, and even with the addition of two hours’ storage it is still beating spot prices in some countries.

Those are two of the findings of a new report from Christian Breyer, professor of solar economy at Finland’s Lappeenranta University of Technology, who has wrapped up new data and forecasts and reinforced the view that solar PV is by far the cheapest form of bulk energy in many parts of the world, and is still competing with the addition of storage.

It gets better, because the price of solar is expected to halve in the next decade, and drop again by another third before 2050. Breyer notes that the changes are happening so rapidly that it is difficult to keep up, and policy decisions are being made based on years old information. Which isn't good when we are trying to decarbonise. OTOH, the market is good at finding profits, so it may get us there anyway. The question is whether it does it quick enough.

(And on that point, its worth noting that Marsden Point, an oil refinery, is going to host NZ's biggest solar farm. We're in early days yet, but our solar resource is comparable to Europe's, and there's no reason we shouldn't see the same cost structure. Its also worth noting that while they take up a lot of space, solar panels combine well with some forms of agriculture, particularly sheep. Which suggests an obvious thing for all those Canterbury farmers to farm instead of dirty cows: the sun).