Solar power in NZ and “net billing”

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tchart

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#295313 21-Mar-2022 09:04

Was watching a new Linus Tech Tips video where is having solar panels installed on his house. He mentioned In BC Canada they have “net billing” which means power retailers have buy back excess power from solar at the same rate they charge.

I thought this was fascinating and would be a great way to encourage adoption.

Does anyone know of any initiatives to get this off the ground in NZ? I’m guess this would need to be a government driven thing. Should we be lobbying our local MPs for this?

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#2889443 21-Mar-2022 09:23

It used to happen here in NZ a number of years ago, but alas it was stopped by the power companies for a reason I cannot recall.

I can’t see them wanting to restart it.

Dynamic

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#2889444 21-Mar-2022 09:25

That would be fantastic for the consumer, but that is not likely to be sustainable. Electricity retailers must be able to make a profit.

Retail electricity pricing breakdown in NZ: How electricity pricing works | Meridian Energy (I was unaware there were government levies on our power.)

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ANglEAUT

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#2889465 21-Mar-2022 10:41

tchart: ... In BC Canada they have “net billing” which means power retailers have buy back excess power from solar at the same rate they charge. ...

In NZ, it has never been "same rate they charge", it's always been lower, but some do buy your excess generation.

From Harrisons: Get paid 16c per unit for your extra solar generation. Install your solar with Harrisons and switch your power to Trustpower on a 24 month term, Trustpower will buy back your extra solar generation at 16c per unit (excluding gst). Maximum of 500 units per month and is guaranteed for the life of the 24 month contract.

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tchart

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#2889479 21-Mar-2022 10:58

Dynamic:

That would be fantastic for the consumer,

@Dynamic yes it would be fantastic wouldnt it.

Dynamic:

Electricity retailers must be able to make a profit.

Im not against profit but I do think that NZ "gentailers" are currently milking the consumers.

For example (source);

The net profit for the six months ended December was up a third to $78 million compared with $59m last year.

Does that sound unsustainable to you? Thats half year net profit BTW

The Meridian link is interesting albeit simplistic.

5% for metering? Given smart meter adoption this should be a negligible amount (5% would equate to several millions of dollars per year for metering?). Non-smart meter holdouts should have a separate meter read charge IMHO.

36% for transmission and distribution, thats a separate (fixed) charge on your bill so that wouldnt be part of solar buy back.

So currently; Meridian purchases the exported electricity at a rate of 8 cents per kWh

Their rate for my address is 24c per kWh, or 21c excl GST). Excluding profit and metering (20%) they should be paying almost 17c per kWh. So they are paying less than half.

boosacnoodle

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#2889480 21-Mar-2022 10:59

There are many common misconceptions with this. Essentially there are many components to electricity charges, such as:

Transmission - the nation grid operator (Transpower)
Distribution - your local lines company, such as Orion or Powerco
Metering - the company on your meter, such as Vector AMS
Generation - what is costs to "make" your power (paid to the generators, such as Meridian or your neighbour who sells back to the grid via their retailer)
GST & Electricity Authority (EA) levies

The amount you get back for selling to the grid is just the generation component (above) as the other costs still exist for selling that power back.

tchart

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#2889482 21-Mar-2022 11:00

ANglEAUT:

tchart: ... In BC Canada they have “net billing” which means power retailers have buy back excess power from solar at the same rate they charge. ...

In NZ, it has never been "same rate they charge", it's always been lower, but some do buy your excess generation.

From Harrisons: Get paid 16c per unit for your extra solar generation. Install your solar with Harrisons and switch your power to Trustpower on a 24 month term, Trustpower will buy back your extra solar generation at 16c per unit (excluding gst). Maximum of 500 units per month and is guaranteed for the life of the 24 month contract.

Yes I realise its never been the same rate. That Trustpower offer is interesting, this lines up with my rough calculation above.

tchart

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#2889485 21-Mar-2022 11:07

boosacnoodle:

There are many common misconceptions with this. Essentially there are many components to electricity charges, such as:

Thanks @boosacnoodle Im quite well versed in all of this having work with/for Transpower, Contact, Trustpower, PowerCo over the years.

Removing the fixed components and just looking at the raw energy cost they are still under paying.

The problem really is that power prices just keep going up (right?).

New Zealand has the fourth-highest renewable electricity percentage in the OECD (84%) but our prices are the 33rd highest in the world? https://t.co/B8LlXwSnwD

Our prices are 600% more expensive than Zimbabwe who only have around 20% renewable energy.

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MikeAqua

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#2889541 21-Mar-2022 12:53

tchart:

Non-smart meter holdouts should have a separate meter read charge IMHO.

I've always tot hew impression that the local lines company own the meter and can upgrade it at will. They just have to arrange a suitable time with the property occupier.

I do recall that when we changed to a smart meter our power consumption went up very slightly. But I was happy not to have the meter-reader coming to the property and leaving the gate open or whatever. Also happy not to have suspiciously high 'estimates' and have to read the meter do the math and and ring it in, to avoid being an unwilling off-balance-sheet creditor.

Mike

Scott3

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#2889555 21-Mar-2022 13:14

In short. No we should not be lobbying for net billing (export rate = import rate) in NZ.

Net metering legislation would force power retailers to buy solar power at a retail rate, rather than the likes of much cheaper hydro / wind / thermal power at wholesale rates.

It's a huge effective subsidy for residential solar, so it absolute would encourage uptake. (At the expensive of higher power prices in general, as power companies are forced to buy expensive solar power, rather than cheaper wholesale power). At this point, moving stuff from other fuels (LPG, Natural gas, petrol, diesel etc.), to electricity is the biggest environmental win, so we need to keep power as cheap as possible to encourage this.

Would mean that solar users could use the grid as a battery for near free. Sadly the grid is far from free to run, and it is fair that all users contribute towards it's running costs. Putting in power off / inter peak in the middle of the day, and taking it back out at peak time in winter evenings means there is a vast disparity in wholesale prices of power generated & consumed.

Should note that NZ power is already pretty green (typically cira 80%), and we we are far from fully utilizing our grid scale renewable resources (which are generally a lot cheaper than rooftop solar). We shouldn't be requiring cross subsidies to rooftop solar at the expense of other renewable generation.

One issue of massive residential solar promotion / subsidisation is that it conversely encourage more fossil fuel generation. Essentially the massive amount of solar available in the middle of the day depresses wholesale prices for much of the day, but wholesale prices will spike massively in the likes of winter evenings. This encourages short running peaker plants to be built, most of which are fossil fuel powered.

Scott3

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#2889562 21-Mar-2022 13:27

tchart:

Dynamic:

Electricity retailers must be able to make a profit.

Im not against profit but I do think that NZ "gentailers" are currently milking the consumers.

For example (source);

The net profit for the six months ended December was up a third to $78 million compared with $59m last year.

Does that sound unsustainable to you? Thats half year net profit BTW

The Meridian link is interesting albeit simplistic.

5% for metering? Given smart meter adoption this should be a negligible amount (5% would equate to several millions of dollars per year for metering?). Non-smart meter holdouts should have a separate meter read charge IMHO.

36% for transmission and distribution, thats a separate (fixed) charge on your bill so that wouldnt be part of solar buy back.

So currently; Meridian purchases the exported electricity at a rate of 8 cents per kWh

Their rate for my address is 24c per kWh, or 21c excl GST). Excluding profit and metering (20%) they should be paying almost 17c per kWh. So they are paying less than half.

Note that Net metering means exactly that. Put 1kWh of power into the grid in the middle of the day, and take 1kWh out in the evening, and the variable change on your bill will be zero. Either by subtracting export kWh from import kWh, or by having exactly matching rates (incl line etc). Daily rates would still apply.

High power prices & Excess profits from power companies is another issue from net metering. Many decades ago, we decided we could make one of the worlds most efficient electricity produces, yet more efficient by a mix of restructuring and privatisation. Sadly it hasn't worked out that way.

Creating a policy that further increases retail power prices (like net metering), would be bad in my mind. Should note it is also regressive. Those will access to capital for rooftop solar get subsided by those who can not...

Personally I would be in favor of re-nationalizing the electricity industry. Little value in having several high paid CEO's for every power company, and the need for massive marketing budgets for each company to attract customers. Having power supplied by the government would slash the cost structure as no need for marketing with a single supply.

Failing the above, we need some massive shake up of the electricity wholesale market. As it stands it is basically incompatible with 100% renewable power. And we need some way to compensate new renewable builds greater than the multi decade old schemes.

tchart

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#2889592 21-Mar-2022 14:52

Scott3:

Personally I would be in favor of re-nationalizing the electricity industry. Little value in having several high paid CEO's for every power company, and the need for massive marketing budgets for each company to attract customers. Having power supplied by the government would slash the cost structure as no need for marketing with a single supply.

100% agree. When people have to forgo heating in winter there is an issue with the market.

Scott3:

Net metering legislation would force power retailers to buy solar power at a retail rate, rather than the likes of much cheaper hydro / wind / thermal power at wholesale rates.

I dont think that is actually correct. Dont forget a "feature" of the broken electricity market is that no one pays the lowest rates - in fact quite the opposite. So even if there is cheaper hydro / wind / thermal power they are still paying the higher coal etc rates.

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#2889604 21-Mar-2022 15:47

tchart:

I don't think that is actually correct. Dont forget a "feature" of the broken electricity market is that no one pays the lowest rates - in fact quite the opposite. So even if there is cheaper hydro / wind / thermal power they are still paying the higher coal etc rates.

The Principal behind net metering is that retailers buy solar generated power at effectively retail price, even if their is cheaper power is available in in the wholesale market. Residential solar power won't be offered into the wholesale market stack at all.

Long run, wholesale prices are lower than retail prices, due to the need to cover costs like distribution, marketing, billing, retailer profit margin.

Clearly both buying and selling at retail price, is not going to be a profitable choice for a retailer.

Nothing to stop retailers offering net metering. In fact a handful did in the early days of grid tied solar. With a small number of solar customer's billing simplicity and perhaps some PR wins could justify this sweet deal. As solar installs became more popular they changed in quick secession to split import / export prices, as to stop loosing money on solar customers.

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#2889652 21-Mar-2022 16:18

I never thought the national government would have brought retail crediting of solar because they floates the electricity companies and wouldnt risk reducing their share price.

But I was disappointed that current green labour bunch didn't bring it in. Sudden ncrease in solar would have cheapened it for everyone via economy of scale.

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#2889687 21-Mar-2022 17:52

Net metering while nice in principal has issues for solar, around time of use.

The problem is that solar produces the most power during mid-day when power requirements are the lowest, and produces little or no power at peak times. A kwh provided at lunch-time when no one wants it is worth a lot less than one provided at 6-7pm when everyone wants one. Net metering unfortunately unlinks power power generation from demand and when solar generation becomes big enough can cause issues for the power grid.

What's fairer is a price tied to the wholesale rate like Flick electric offers, with their scheme they pay you what ever you power is currently worth on the market in 30min blocks. The advantage of this is that it becomes more rewarding to optimism your power generation for peak times, ie set up some east and west facing panels to catch the morning and evening light during the peak period. That way you could get be getting 20-30'c per kwh during the peak times and 8-15c per kwh during off-peak times (midday), which is ideally what we want for the power grid. Otherwise there is an incentive to flood the electricity network with useless power at midday in the knowledge you'll get 'free' power back at peak times.

MikeAqua

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#2889894 22-Mar-2022 09:39

I've always thought that retailers should all have to buy customer generated power at the spot price. Reflects the reality of how much the power is needed at that point in time.

Not sure if it's technologically possible, but people with storage could set a threshold price above which they will sell stored energy back to the network.

Mike

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