Falling solar and battery costs may already have overtaken prices assumed in Transpower’s latest modelling of the future power system, the Sustainable Energy Association of New Zealand says.

Chair Brendan Winitana says improving performance and falling costs means solar and battery combinations being installed today are delivering power at 23 to 24 cents per kilowatt-hour, compared with the 34 cent figure Transpower used as the underlying cost of such installations in its latest report on the potential of solar in New Zealand.

He says the difference reflects both the pace of the price declines in the sector, and the industry-average the national grid operator would have been seeking for its modelling.

When Transpower started its latest work seven months ago, Winitana says a 3.5 – 4 kW solar unit and a 6 kWh battery would have delivered power at a cost of about 28 cents.

“This time next year it will be under 20 cents,” he told BusinessDesk. Average delivered household power costs are about 28c/kWh.

“The Transpower report shows the value and potential of solar and batteries, however, this is yet to be fully acknowledged and actioned by the government and many in the incumbent industry,” Winitana said in a statement.

“It’s insane that currently, in the middle of summer, we are paying high electricity prices and burning record amounts of fossil fuels while affordable and clean energy is ignored and wasted.”

About 4,200 homes and businesses added almost 20 MW of solar capacity last year. That took the national total to just over 89 MW at the end of December, a doubling since mid-2016, according to Electricity Authority data.

About 30 percent of systems are now being installed with batteries, twice the rate two years ago, SEANZ says, and also potentially quicker than assumed in Transpower’s modelling.

SEANZ, and critics like Greenpeace, believe the uptake could be much higher and should play a more leading role helping the country meet the government’s 2035 target for having 100 percent renewable electricity generation.

Lines companies are adapting their charging models to better cater for both solar and electric cars, but the Electricity Authority has said some firms are still taking too long.

Winitana said regulation to streamline access to distribution networks would enable new technologies and new business models to compete and lower energy costs for all consumers.

“A truly competitive market will enable the benefits of mini and micro-grids with embedded solar and batteries and market mechanisms such as peer-to-peer trading, to benefit all electricity consumers.”

Transpower last year examined the potential for large-scale electrification of the economy to reduce emissions. Its report – Te Mauri Hiko – looked at a range of scenarios but its base case assumed a doubling in electricity demand to 97 terawatt-hours by 2050.

That would require 61 TWh of new capacity – mostly wind and solar, but also additional geothermal and hydro – in order to meet the new demand from the electrification of industry and transport while also replacing existing coal and gas-fired generation.

The base scenario assumed 16 TWh of supply would come from rooftop solar, with another 6 TWh coming from utility-scale arrays. In a mass take-up scenario, the contribution from small-scale solar jumps to 26 TWh.

Transpower’s projections are way ahead of any other forecasts in the electricity sector.

In its latest paper, it says there is sufficient roof space now to support 11 GW of solar capacity if it was all utilised. Population growth, new home construction and improving technology could cater for 27 GW of rooftop capacity by 2050.

Nor would the power system become unstable. It says the combination of panels, inverters and batteries should allow distribution networks to host 9-10 GW of solar.

Transpower warned last year that increased reliance on variable wind and solar generation would require additional storage or fast-start thermal generation to meet peak winter demand and cover the risk of dry years.

That remains a concern for Transpower, which says in its latest paper that encouraging battery storage will be “critical” in making solar work for New Zealand.

It also noted that most solar systems being installed now are aligned to optimise summer production, and that may need to change.

“If this pattern continues, then the 16 TWh of solar energy we foresee in Te Mauri Hiko would be heavily skewed to summer – while New Zealand’s energy demand continues to peak in winter.

“A more balanced supply would include some higher angle installations to provide more efficient winter peaking,” it said in its 20-page report.

“With solar playing a bigger role in New Zealand’s energy future, these issues of angle, installation design and the winter demand peak challenge will require increasing planning focus from the industry, government policy makers and a range of building and construction stakeholders. A coordinated and strategic approach to maximising this opportunity is required.”

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