Why solar makes sense

New Zealand can lay claim to one of the cleanest electricity networks in the world. In 2023, 88% of our electricity came from renewable sources. 

In that case, are there really significant benefits to be gained from scaling up rooftop solar? After all, rooftop solar takes energy and emissions to manufacture, and if our grid is already so renewable, what’s the point? 

The answer requires us to look beyond our electricity network and to the broader energy system. When we do that, rooftop solar makes a big difference to: 

• Our energy supply (we will need more electricity to run all our electric machines).
• Our energy security (we need more electricity at certain times and it needs to be affordable).
• Our emissions (we need to move away from oil for transport and gas in the home).  

In this piece we explain how solar can check all three boxes.

Jump to sections: 

• More power to you
• Driving change
• Look to the sky
• Turning sunlight into water
• Go large?
• More for less
• Cheaper, cleaner, more resilient

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TLDR? Check out our infographic.

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Let’s shine a light into some dark places.

More power to you

Transpower has estimated that electricity demand could increase by 68% by 2050 and other estimates are far higher. This means machines that previously didn’t rely on electricity will in the future and the clearest example of this is our vehicle fleet. 

Currently, we rely heavily on petrol and diesel to power our cars, trucks and buses, and the shift to EVs is expected to be the main driver of increasing electricity demand in the coming decades.

We have shown previously that just a quarter of the country’s total energy use comes from electricity. The vast majority of the remaining three quarters comes from imported oil (in the form of petrol and diesel) and other fossil fuels (such as gas and coal). 

In the future, an electrified vehicle fleet and residential sector will no longer rely on imported fossil fuels, but it will need a much greater amount of homegrown electricity. It is these fossil fuel energy sources that additional rooftop solar panels will replace, rather than the fossil fuels used in the electricity grid.

Driving change

To understand this, imagine you’ve just traded in your petrol or diesel car for an EV. 

First of all, congratulations. Pretty zippy, right? Second, you’re going to need to fill it up with electricity to get anywhere. This means you’ve decreased the national demand for petrol by one car’s worth and increased the demand for electricity. 

This electricity has to come from somewhere. Since you only bought one car, the current electricity grid can handle the extra demand you’re creating. But, the situation would be very different if the owners of all four million light vehicles traded their internal combustion cars in for electric alternatives, especially if those cars were charged at peak times. 

The average vehicle owner in New Zealand drives their car around 11,000km each year. Four million ICE vehicles driven 11,000km per year corresponds to about four billion litres of petrol and diesel each year. This corresponds to about 40,000 GWh of energy. This is roughly the same as total electricity consumption. 

If all of these vehicles went electric today, electricity demand would increase by around 20%. If we also convert all the gas appliances in our homes to electric, this would increase demand up to 25% above today’s levels.

This also assumes the transition happens overnight. In reality, population growth and other forms of electrification will be happening simultaneously, so the increase in demand will be larger than this.

All of this additional electricity has to come from somewhere, and rooftop solar is a key part of providing this.

If 80% of New Zealand’s households had a 9kW rooftop solar system (about 20 panels), that would add around 40% more generation to the country’s total. 

If all our 50,000 or so farms had mid-sized solar systems, that would be an additional 60%. 

That means we could double the amount of electricity currently being generated by focusing on our rooftops and unproductive land.

Look to the sky

The average car is driven about 200km a week in New Zealand, much less than the range of modern EVs. This means that EV owners with solar panels on the roof can do most of their charging at home. Of course, it’s not always sunny when the car is home and some may not have a garage where they can charge their car, so some charging will happen away from home. But, with solar panels on small businesses, farms and other buildings, solar can still be the main source of electricity for an electrified fleet. 

For example, Forest Lodge Orchard produces around 80% of the electricity it needs to run its 21 electric machines via rooftop and ground mount solar. It stores a lot of that electricity in batteries, so while its electricity consumption has increased dramatically after electrifying all its machines, it doesn’t use any more electricity at peak times. Instead, it can export during congestion times and power roughly 25 neighbouring homes. 

Heating water, which makes up around 30% of a home’s energy use (if you don’t count your car), can also be timed for the solar window. 

The upshot of this is that rooftop solar isn’t just about reducing electricity emissions; it could provide all the energy we need to wean ourselves off petrol, diesel and gas. 

Our Electric Homes report showed that 31% of the emissions produced domestically are related to household decisions, with vehicles and gas use in homes key contributors to this. With accelerated uptake of rooftop solar, we can slash this virtually to zero, while saving households thousands per year.

Turning sunlight into water

Many people assume solar can’t help in New Zealand because it is generated during the day and our peaks are in the morning and night, and generally in winter. But solar - from homes, farms and businesses - offers a very real solution to our energy security issues because we have a massive battery in the form of our hydro lakes.

Solar could be particularly helpful in dry years when our hydro storage is low. According to NIWA data, solar generates 11% more in April - June in a dry year than it would in an average year. This makes sense: when it’s not raining, the sun is normally out (*more detail on our methodology here). 

If a 9kW system was installed on 50% of homes in New Zealand, the 11% bump in that period would equate to 225GWh of ‘extra’ production in a dry year.

If 30,000 farms had a 300kW system (around 600 panels) that would equate to the same amount of extra production in a dry year. 

That’s around 5% of New Zealand’s total hydro storage capacity. 

If it had been there in 2024, it would have equated to an extra 18 days of hydro storage, based on the trajectory of national storage in July/August. 

5% or 18 days might not sound like much, but when hydro storage bottomed out in 2024, the average wholesale price averaged 80c/kWh for a week, with coal and gas generation setting the price. 18 days earlier, when hydro storage was higher, the wholesale price averaged only 37c/kWh for that week.

If we had that extra solar capacity, all other things held equal, the worst prices we would have seen would have been 37c/kWh. So it is fair to say it would have more than halved the wholesale price at the worst time of the crisis because solar would have kept more water in our lakes.

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Solar is not just beneficial in a dry year, either. More air conditioning, large demands on irrigation and increasing numbers of EVs mean summer electricity use is also starting to increase. Solar can cater to much of that need, and while not all of our hydro is in lakes, it’s important to go into the winter season with as much water storage as possible. 

This is not just helping the wealthy few who can afford it, either. Lots of solar on rooftops, as we have seen in the Australian market, can help to bring the cost of electricity down for everyone on the network. Low income homes spend around twice the proportion of their pay cheque on energy and benefit more from the cost-savings and price stability of solar. 

And when it comes to farmers, it’s a double whammy: they can grow grass when it’s wet and generate electricity when it’s sunny. Even though they produce less energy in winter, no irrigation loads mean they may actually export more to support our lakes.

Go large?

New large-scale renewable electricity projects - including grid-scale solar - can also be used to meet the additional electricity demand the transition will bring, but solar farms are not the lowest cost option for customers.

As our Electric Homes report showed, electricity from rooftop solar costs households about 7c/kWh on average (or 13c/kWh financed), while retail electricity from the grid costs around 35c/kWh, with less than half of it made up by generation.

Solar panels on our rooftops can significantly reduce the need for new large-scale generation and also reduce (or potentially remove) the need for too many expensive pole and wire upgrades that are likely to make up the biggest increases in customers' bills in the coming years. 

‍More for less

Displacing fossil fuels is also about efficiency. When we burn petrol in our cars about two-thirds of it is lost as waste heat. This isn’t the case for electricity. And although it takes energy to manufacture solar panels, they generate many times more energy over their lifetime than it takes to create them, in the same way that EVs quickly pay off their ‘carbon debt’. 

According to a peer reviewed study on the embodied energy of solar panels, producing silicon solar panels uses 640 kWh per kW of peak capacity on average. This means that a house in Auckland with an average of 5.5 hours of sunlight per day will generate enough energy to balance out the manufacture of the panels after nine months.

Over the 25 year life of the panels, they will generate 32 times more energy than it took to manufacture them. Compared to fossil fuels, this is a massive increase in efficiency.

The International Energy Agency recently found that one large container ship full of solar panels “can provide the means to generate as much electricity as the gas on over 50 large LNG tankers or the coal on over 100 large ships”.

And these panels are getting more efficient by the year. As energy analyst Nat Bullard told Derek Thompson (the author of a new book with Ezra Klein about abundance), solar is an energy technology that’s showing signs of Moore’s Law-level improvements and cost reductions, and batteries are improving at a similar rate, too. Other energy sources cannot claim that. 

‍Cheaper, cleaner and more resilient

It is true that installing solar panels makes only small impacts on the emissions of New Zealand’s electricity grid because it is already so renewable. But this isn’t the right comparison to make in this country and will always underestimate the impact of installing solar. 

Solar on our rooftops, farms and businesses can displace the emissions generated by burning fossil fuels in our homes and especially our cars, provide the extra electricity we need to run our electric machines, improve our energy security by keeping water in our hydro lakes for when we need it most, and help bring the cost of electricity down for everyone on the network. 

It is a low-cost investment in the cleanest, cheapest energy system for New Zealanders and any energy strategy we develop needs to fully embrace the many benefits of solar.

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*METHODOLOGY NOTES

“In a dry year, solar generates around 11% more electricity in April - June than it would in an average year”:  Based on NIWA monthly sunshine hours for Auckland, Wellington and Christchurch accessed from data.niwa.nz.  Period of analysis is 2000 - 2024.  Dry years were defined as 2001, 2003, 2008, 2012, 2017, 2019, 2021, 2024.

- “This 11% bump could help keep water in our hydro lakes…”  based on renewable Niwa data for Auckland, Wellington and Christchurch for a 9kW solar facility, and taking 11% of April, May, June production (226kWh). As a result of the 11% bump, July 1 2024 storage would theoretically have been higher by 226kWh x number of households (and equivalent for the number of 300kW farms) assuming hydro operators would not have changed their reservoir management approach over that period. Over the period July 1 - August 10 2024, storage declined at an approximately 12GWh per day. Hence, the number of days of storage that would have been ‘bought’ through the bump of rooftop solar is the 11% divided by 12GWh. Put another way, the extra production from solar would have resulted in storage bottomming out (on August 15th) at a level equal to actual storage X days earlier, where X = the 11% bump divided by 12GWh.

We recognise that hydro reservoir management is a complex interplay between storage level, expected rainfall, expected prices and the offering of other plant in the system. Hence our analysis is relatively simplistic, as it holds all these other factors equal. We welcome debate and a more thorough analysis so that New Zealand can make better use of the renewable resources we already have (hydro) and an energy source that has a clear tendency to produce more in a number of critical months (Q2) during dry years (solar) so that we can build the cheapest, cleanest electricity system in the world.