27 Mar 2017

Solar panels will hit poorer households - study

1:35 pm on 27 March 2017

New electricity technology will disproportionately harm low-income people, a new study has found.

Solar energy

Costs of solar power and other technology will be shifted to people who can't afford it, a report argues. Photo: RNZ

The research, by Wellington firm Concept Consulting, says technology such as solar panels and high-performance batteries are likely to make 80 percent of those on low incomes worse off.

This is because people with these devices won't pay for their full impact on the rest of the electricity system, and people who can't afford solar panels will have to pick up the cost.

In its report, Concept said solar panels would typically cut household electricity costs by $450 a year, but the savings for power companies, in terms of getting electricity to houses, was only $200 a year.

Concept Consulting director Simon Coates said the missing $250 would have to be found from other customers.

"Those costs will be shifted onto those consumers who don't have solar panels through higher rates from the networks and retailers.

"It is the poorest consumers in society who are least likely to put solar panels on their roofs, because they do not as much disposible income and because they tend to rent their propeties."

Mr Coates said for these consumers, electricity bills were likely to rise by $100 a year in most cases and by as much as $350 a year in extreme cases.

He blamed the way most people's electricity bills are worked out for this problem - a billing system that has lasted for decades.

He said people were charged the same for electricity the whole year round, when the real cost of providing that electricity was far higher on a cold night in winter than during summer.

Mr Coates said the way to fix this would be to get people to pay for the real cost of producing the electricity at the time they use it.

This would sheet home the real cost of solar panels.

But the chairman of the Sustainable Energy Association Brendan Winitana disagreed.

He says by 2030, there will be solar batteries and advanced battery storage that will save electricity companies from investing in new infrastructure, meaning consumers will also save money.

Electricity billing will have to change - networks association

The view that New Zealand's electricity billing system is antiquated is supported by the lines company body, the Electricity Networks Association.

Chief executive Graeme Peters said it would have to change, but this would not be easy, and it would not happen overnight.

The Electricity Retailers Association executive Jenny Cameron pledged that when change came, companies would try to ease its impact.

"Retailers will be able to build a lot more products and services as these new pricing models come through," she said.

"Consumers who are interested in controlling their demand will have plenty of products to choose from.

"For those who aren't, retailers will be able to provide options to smooth their bills or lessen any impacts so they have certainty over the costs."

The Concept Consulting report has come several months after the Electricity Authority indicated some sort of change was needed.

What it made clear is that without change, the potential for social inequity is huge.

The report was based on analysis of 100,000 electricity bills. It was funded in part by Concept Consulting, and in part by companies such as Contact and Powerco, as well as Consumer New Zealand and the Energy Efficiency and Conservation Authority.

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