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Solar Could be the Key to Tackling Electricity Price Rises

Kiwis are starting to grumble as the cost of power in New Zealand continues to rise. Residential power prices have continued to rise a little bit each year, however have remained much more consistent than wholesale prices.

Nominal Residential cost per unit for power

The Electricity Authority’s Electricity Market Information (EMI) shows the rising wholesale price trends over the last year. From late January 2021 to now in June 2021 prices have averaged around $250/MWh (25 cents/kWh) with the lowest prices getting further and further from zero. This trend is rumoured to continue to rise with no intention of going back down. At this time last year wholesale prices averaged around $120/MWh (12 cents/kWh), showing they have more than doubled.


Electricity wholesale prices
EMI Wholesale Price Trends from June 2020- June 2021

While residential prices are not yet showing the same increases as wholesale, don't hold your breath. They are going to be passed on to households sooner rather than later. With the consistent rise of power prices, many Kiwis are looking to install solar panels on their homes to reduce power bills, as well as reducing their reliance on the grid. Having an electric vehicle (EV) also allows you to essentially fuel your car with solar energy you make at home.


As we move to electrify transport, a lack of power to meet demand is a worry for power companies. Although there is the ability of smart EV chargers to adjust output to vehicles to reduce the pressure on the grid, additional power will be needed eventually if we are all driving electric vehicles by the 2050 net zero carbon emissions goal. Pressure is on renewable energy to upscale to meet this demand whilst also decreasing the emissions that current coal and oil power sources produce. Renewable energy sources, such as solar, wind, and hydro, are already making up 82.4% of New Zealand’s electricity. So we are definitely a step ahead of the rest of the world when it comes to clean energy production but not ‘100% pure’ clean, green NZ yet.

Tesla Powerwall 2 Power Battery Storage
Tesla Powerwall 2

When compared to Australia, where 1 in 4 homes have rooftop solar installed, New Zealand is behind the game. This suggests that it may slow down our uptake of electric vehicles in comparison to our cousins across the ditch. When consumers can charge their vehicle at home with solar power it makes running costs essentially zero and reduces the time for solar pay back. Solar is a power source that everyone is able to add to their own home to help generate further clean energy for the country by feeding back into the grid as well as powering their own homes. With the fear of scarcity that peaked in all when the pandemic hit, becoming self-sufficient with our own power source is of interest to more people. Batteries, like the Tesla Powerwall 2, added to a solar system gives this piece of mind that if the power cuts out a backup is ready; it also reduces the need for a generator which is powered by petrol. Overall, a home powered primarily by renewable energy is only topped up by the grid when there is a lack of sunlight hours, for example in winter, or if power use exceeds production.


Incentives to encourage more New Zealanders to add solar to their rooftop could be the key to unlocking the power we need for our future, whilst also continuing to reduce carbon emissions. There are many complaints whenever the Huntly power station is seen to be burning coal and gas again, so isn't it time that those that have the means to contribute to reducing the pressure on the grid which causes this, do something about it? Solar is still a large capital outlay for many people, despite the price of panels dropping over the years. However, it is able to reduce power bills by around 50% for most households (depending on individual variants of location and placement). Perhaps as the Clean Car Discount increases EV uptake a government solar incentive or strategy will also be introduced to balance the power needed for our electric future.



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