So you want to get solar panels - here’s what you should know

A growing number of households are putting solar power systems on their roofs, as the rising price of power and the falling price of solar components makes it more appealing.

But have you ever wondered how you go about it?

RNZ talked to the experts about how the process should work.

Check your house is suitable

In general, solar works in virtually all of New Zealand. It will take longer to pay itself off, though, in places that get less sun.

The Energy Efficiency and Conservation Authority (EECA) said solar in Auckland would have an annual return of between 6 percent and 12 percent. In Christchurch, it was 6 percent to 11 percent. Queenstown was 7 percent to 14 percent and Wellington was up to 10 percent. The variation applies to individual houses, too.

Houses that are ideal for solar have a roof that is in good condition, with a good chunk of it oriented somewhere between north-west and north-east, with a tilt of at least 30 degrees. A tilt of 45 degrees might mean you get more solar power in winter.

It helps to have minimal shading - so if you live in the middle of dense bush it might not be appropriate.

“While it will work for most houses most of the time you might be in the shadow of your next door neighbour’s big house or you might be in the shadow of a hill or something like that for half the year and all of a sudden the economics don’t work out so it’s about doing that homework on the physical aspects of your home and also how you use your power,” James le Page, technical products and systems lead at EECA, said.

Consider your power use

The houses that benefit the most from solar are those that use a reasonable amount of power but can shift their use to the times when power is being created by the solar system.

The more electric stuff you have, the better. People who have a heat pump and electric hot water will benefit more than people who are using a fireplace and gas. If you have an electric vehicle you could charge while your system is making solar power, that’s even better.

Consider what size system you need

You’ll be looking at quotes for a particular size of system. EECA said a common setup was about 6kW of panels and a 5kW inverter and oversizing panel capacity relative to the inverter would improve returns. Some houses, particularly those that use a lot of power, can have much bigger arrays.

Le Page said people should ask installers about the capacity and type of the panels being quoted, the inverter capacity and type, and the warranties on the equipment.

“You might get five different quotes with five different answers. You need to be really digging into the details, so for any quotes you want to be asking for things to broken down. You don’t want to say ‘I’m installing a 5kW system that cost $10,000’. You want to say it has x number of panels of this capacity, it’s going to have this type of inverter.

“You also want to have a breakdown of your return on investment. Quite often with a quote it’ll say you use this much power, we expect it to pay for itself and it should scrub out this much of your power bill each month. That’s really important. You want to be asking questions of how they come up with those numbers as well.”

He said people should find out what kind of equipment warranty was offered and whether there was a performance or workmanship warranty. “It’s a long-term investment. If I was installing solar panels on my roof this week I’d expect them to be running in 20 years, 25 years’ time. So really nailing down what you want to put on your roof today is important. It’s going to be there for a long time.”

He said it was important to get multiple quotes because installation was one of the biggest drivers of cost.

EECA is developing a voluntary “approved product” list for solar products.

Mike Casey, chief executive at Rewiring Aotearoa, said some people were not installing big enough systems because their demand for power was likely to increase over time.

“They’re going with the cheaper option and ultimately then outgrowing that solar system very, very quickly … they’ll get a solar installer who will ask for their power bills over the last few months and they’ll design a solar system that’s optimised for return for that particular movement in time but then you add more electricity demand.

“Another way of explaining it is the most savings that you’re going to get comes from avoiding buying electricity from the grid at 40 cents… the way to maximise your return on investment is potentially to look at a smaller system where you’re using almost all of the generation immediately in your hot water, in your fridge and freezer and EV or whatever it might be.

“But actually that’s not practical because as your electricity consumption grows, your solar install needs to grow as well. And the most expensive thing isn’t the panels, the most expensive thing is getting the bloke on your roof to drill the roof. So really you should be overbuilding your solar system.”

Do you want a battery?

Batteries add to the cost of the solar power system but allow you to store energy you generate during the day, to be used in the evening and early morning.

You can store power without a battery, for example by using a hot water cylinder with a solar diverter or timer to heat the water when the sun is out, for you to use later.

Casey said people with a zero percent interest loan would be paying about 6c a kilowatt hour for the five years it took them to pay off a green loan for a system, for power used as it was generated.

“It’s a really remarkable thing. Batteries on the other hand don’t have a strong return on investment but they certainly have a really good resilience thing.

“If there is a natural disaster like Cyclone Gabrielle, we know the sun will come up the following day. And if your solar panels can then replenish the battery, you’re in a far better position than most other households in New Zealand.”

Which power company offers the best rate?

You’ll also want to check what rate you’re being offered by your power company for power you put back into the grid.

This can vary a lot, from about 8c to more than 20c. You’ll also need to consider the type of plan you’re on. Sometimes, a time-of-use plan won’t be the best bet because it may mean your power is more expensive during the times that your solar system isn’t delivering.

Check if you need a loan

Many people finance their solar power systems with a “green loan” from the bank. The main banks all have some sort of incentive for this, either a no- or 1 percent-interest loan for a period of three to five years.

Le Page said people should remember they would need to clear the debt in that time to benefit from the rate.

What if you’re planning to sell in the near term?

At the moment, there’s no clear data on what the installation of solar panels means for the value of a house.

Auckland real estate salesperson Diego Traglia said it depended how the system was structured.

“In my experience, owned solar systems are generally viewed positively, particularly by buyers focused on reducing ongoing living costs.”

However, when a solar system is leased, it often becomes a point of friction during the sales process.

“I’ve had multiple situations where buyers requested the leased solar system be removed before settlement. In some cases, negotiations became complicated because the lease could not be easily transferred or terminated. I’ve also seen buyers walk away from transactions altogether because they didn’t want to take on the solar contract and the system couldn’t be removed.

“From a real estate perspective, an owned solar system can be a positive feature that enhances a property’s appeal. A leased system, however, can sometimes become a hurdle that needs to be carefully managed during negotiations.”

What if you’re renting?

At the moment, options for tenants are limited. New Zealand does not yet have the balcony solar systems that some other countries use, where panels can be temporarily plugged in.

Casey said Rewiring NZ was running a trial of solar for renters in Queenstown.

“When you rent a property for the first time you have to pay a bond. That bond doesn’t go to the landlord, it goes to another entity that is trusted by both the landlord and the tenant. We think there’s potential for another option there, which essentially holds the finance or finance repayments for solar on the roof.”

He said the intention was to construct something through which tenants had a lower rate for their power than they would if they bought it from the power company, but offered the landlord a return on their investment for the solar system on the roof.

“There’s huge demand, but it’s kind of latent demand in that people haven’t been able to figure out how to make this work yet.

“Ultimately solar on the roof will generate far greater yield or the landlord than the actual rental fee of the rental property itself, in terms of percentages.”

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