SolarZero trumpets winter success, but Consumer NZ queries long contract term

Thursday, 31 October 2024

SolarZero installs solar systems with batteries in homes, retaining the ownership of the systems.

Three-quarters of daylight hours over the winter generated enough solar energy in the main urban centres to be stored in batteries, says SolarZero chief executive Matt Ward.

The company, which was bought two years ago by US fund manager BlackRock, owns just over 15,000 solar arrays installed on homes across the country.

Winter was a testing time for the country, with August seeing an alarming spike in wholesale power prices for the technology.

Ward said despite it being received wisdom that solar was a waste of time in the winter, SolarZero’s network of solar panel and battery arrays in homes generated 16,100 megawatt hours (MWh) of energy from June 1 to August 31.

That was equivalent to the power usage of 7040 households, he said.

“This winter still saw an average 75% of the daylight we experienced in autumn across our major centres allowing for sufficient solar energy to be captured by panels and stored in batteries for efficient usage.”

Kia Whitingia is a community-based renewable energy project that uses solar energy to provide power to whānau.

Germany has a far higher uptake of solar, but homes there get less sun than most of those in New Zealand, he said.

The lack of reliability, and stable pricing of power has become a major political issue, costing jobs, and threatening households with rapidly rising power prices as huge investment is needed in expanding generation, and upgrading transmission infrastructure.

Dispersed solar generation had to be part of the solution, Ward said.

“We had the chance to prove this when our virtual power plant network of solar systems helped to prevent nationwide power outages by supplementing the national grid,” he said.

Not only were households with SolarZero on their roofs less of a drag on the power supply, but power from SolarZero arrays on house roofs was exported power to the grid.

SolarZero chief executive Matt Ward at an event run by ethical investing charity Mindful Money.

Ward guessed one in a 100 people opting to join SolarZero had fighting climate change as their main motivator.

For the other 99, it was all about paying less to keep the lights on and run the dishwasher.

SolarZero’s main business is offering a subscription service. It installs solar systems with batteries in homes, retaining the ownership of the systems. Homeowners get to use the power, and export unused power into the electricity grid.

It’s a very different model from people who borrow, or pay in cash, to install a solar system they own, getting all the benefits from it but having to maintain it and swap batteries out periodically.

After signing up with SolarZero, people end up with two power bills; one to a traditional power retailer, and another to SolarZero, but combined the two should save the homeowners tens of thousands of dollars over the 25-year subscription term, he said.

Ward said SolarZero won’t install a system at a home unless it is sure it will save the homeowner money.

The services contracts are 25-year agreements under which SolarZero owns and maintains the system.

“The way to think about it is you substitute your bill from Genesis or Mercury of $250 per month and you swap it for a new one, which is probably about $225 a month,” Ward said.

“Most of our customers will save anywhere between $300 and $400 in their first year and what they pay for us is fixed. It's inflation free and will never go up.

“Over the course of that 25-year term with us, you're looking at savings of $30,000 to $40,000.”

Wards said so far saved its customers have saved a combined $10 million on their power bills.

While that all sounds great, Consumer NZ sounded some words of caution.

James le Page, product test team leader at Consumer, says some things about solar need to be considered before leaping in.

Earlier this month it put out a note on SolarZero, prompted by a number of calls from members of the public after having salespeople knock on their door.

“There are certain things that homeowners need to take into consideration that muddy the waters,” said James le Page, product test team leader at Consumer.

“You don’t actually own the system; they do. SolarZero peddle this as a positive thing, but we believe it’s the biggest drawback of the whole shebang,” he said.

SolarZero said its subscription service helps in a “just transition”, as homeowners don’t need the capital to buy a system.

But le Page said: “If you sell your home after the system is installed, the new owners will need to take on your agreement, or you’ll need to pay out the remainder of the agreement or have it moved to your new place (assuming it’s suitable for solar). It could make selling your house messy and expensive,” he said.

Prime Minister Chris Luxon listens to Energy Minister Simeon Brown. They found themselves with a power crisis that saw some businesses close, citing high power prices as part of the reason.

“There aren’t many things you commit to for 25 years other than your mortgage. You need to be sure you can cover those costs if your financial situation changes.

“Once you sign up, you’re also locked into one power retailer. As long as the prices are good, it doesn’t really matter, but it also means you can’t shop around for a better deal.“

The economics encouraging homeowners to install solar are only going to get stronger, Ward said.

Patrick Reynolds says Auckland could generate more of the power that is needed to run it from solar.

Over the next two years, households will see almost 25% inflation on their household power bills, he said.

Dispersed solar became an issue in the Entrust elections in Auckland, when the More for You, Better for Auckland group of candidates called out the lack of investment in solar on house and business roofs.

“Rooftop solar is the fastest and cost-effective way to secure a more stable, resilient energy supply,” said Patrick Reynolds, spokesperson from the group as the election loomed on Friday last week.

“Currently only 2% of Auckland’s roofs have solar panels. In Australia, it’s more than 35%. We’re on the same latitude as Melbourne, so we’re perfectly positioned to maximise solar energy, which, at as little as 6c/kWh, is a fraction of what the big power companies currently charge.”

Generating power is only half the problem. It takes a lot of infrastructure to get it from generation sites to homes and businesses.

One in three residential solar installations is now done by SolarZero, though Reynolds saw large commercial roofs as being extremely attractive sites for solar.

Installing solar on commercial roofs could create “virtual” power stations cheaply, he said.

“Virtually overnight, you’d have a gigawatt power station in South Auckland that’s bigger than our largest hydro power station in the South Island, or even the Huntly gas and coal station,” he said.

One of the benefits of solar on roofs is that it does not require large investments in transmission infrastructure, Ward said.

“Otherwise the counterfactual is, if you look at the Boston Consulting Group report, there's $40 billion that needs to be spent over the next 10 years right now. Interestingly, only $12 billion of that is on generation,” Wards said.

The biggest problem the country has to solve is getting power from generation sites to homes and businesses, Ward said.

The biggest problem SolarZero had was that only 24% of people know it exists. Ward said it has never spent any money on advertising.

Despite that, Ward said: “In our biggest months, we’ll do 425 [homes] a month.”

In 2020, it was around 100 a month.