Solar power part of the mix for consumers - utility chief executives

New Zealand electricity company leaders say solar power has become part of the energy mix for consumers but less so than in Australia.

In a panel discussion at the Downstream energy sector conference, the leaders of several electricity generator-retailers and lines companies talked about the changing face of New Zealand's energy industry, including installations of solar power.

The latest figures from the Sustainable Energy Association show there have been 8400 installations to the end of 2015, with an increase of 800 to 3500 last year over 2014.

By comparison, Australia has installed 1.5 million photo voltaic systems on rooftops with some states such as Queensland and South Australia showing a 29.4% and 28.4% penetration of households respectively, says Tom Butler from the Clean Energy Council in Australia. But he admitted it had been something of a "solar coaster" with booms during times of high subsidies which aren't available in New Zealand.

Contact Energy [NZX: CEN] chief executive Dennis Barnes says other differences between the two countries include Australia being sunnier than New Zealand and also having sunnier conditions at times of peak demand. In New Zealand the peak occurs during cold weather.

"New Zealand is on a different timetable," he says.

A lot of the Australian uptake has been facilitated by larger retailers and Mr Barnes says Contact Energy will participate when solar hits a level of scale, but "right now there are other scale opportunities for the business.”

"We have to get the basics right first. The industry has spent hundreds of millions of dollars on smart meters and very few customers are benefiting from that," he says.

Some energy retailers caused outrage last year when cutting back their solar buyback rates. A 2015 Canterbury research paper found buyback rates were much lower than retail power prices -7 to 8c versus 26 cents/kilowatt-hour - that the only way to get a good return on solar power was by using more of the power generated at home rather than selling it back into the grid.

Powerco chief executive Nigel Barbour says technology changes to the industry will be largely customer-led, rather than by the industry.

He says there needs to be healthy debate over pricing, including what is a natural monopoly and pricing of evolving technologies.

The Electricity Authority is reviewing distribution pricing methodologies with the gen-tailers keen to see standardisation across the 29 lines companies. The market regulator also recently launched a review into whether consumers are able to make the most of innovations in the electricity market.

Mighty River Power [NZX: MRP] chief executive Fraser Whineray says solar will continue to grow in an unsubsidised market, with people putting it on for a variety of reasons.

New Zealand is a unique market compared to other overseas countries because it already has a high proportion of renewable energy through hydro, geothermal, and wind, he says.

"New Zealand is only one of a few places globally that have a high percentage of renewable energy projects in the pipeline that are economic and ready to build. Solar is part of that mix."

Meridian Energy chief executive Mark Binns says wind was the forgotten technology. His company recently looked at a solar project in Australia that would have taken 10 years before it was price competitive with wind power.

"In New Zealand I think geothermal and wind will prevail going forward," he says.

New Zealand is facing a challenge at the end of 2018 with the closure of about 100 megawatts of thermal capacity. Mr Binns says thermal generation is critical for "firming" and ensuring there is enough generation to cope with demand.

Genesis Energy has also says it will close its Rankine coal and gas units at Huntly by the end of 2018, although it's open to negotiation on keeping them and has raised the possibility of building a gas-fired peak power station instead.

Mr Binns says uncertainty over the long-term future of Tiwai smelter, a heavy South Island energy user, made it uneconomic for anyone to consider building a peaker power station.

"Unless something is built by 2019 there is a lot higher risk of brownouts," Mr Binns says. "From a political point of view, it's important for the industry to solve this."

(BusinessDesk)