Before you can enjoy a sun-powered home, you’ll want to find out if solar panels stack up for you.
Photovoltaic (PV) solar panels can seem an attractive option – who doesn’t want lower electricity bills and clean, green energy? However, before you can enjoy a sun-powered home, you’ll want to find out if solar panels stack up for you.
This report is free thanks to EECA (Energy Efficiency and Conservation Authority).
Consumer NZ is non-profit. To help us get a fairer deal for all New Zealand consumers you can become a Consumer member or make a donation. We’ll use your contribution to investigate consumer issues and work for positive change.Donate
In August 2018, we arranged for four solar installers to assess homes in Auckland, Christchurch and Hawke’s Bay, and provide a quote for an appropriately sized grid-tied system. We then analysed the homes, the household behaviour, and the quotes using the Energy Efficiency and Conservation Authority (EECA) Energywise Solar Calculator to see if we thought solar was a good option.
A PV system for an average-sized house can be installed for under 10 grand. However, how long it’ll take to pay itself off depends on several factors, including:
Assessing your property for PV suitability essentially comes down to two factors: the power a system can generate and how much of that power you can use.
In the southern hemisphere your panels need to face north to get the best power production. Your roof will ideally be north-east- to north-west-facing, with a 15 to 45° pitch. Falling outside this range cuts down how much power panels can generate.
Look for shading on the roof – think nearby hills, trees or buildings. As soon as panels are in shade, their generation levels plummet. Small patches, such as the shadow cast by a chimney, can be overcome using micro inverters or power optimisers, but these cost. Think long-term as well. How big will the neighbours’ trees be in 20 years? Is there the possibility of taller buildings being put up in your area?
Getting PV panels installed on your roof is only part of the equation. You also need to make best use of the power produced. Selling it back isn’t financially attractive (the buy-back rate from power retailers is 7 to 8¢ per kWh). A better option is using the power produced on your roof during the day.
Power usage peaks in the morning and evening for most households. We use more electricity in the winter, and the peaks are higher too, as we turn on heaters and use more hot water on chilly mornings and evenings.
Solar PV isn’t much help with winter power peaks. The bulk of solar generation is between 11am and 3pm. Solar panels also generate considerably more power in the summer, when the days are longer and the sun is higher in the sky.
To get the best payback from solar PV, you need to use as much of the solar power as possible as it is generated. Some of the power used in morning and evening peaks can be shifted. Using timers to delay and stagger appliances could be one part of the puzzle. Another is switching electric water heating to come on during the day.
However, solar PV becomes most viable if you consume power all day, especially in the summer. That could be because your home is occupied all day, you heat a spa pool, run a swimming pool pump, or have an electric car charging.
Ultimately, getting the best bang for your solar buck requires a home with large daytime power use, plus a behavioural change for your household to bring consumption into line with production.
Solid line = Power generation
Dotted line = Power consumption
The ideal solar PV system for your home is sized so you can use most of the power it generates, selling as little as possible back to the grid. You will pay more than three times as much to buy power from the grid as you’ll get for the power you sell. So a large system may be cheaper per watt generated, but it could take a long time to pay off the extra investment.
The installers all did a good job of assessing our three households. They all checked the latest power bill, asked questions about our household size and behaviour, and noted any major power uses (such as a pool or home office). All installers highlighted that to realise any financial benefits, the household would need to adjust how it used its power.
There was variation in recommended panel array sizes across the board. However, many recommended pairing the panels with a larger-than-required inverter. We think this is a good idea, as it allows the addition of generation capacity in the future (for example, if batteries were to be installed).
Two Auckland installers recommended including a battery now. However, we think the payback time for the battery is far longer than its lifespan. The other installers in Auckland and all of the installers in Hawke’s Bay and Christchurch told us batteries weren’t economical, and didn’t recommend we install one.
Installers at our Hawke’s Bay property all quoted scalable systems. The inverters quoted were either larger 5kW models or micro-inverters. This factored in the pool that was being installed and would allow for more panels to power the pool pump and potential water heating.
One company incorrectly identified our Christchurch property as having too much shading and quickly left after the sales pitch. This particular roof was in full sunlight during the 1pm visit and it’s difficult to ascertain the shading from such a quick look. While it was overly cautious on the installer’s part, it did show care and consideration for our homeowner.
Each company offers several brands of panels and inverters. However, there isn’t a marked difference in their ability to generate power (they range from 270W to 300W per panel). For inverters, the smart choice is a system with monitoring software so you can see in real-time the amount of power you generate and use. This enables you to adapt behaviour to use as much self-generated power as possible.
It’s important to check your warranty. For panels, you want a guarantee of minimum power production levels for at least 20 years. Panels and inverters should also be covered for physical and electrical issues.
All quotes were inclusive of equipment, installation, and any consents or paperwork needed to switch the home to “distributed generation”. The only extra we were warned about by all installers was a charge of a few hundred dollars for an import/export meter, paid to our electricity retailer.
You might see or hear the term “tier one” in solar panel sales pitches. Don’t mistake it for anything regarding panel performance. Rather, it’s a measure of the size and financial vitality of the manufacturer. The only use to you is it indicates the company is more likely to hang around.
The ideal solar PV system for your home is sized so you can use most of the power it generates, selling as little as possible back to the grid.
For each of our three homes, we took the best of the quotes and analysed the viability of the solar PV systems in the EECA Energywise Solar Calculator.
It’s important to note solar PV is a long-term investment, which brings added risk and uncertainty. Over the 20+ year life of the system, there are likely to be changes to interest rates, electricity prices and buy-back rates, and household electricity use that could reduce or increase the actual return provided.
Tip: Some lines companies may impose an additional daily charge for grid-tied solar customers, which your retailer may pass on to you. We haven’t included these charges in our analysis, but they may affect the viability of solar for your home. You can account for the charge in the Energywise Solar Calculator question “Would you have to pay an additional daily fixed charge for a solar electricity system?”.
GUIDE Earnings are the return on the investment over 25 years. Generated kWh are per annum. Used is the proportion of generated power used by the household. Buy is the amount the household needs to buy from the grid.
Our Auckland home pays a low 19¢ per kWh. That means the home doesn’t generate big savings to pay the PV system investment cost back quickly. The larger 3.0kW system is a better investment, as it doesn’t cost a lot more up-front than the smaller 2.1kW system, but $1100 earned over a bank investment for 25 years isn’t much return.
Our Christchurch household has low daytime power use. That meant it would sell a large proportion of the solar power generated back to the retailer at 7-8¢/kWh. It currently pays 29¢/kWh for any electricity purchased and would need to borrow to fund the PV system through a mortgage, so solar doesn’t appear cost-effective, although the household would end up with a modest net gain over 25 years.
We looked at the effect of switching to cheaper electricity: if the household switched to a plan charging 26¢/kWh, the payback period for the 3.2kW system would increase by 3 years to 21 years and the family would realise just $1100 over 25 years (down from $2200).
To illustrate the time value of the investment, we ran the calculator assuming the family could pay for solar using savings (forgoing interest at 3.5 percent), instead of borrowing on a mortgage and paying interest of 6 percent. The smaller 3.2kW system then looked a more attractive investment, with a 15-year payback earning $5200 over 25 years.
Our Hawke’s Bay family has a better case for solar, although it may benefit from energy efficiency more than solar PV, as its electricity use is particularly high (almost 8000kWh with no electric space or water heating). It would use three-quarters of the power a small 2.3kW system would generate, even before adapting behaviour. The system would be paid off after 13 years, and the family would have a $5700 return after 25 years.
This household was installing a swimming pool when the installers visited. It is expecting the pool pump will add about 3000kWh to its power use each year (making about 11000kWh in total). This would make it a heavy electricity user. There’s no swimming pool option in the EECA Energywise Solar Calculator, but including the extra power and setting loading to ”high daytime“ with ”electric hot water“ goes some way to accounting for it.
The larger 3.4kW system would pay for itself in 11 years and return $10,500 above the interest from a bank. It’s likely to be even better, as the pool pump can be set to run during the day, and dialled back in winter – the calculator doesn’t fully account for this optimisation.
Panels are roughly 1.6m by 1m with outputs of about 270 to 300W. A 3kW system needs a minimum of 10 panels – for reference, 3kW is about how much power you’d use to run a clothes dryer and an electric cooktop simultaneously.
On a summer day, you’ll get peak production for a few hours either side of midday. Over time, panels lose some of their generation capacity (they’ll usually experience a 15 to 20 percent drop over 20 years). However, you can expect a maintenance-free run over this period. You may need to clean them annually, which may involve a cost for someone to do this.
An inverter converts the direct current (DC) electricity produced by the panels to the alternating current (AC) used in your home. For grid-tied systems you’ll need a grid-tie inverter to synchronise your system with mains power and sell electricity back into the grid when you’re producing a surplus. There are different types of inverters:
Inverters are unlikely to last as long as the panels, and over 20 years you’ll need to replace them at least once.
Export meters measure how much power you’re selling back into the grid. This is an upgrade over your standard meter.