A new report for MBIE[i] outlines the “economics” of massive growth of utility-scale solar – suggesting power companies may install some 2 to 11 gigawatts of solar by 2030. This compares to today’s total generation capacity of 9.2 gigawatts.

In the example given on table 1, a $190 million solar farm would cover some 533 hectares of dairy farming country, and generate 160 peak megawatts. The energy output would depend on the solar energy regime at the location.

The report notes that no such plant has been built yet in New Zealand, but costs are falling rapidly, and the possibility of a substantial “covid subsidy” would make such an investment particularly attractive to the big power companies.

The report does not discuss the effect of massive increase of solar generation on real-time wholesale electricity prices. It does note that the rate of return of NZ solar may be lower than in Australia, California, the Middle East or Northern Africa, but says that the solar development market may become saturated in those areas, and investors/ developers may be looking to NZ for further sales.

Their scenarios investigate the sensitivity of the forecasts to the electricity price, noting that in the 2018 and 2019 calendar years, wholesale prices averaged 10.7 cents per kWh (earlier price forecasts were for around 8c/kWh). It describes 10.7c as “the new normal”.

This report is one of a series of “Generation Updates” published by MBIE, in support of their electricity demand and generation scenarios. They have no demand-reduction scenarios, only demand-growth ones.

The thought of covering dairy pasture with solar panels would horrify most New Zealanders – even worse than covering sheep-and-beef country with pine trees. Importantly, solar PV gives a low energy return on energy invested (EROEI); also, solar panels use rare minerals. All these factors make it clear that not all “renewable electricity” is equal – all environmental, resource, and climate impacts must be considered.

MBIE’s scenarios support Government’s fast-track plan for removing the Low Fixed Charge regime - an unfortunate Christmas gift of MBIE to the climate-concerned public. The corporates want every residential consumer to pay around $2/day on their power bill. This is like an electricity tax to fund their growing electricity empire. Their intent is to reduce the per-kilowatt-hour charge from 33c/kWh to 23c/kWh, which will clearly make consumer investment in rooftop solar panels much less economic.

Yet rooftop panels add resilience to our energy supply – a benefit that is ignored in MBIE’s supply-side analyses. Small-scale energy projects, household retrofits and community energy projects all employ people at all levels of skill and experience.

Utility-scale solar competes with rooftop solar, so removing the low fixed charge regime, driving unit prices down from 33c/kWh to 23c/kWh, will be a nail in the coffin of the independent solar installers.

Any such change to electricity legislation must be accompanied by a true cost-benefit analysis the scope of which must be debated with interested parties, including residential consumer representatives, solar installers, energy efficiency providers and climate activists.

[i] https://www.mbie.govt.nz/assets/Uploads/utility-scale-solar-forecast-in-aotearoa-new-zealand-v3.pdf

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