Solar electricity systems

Solar electricity systems, normally called solar (or solar panels, photovoltaics or PV) generate electricity from the sun.

How does solar work?

Solar panels convert sunlight into electricity. Light energy (photons) hits the solar panels and excites the electrons in the atoms of a semi-conducting material (for example silicon), and the movement of these electrons results in an electric current.

Does solar work well in New Zealand?

New Zealand has good sunshine hours and solar works across the country. Solar works best in sunny areas such as Nelson/Marlborough, especially when there are high levels of direct sunlight, but some electricity is also generated on cloudy days. Solar generates no electricity at night.

What does a solar electricity system look like?

Solar electricity systems usually include:

  • solar panels (sometimes called modules), cables, and mounting or fixing hardware
  • an inverter (or inverters) to convert the electricity generated by the panels into the type used in houses
  • special meters to record how much electricity you generate and sell
  • batteries for grid-connected solar are just coming onto the market
  • for off-grid applications, batteries, back-up generators and other specialist components.

Does it make financial sense?

If you are looking at solar for purely economic reasons, then EECA strongly advises you do your sums carefully before you buy. To help, EECA ENERGYWISE has partnered with the EPECentre (New Zealand’s centre of excellence in electric power engineering at the University of Canterbury) to bring you a solar calculator that can estimate how much value your household might get from solar. The calculator is independent, provides a personalised assessment, and has been developed specifically for New Zealand conditions.

 Solar calculator

Things to note:

  • The price of solar has been falling for many years and if solar doesn’t stack up for you right now, it may make financial sense sometime in the future.
  • The circumstances that affect how much value you get from solar are likely to change over the life of the system (e.g. you may choose to sell your house in the short term, or decide to retire and therefore use more electricity during the day). It is not always easy to foresee these changes when considering solar.
  • The interest charged on money borrowed to buy solar, or interest lost on savings used, has a significant impact on the financial viability of solar. The solar calculator can help you assess this.
  • There are likely to be changes to New Zealand electricity pricing mechanisms over time that may reduce the financial value a household gets from solar (see the Electricity Authority website for more detail).
  • The amount of electricity generated by a solar panel reduces over time, so check panel warranty details before you invest.
  • There may be additional costs to install solar that are not included in an advertised price.

Electricity Authority website

Most houses with solar will need to buy electricity from a retailer

As solar doesn’t generate at night and it doesn’t always generate enough electricity when you need it, most solar installations in New Zealand are ‘grid-tied’. The house remains connected to the electricity grid and electricity continues to be purchased from a retailer during times when the solar system does not generate enough electricity.

Some households choose to go ‘off-grid’, disconnecting from the grid entirely and purchasing batteries to provide electricity when the panels are not generating enough electricity to meet demand. Although battery prices are falling, this approach won’t make economic sense for most households. However, for new houses facing a high cost to connect to the grid, going ‘off-grid’ with solar and batteries may be cost-effective.

Excess solar electricity can be sold to a retailer

At times solar will generate more electricity than can be used, allowing households to sell electricity to an electricity retailer. The retailer buys this electricity at a ‘buy-back rate’- these vary but are lower than the amount companies charge you for electricity. This means households with solar get greater value out of using the electricity they generate themselves, rather than selling it back to a retailer.

When considering solar, consider the buy-back rates on offer. You may need to switch from your current retailer to access a buy-back rate. The retailer offering the best buy-back rate may not necessarily charge the lowest for the electricity they sell.

Grid-tied solar doesn’t work during power outages

For safety reasons, grid-tied solar electricity systems do not operate during power cuts. Off-grid solar is unaffected.

Is it ‘green?’

New Zealand’s electricity system is highly renewable and this affects the impact that solar has on greenhouse gas emissions. A Concept Consulting report has investigated solar in New Zealand and found:

  • the uptake of solar reduces New Zealand greenhouse gas emissions in the near term
  • solar will have a limited effect on greenhouse gas emissions in the medium term, as it displaces investment in other renewables
  • solar will modestly increase greenhouse gas emissions in the longer term, as more fossil fuel power stations will be needed to meet peak electricity demand.

Electric cars, solar panels and batteries - how will they affect New Zealand’s greenhouse gas emissions? - Concept Consulting website

If you are focused on reducing your greenhouse emissions, then you may want to consider an electric or more fuel efficient vehicle, or energy efficiency measures in your home.


 Getting the best value from solar

 Solar calculator