Solar power can play a crucial role in scaling up New Zealand's electricity generation to meet increasing demand if key barriers are removed, according to a new Westpac NZ report.
The Powering New Zealand report finds New Zealand is lagging other countries in solar energy generation but has the potential to ramp this up significantly to help meet rapidly growing demand.
"Modelling from MBIE suggests that New Zealand's electricity demands could rise by as much as 80% by 2050, due largely to increasing electrification of sectors like manufacturing and transport," says Westpac NZ industry economist Paul Clark.
"We need to start exploring every avenue available to have any chance of keeping up with that soaring demand.
"Solar makes sense for many reasons: it's clean, adaptable, and cheap. It's also responsive and can boost local community resilience to extreme weather."
While solar currently only contributes about 2% to electricity generation, MBIE projects this could rise ten-fold by 2050. But Mr Clark says existing barriers need to be removed to help solar reach that scale.
"Central and local government should look for ways to encourage solar development by removing unnecessary compliance costs and reducing consenting timelines. This would help create a more conducive environment for both local and offshore investment.
"We were encouraged by recent changes announced by the Electricity Authority that will make it cheaper and easier for households and businesses to connect to the grid.
"But homeowners with solar should be able to return more electricity to the grid than at present. That requires distributors to further standardise processes for connections.
"Banks and other lenders also have a role to play in helping finance both residential solar and large-scale solar farms. In the case of solar farms, that can be difficult at present if there are no power purchasing (PPA) or off-take agreements in place. Large-scale corporate electricity buyers have been typically reluctant to enter into PPAs in New Zealand, partly because of risks like the intermittent nature of solar generation. However, we're hopeful that PPAs will become easier to obtain as the industry develops.
"Iwi and Māori involvement is deepening at all levels, as landowners, developers and investors and partners with other entities. Iwi and Māori involvement will be crucial to scaling up solar production and they're well-placed to do so.
"Finally, local government, developers and community leaders need to work together to drive a mindset shift towards becoming more open to grid scale solar developments in their area.
"We think these challenges are by no means insurmountable. Some of the actions required are already in train. However, it will still take a joined-up effort between central and local government, electricity generators and suppliers, funders, and local communities for solar to realise its potential.
A full list of barriers and recommendations can be found in the report.
