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Solar Power

The Accuracy of the EECA Energywise Solar Calculator is Questionable

In late 2016, the New Zealand Energy Efficiency and Conservation Authority (EECA) produced and marketed a solar calculator, claimed by them to assist homeowners in making decisions about solar power.

The calculator was heavily promoted and advertised, both on TV, Facebook, Google Adwords and print media.

Unfortunately there are some strange inacuracies built into this device – it gives misleading results, and according to the NZ Green Party, it attracted a deluge of complaints as soon as it was launched.

Many of these complaints and criticisms ended up in a steady stream on the Facebook page for EECA Energywise. Just as steadily, EECA mysteriously deleted these comments.

In terms of power production in kW per annum it is actually reasonably accurate. The calculator relies on NIWA data and it matches what solar installers know about their customer results. From that point there is a major divergence.

The basic problem is that the calculator acknowledges zero storage during the day, when in fact almost all Kiwis already have plenty of storage, in the form of hot water tanks, underfloor heating, night stores, spa pools, swimming pools and deep freezers. All of these devices can be run on timer systems so that they activate during the day using free solar energy, and turn off at night. Washing machines and dishwashers can be used selectively for day time only use for a similar results.

Using LED lights with solar is as common as icing on cakes to reduce night time lighting costs, also noticeable by its absence.

When I asked the calculator’s inventor, Dr. Alan Wood why these important factors were not included in the calculator. He said “It is true that energy storage and customer behavioural change are not modelled….it is extremely difficult to include the effect of these extra behaviours”.

I asked him if he would agree that any calculator not including storage would give a vastly distorted result 10 years or more out of sync with reality – I never got a reply.

I ran a quick scenario with an average power bill and the calculator gave me a result of about 18 years to break even, a result I believe to be nonsense because of the number of customers with the same bill we personally know that get a much superior outcome. My colleagues and I repeatedly asked EECA to provide examples of real people that are getting results matching their calculator. Not only did they never reply, but they deleted our persistent questions from their Facebook page.

There are some other assumptions within the calculator that look a bit dubious. One of these is the predicted future price of power being at 1.5% (about the same as the CPI). However, historically power has been increasing in price at a much higher rate – about 5.85% from 2003-2012 according to the MBIE. Future demand for electricity is also likely to be heavily influenced by the rise of electrical vehicles. All the energy coming directly from petrol and diesel will have to be supplied by electrical generation. This is not acknowledged in the above estimates.

With the cost of power rising rapidly, the relative savings of a solar system also increase rapidly. In fact, the relative savings increase at a faster rate than any degradation

The calculator also assumes that a solar system lasts for 25 years. Dr. Wood is confusing warranty periods with system life. So at 25 years, the system will still be operating at 80% efficiency and extra panels could be added at that stage to bring it up to a higher level, it is only the warranty that would expire. Because the level of panel degradation (0.5% on Duomax panels) is less than the rate of power price increases, in 25 years it will actually be saving more money than in year 1, not less.

There is a Net Present Value NPV section included in the calculator that compares the return on investment compared to another investment (money left in the bank). There are several problems with this approach:

-         It doesn’t acknowledge that a solar pv system adds value to a house as soon as it is put on. A solar powered house is easier to sell and commands a higher price.

-         Whatever savings are generated from the solar system are tax free. But bank account earnings are taxed.

-         Solar systems have warranties covering their output performance (effectively a guarantee, which banks do not have).

-         Solar savings are normally left to accumulate in a bank account, generating compound interest over time. For most clients, this ends up being about 10 times the financial benefit if they had left the money in the bank instead of investing in solar.

-         The choice is not between paying for solar or having no power cost at all. This is because if a client didn’t have solar they would still have to pay for power from the grid (at a higher rate). Either way, the money gets spent anyway – the real choice if a client wants an investment or not. It’s a bit like the difference between mortgage (ownership) and rent.

So why is EECA doing this? Dr. Wood says that he is receiving no financial advantage at all and I have no reason to disbelieve him. But you look at the bottom of the calculator in the disclaimer section it mentions that  Transpower is partially funding his research program.

Transpower owns and operates the nationwide grid in New Zealand. In some circles it is thought that solar power presents a great challenge to the viability of the national grid, because as more people use solar the less they need Transpower’s services and the less economic these services become.  On its own website it states that

“Transpower has a major investment programme to address:

-         Strong recent growth in electricity demand and predicted growth over the next 40 years.

-         The need to connect a diverse range of new sources of generation.

-         The ageing of the grid”

March 26th 2017