There are more and more articles written about solar being the cheapest form of power. Knowing what’s going on in the world with electricity pricing, we’re still lucky that our pricing is reasonable in New Zealand. Compared with Europe; where prices are 3x to 4x more expensive than in NZ, solar in Europe is a no-brainer and has grown by a staggering 47%.
In New Zealand, the average price for a kWh electricity in New Zealand is 21 cents. This is excluding line charges. This is important to know when comparing this with a solar system which is still connected to the grid, which most of the solar systems are.
Let’s calculate an average installation for a solar system. First, I’d like to explain the need for a battery. Most of you are not at home during the day. Most of the electricity you use is during the evening, when the sun is not shining anymore. What happens if you don’t have a battery? The excess electricity will be fed back into the grid, and when you need the electricity, during the evening, you must buy it from the grid. The buy price is always higher than the sell price, and therefore doesn’t sound optimal.
For this example, we will use an Hybrid Battery System. We are placing 20 x 440 Watt solar panels on the roof, installing a 6 kW inverter with a 10 kWh battery. Let’s assume an average installation price of $30,000. This, of course, depends on a lot of different factors related to your specific property. We can install solar on every roof, however there are differences in price.
In average this solar system will produce about 11,500 kWh per year of electricity. This depends on the direction and pitch of the panels. If we design your solar system, we will make sure that the panels are optimally placed and will produce that output. If this is not possible, we will discuss this with you.
When you have battery storage, you will use solar electricity in the most efficient way. For example running a dish washer and washing machine during the day, we assume that all solar energy will be consumed by you, and there will be minimum export back to the grid.
In this article the lifespan of the solar system is explained and is calculated to be a minimum of 25 years. Our solar panels are nowadays coming with 30 years performance warranty, which means that after 30 years more than 88% of the original out put is still produced. Taking that into account, the solar system will produce 285,000 kWh in 25 years.
The price per kWh of solar electricity is therefore 30,000 / 285,000 = $0.105 (10.5 cents)
The average price of a kWh in New Zealand is 21 cents. So, even in New Zealand, with the relatively cheap kWh prices, Solar is half the price.
What will happen with electricity prices going forward?
In New Zealand, electricity prices have been rising steadily over recent years. On average, electricity prices have increased by about 3% to 5% annually. However, the rate of increase can vary depending on factors like inflation, supply and demand, infrastructure costs, and government policies. More recently, prices have seen sharper increases, especially in 2023 and 2024, driven by rising costs in the energy market and inflationary pressures.
Calculating your savings over the minimum lifetime of the solar system will be more than $95,000.
If you would go to the bank with $30,000 you would need 4.8% interest per year to get a similar saving.
So, solar is an incredible investment, and is the cheapest form of power.
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