I’m not an energy economist, and am currently a bit short on time, so I thought I’d outsource discussing the new Greens policy on solar. As a matter of principle I see it as saying “consumers are credit constrained, the energy sector has issues of competition, and the installation capacity exists, given that government loans at a market interest rate (which we can quibble over) may help”. I have no real problem with that, although I’d like to spend time with the details.
A few questions though:
- Why does the government think this will reduce competition? I’m not quite sure what is being said?
- Paying it back through rates, when it is a central government scheme, seems inelegant. Wouldn’t a more direct scheme where the government installs and then charges make sense.
- Given that, if solar is actually effective (hopefully it is getting there), why don’t we have someone in the market trying to lease panels – is the installation cost (given the capital) that much of a pain?
- The question of feed in tariff prices, and how that actually works with the grid, is a damned hard one. Remember, people will be generating “excess power” at times of the day with low demand – the real big problem is storage!
In some ways this feels like a policy trying to “tick a lot of boxes” at once – perhaps the best option would be to deal with perceived competition issues directly, if they exist. Credit constraints are an interesting one on a number of dimensions – I have some sympathy for the idea that lack of access to credit reduces opportunity, however how much of this is due to the fact that the type of lending is risky?
I’ll leave my mind open to be persuaded either way on this, but when Meridian says there are problems with it (when they are one of the key players trying to get solar power working in NZ at the household level), I am uncertain about the scheme itself.