This whole article is weird to me as a New Zealander, since most of the problems comes from weirdly, not letting the market set the buy-back rate of electricity.
I worked for one of New Zealand's largest electricity generators and retailers, and we investigated a solar market. Here's how it works.
Electricity is broken up into generation costs, distribution costs, retail costs, regulatory costs, and profit.
Generation capacity goes up and down throughout the day, as does demand. In New Zealand an automated auction happens 30 minutes where generators bid in electricity at a price. The system operator then buys capacity required at any particular area at the cheapest price that is available. This sets the wholesale price of electricity.
This then gets distributed by the system operator throughout the country to a local lines company. They maintain the power lines to your house, but also to that person in the middle of nowhere.
The energy company figures out how much you've consumed, and bills you. Of course, when you have a problem, you call them, so there's a call centre always available as well.
Finally, there are taxes and levies that the government applies.
After all that, if there's anything left over between the retail price, and the sum of those costs, well, that's the profit.
The weird bit is, where do you set the buyback rate for solar? The retail price? But there's so much expenses there, not all of which are the retailer's cost. The fair price of the market is the generating price, or wholesale price. But, there maybe political incentives to set a higher rate, as well as cap the number of people who can get that higher rate.
But if you want it sustainable for everybody, then using the wholesale rate makes more sense.
I worked for one of New Zealand's largest electricity generators and retailers, and we investigated a solar market. Here's how it works.
Electricity is broken up into generation costs, distribution costs, retail costs, regulatory costs, and profit.
Generation capacity goes up and down throughout the day, as does demand. In New Zealand an automated auction happens 30 minutes where generators bid in electricity at a price. The system operator then buys capacity required at any particular area at the cheapest price that is available. This sets the wholesale price of electricity.
This then gets distributed by the system operator throughout the country to a local lines company. They maintain the power lines to your house, but also to that person in the middle of nowhere.
The energy company figures out how much you've consumed, and bills you. Of course, when you have a problem, you call them, so there's a call centre always available as well.
Finally, there are taxes and levies that the government applies.
After all that, if there's anything left over between the retail price, and the sum of those costs, well, that's the profit.
The weird bit is, where do you set the buyback rate for solar? The retail price? But there's so much expenses there, not all of which are the retailer's cost. The fair price of the market is the generating price, or wholesale price. But, there maybe political incentives to set a higher rate, as well as cap the number of people who can get that higher rate.
But if you want it sustainable for everybody, then using the wholesale rate makes more sense.