Nelson Mayor Aldo Miccio is defending the aim to become New Zealand's first "solar city" after a report that says solar water heating is less effective on the environment than reducing peaks in electricity demand.
The report, released this morning by Parliamentary Commissioner for the Environment Jan Wright, has found that solar water heaters are at their least effective at times when saving electricity benefits the environment most.
"Reducing electricity use when demand is high is more valuable from an environmental and economic perspective than reducing demand at other times," Dr Wright said.
Mr Miccio agreed with aspects of the report but believes solar technology still has a place.
"The report does shine a light on the fact the net carbon benefit of solar hot water heating is not positive in winter in a country like New Zealand, where we have such strong hydro schemes, which are considered a renewable energy source."
The city council wants to move more towards photovoltaic technology, which has a more positive impact on net carbon reduction, Mr Miccio said.
The head of Nelson-based solar power company, solarcity, said the report was “out of step” with guidance from the International Energy Agency, which released its own report this month encouraging all OECD nations to increase funding for solar hot water heating and cooling.
solarcity Chief Executive Andrew Booth said the IEA found solar thermal power could meet one sixth of global demand for heating and cooling, saving 800 mega tonnes of a CO2 emissions a year by 2050.
Dr Wright said her findings were specific to New Zealand only and based on the discovery that solar water heaters are least effective on winter days when saving electricity would be most beneficial.
"Traditionally it has been assumed that the environmental benefits of solar water heaters are represented by the electricity they save.
"A major conclusion of this investigation is that flattening the high peaks in electricity demand that occur in winter has great environmental value."
She said heating water only at night flattens peaks, which would reduce the need to build new fossil fuel power plants.
Dr Wright has recommended the minister of energy and resources directs officials to recognise the main reason for encouraging renewable energy is not renewability but climate change, and to incorporate this into policy and advice. She also wants officials to investigate how current, or lack of, electricity regulations are constraining the potential for load control to deliver environmental and economic benefits.
She further recommends the minister directs the Energy Efficiency and Conservation Authority to provide better information on energy efficiency and renewable options (including solar water heating), so that the environmental benefits and cost-effectiveness of options are clear.
The investigation revealed industry issues that appear to be constraining the ability to manage electricity loads and flatten peaks, including the erosion of ripple control infrastructure.
The way the Commerce Commission regulated lines companies to prevent them profiting from their monopoly status also made it difficult for them to make a strong economic case for investing in demand management and energy efficiency.
Dr Wright has used Nelson has an example to other councils around the country where uptakes to the city's solar scheme did not meet expectations.
In 2009, the city council was the first to promote solar water heating on a significant scale.
The council provided financing to home owners to help them with the capital cost of buying solar water heaters, with both capital and interest paid back through rates.
The council decided through the recent long-term plan process to discontinue the scheme in favour of investigating solar photovoltaic power generation technology.
Mr Miccio said the council still stood by the fact there were opportunities for residents to save money.
Mr Booth believes there is a "fundamental flaw" in Dr Wright's argument in that peak demand for electricity on a cold winter's day was not for hot water, but for space heating and light, neither of which can realistically be offset by solar water heating or load control.
"The commissioner is only looking at environmental benefits gained from reducing peak power demand, focusing on the reduced efficiency of solar hot water in the three months of winter.
"We all know there is less sun in winter, so the report sheds no more light on that fact, but regardless, solar hot water does still reduce electricity usage and lessens the peak load."
Mr Booth said energy security is important for New Zealand, and solar has an important role in ensuring hydro can be used to meet peak energy requirements.