NZ electricity sector drowning us with sun block

The government may not want to admit it, but the Paris climate change agreement has big implications for New Zealand.

In the electricity sector we need to get to 100% renewable generation as quickly as possible. That means we need to close the coal-fired power station at Huntly and other gas-fired power plants around the country.

New Zealand still uses coal in its power system, which is strongly supported by many in the electricity sector. Meridian Energy Chief Executive, Mark Binns, was recently on record saying New Zealand needs to keep Huntly open. Ironic, given that Meridian Energy promotes itself as a renewable energy company.

There are three main sources of electricity that will replace the last of our 20th century fossil fuel generation. Solar, wind and geothermal - hydro is largely built out in New Zealand. Speaking in the global context, the head of Shell recently said that he had "no hesitation to predict that in years to come solar will be the dominant backbone of our energy system, certainly of the electricity system".

Yet, almost the entire electricity sector in New Zealand is opposed to solar. If Shell gets it, why not our electricity sector? The answer is that solar disrupts the comfortable position of the incumbent electricity players. For the first time the electricity sector companies face a real competitor and they don't like it.

Solar generation is a consumer-driven revolution. The technology is becoming cheaper. Solar electricity is generated locally on people's houses. Combined with batteries, which are becoming cheaper, the grid and distribution system will be used much less and in quite a different way. Instead of the the sole source of electricity, a connection to the distribution network will become an insurance policy for many households. And people will pay less for insurance than a service.

Houses will use the existing electricity infrastructure to 'top up' their battery system. They will use electricity, when it is the cheapest to produce, and store in it their home batteries. They will use their own electricity at peak times, or sell it to neighbours in a similar way, or even as part of the national electricity market.

The implications of this change in electricity production are huge. Peak loads will reduce significantly, meaning that investment in electricity transmission infrastructure can be reduced. Consumers will be better of through the deployment of more efficient and better technology. This sounds like a fantastic future, putting consumers truly in control, but the electricity sector is fighting it tooth and nail because it fears its assets will be stranded.

Have you ever heard of a technology sector where rules protect existing technology? The electricity sector's actions are like Kodak (remember Kodak?) which was too slow adapting to the digital age.

The electricity industry has some powerful allies. The Electricity Authority, which is supposed to work for the benefit of consumers, has come our swinging in favour of the industry. The Authority says that investment in solar is "inefficient". What this means, in simple language, is that the profits that have accrued to the electricity companies will now accrue to individual householders. Apparently, it is much more efficient to run old coal-fired generation than to empower consumers to use new technology like solar and batteries. In the Electricity Authority's world we would still be using film in cameras.

So, the industry is lining up with Electricity Authority to make it much harder for solar generation. Like Meridian Energy's view on coal, this is truly ironic. Nearly every developed country is encouraging solar. New Zealand, supposedly a renewable energy mecca, is the only developed country in the world where the dark forces are gathering against solar.

The details of how the industry wants to stop solar are complicated. The electricity sector is good at making the simple complex - have you ever tried to truly understand a power bill?

The first attack against solar is to get rid of what is called the low user charge for people who use only small amounts of electricity. It seems the industry wants to abolish the low user charge on the basis that it encourages solar. What next? people with heat pumps having to pay more because they have switched to more efficient heating?

So, will the government take any notice of the Paris agreement on climate change? The first step it can take is to stop the Electricity Authority and its industry mates from putting up barriers against solar and batteries. Next it needs to develop a plan for how all the fossil fuel plants in New Zealand can be shut down in an orderly fashion. Yes, some company shareholders will lose some money. The people who invested in fossil fuel generation simply made a bad investment and the government should not protect them.

Solar and batteries provide a brilliant win for New Zealand. Consumers benefit. Carbon pollution reduces. The only losers are the main players in the electricity industry. What will the government do? Block solar and support big industry and do nothing on climate change? Or, support a truly competitive playing field that empowers consumers and helps our country to reduce its carbon emissions?