James Shaw said the policy has been costed at $682 million in year three, which is when it would be operating at its maximum level. Photo: RNZ / Cole Eastham-Farrelly
Green Party co-leader James Shaw is adamant that its new clean power policy to cover the cost of installing solar panels and making energy efficient upgrades to households is affordable.
Shaw told Morning Report the policy would cost about $682 million a year, but most of that would come from the emissions trading scheme.
The Green Party has announced its Clean Power Payment policy which includes providing $6000 grants to cover the cost of installing solar panels and making energy efficient upgrades to households, interest-free loans of up to $30,000 to cover the cost of additional zero carbon home upgrades and tax deductible zero carbon upgrades for rental homes.
"The bulk of that [the cost of the policy] comes from revenues from the Emissions Trading Scheme so it will be polluters who are actually paying for it" - James Shaw
Shaw said the cost of the policy would depend on its uptake.
"But we've costed it at $682 million in year three, which is where we think it'll be operating at its maximum level, it'll take a while to ramp up."
Most of the revenue for that would come from revenue from the emission trading scheme, he said.
Shaw said the policy was affordable.
"For example if you look at last year's Emission Trading Scheme revenue there's about $1 billion coming in there, the price of carbon is $60 give or take and that's anticipated to rise in future years - so there will be more than enough revenue coming in."
New Zealand will need to produce about 70 percent more electricity as the country is decarbonised due to electrified vehicles, companies like Fonterra and NZ Steel switching from coal to electricity usage and the more of that that can be produced locally, the less pressure will go on the national electricity grid and infrastructure, he said.*
"It's also good for resilience, I mean every time we get one of these mega-storms that knocks out part of the grid, tens of thousands of homes are without power. If every one in three homes on the street has a solar panel on the roof then everyone on the street can have a hot shower that week."
The cost of living crisis has been used as an excuse for not addressing climate change, he said.
"What we're saying is actually let's solve both of these challenges together, if you can get households off fossil fuels the cost of which is clearly rising and switch them over to solar which is falling in cost, it means you are solving the cost of living crisis."
Despite the fact that the policy would be paid for through petrol, fuel and electricity costs via the Emissions Trading Scheme, if people did not use petrol and their energy was coming from 100 percent renewable solar power on their roof then their costs would only be a fraction of what they would have been if they continued using fossil fuels, Shaw said.
"I'll give you an example, it's $62 a week in petrol which is the average spend right, if you power an electric car from solar on your roof that's about $8 a week - so it's eight times cheaper to do that with renewable electricity."
Asked whether this policy would only benefit wealthier New Zealanders who could afford electric cars and solar panels Shaw said the policy was also targeting those who rent.
"The problem we've had in the past is the landlord has no incentive to spend the capital works on a property when it is the tenant who pays the power bill," he said.
"We're aligning those incentives so we're saying if you put solar on the roof, if you take the gas appliances out and you replace them with electricity, or if you're taking really inefficient heaters out and replacing them with more efficient heaters, heat pumps and so on, then you can write those off as tax deductible."
That would provide an incentive for landlords to act, but it would be the tenants who would benefit of that in terms of lower electricity bills, he said.
Solar subsidies should only go to 'thermally efficient' households - Eagles
New Zealand Green Building Council chief executive Andrew Eagles said most OECD countries were taking steps such as those suggested by the Greens and which reduce costs, emissions and frees up power for other sectors such as electric vehicles.
In other countries more than 20 percent of homes had solar panels, but in New Zealand it was less than 3 percent of homes, he said.
"We do need action on this scale to improve health and improve the transition to a lower carbon future" - Andrew Eagles
Eagles said action on the scale suggested by the Greens was needed to improve health and transition to a lower carbon future.
"There's some great initiatives in there such as energy assessors helping people understand and improve their home, we really like the focus on getting off gas, you know we have to move away from fossil gas really quickly."
But he said it would be necessary to ensure that a home was "healthy and warm" before more efficient heating such as solar panels or heat pumps were introduced, he said.
"I think what's really important to remember [before solar panels are installed] is it's really key we get the house right first and that's where you get the health of the occupant, you get those huge wins from reducing kids or adults being unwell, and you reduce the energy demand."
New Zealand should follow the example of places like the United Kingdom in saying home owners could only get a solar subsidy once the house was "thermally efficient", he said.
"Big problem we've got in New Zealand is 30 percent of our homes are damp and mouldy, so solar panels are good, but it's that addition.
"The other thing we need to focus on is getting smart inverters, so that you don't get a surge of power from all that you don't get a surge of power from all that solar going in during the day - and that's the issue that Australia had."
*Editorial note: This sentence was updated on 15 August, 2023, to include 'percent'.