Why Commercial PV Systems Are the Key to Reducing Electricity Costs in New Zealand
In recent years, New Zealand has faced significant challenges in managing its electricity costs, which have continued to rise, placing considerable pressure on both residential and commercial consumers.
The country’s energy sector, once known for its stable and relatively low prices, is now experiencing some of the highest power costs in decades. Factors such as lower hydro lake levels, increased demand, and reliance on fossil fuel-based power generation have created a perfect storm, leaving businesses scrambling to manage their energy expenses. The issue has become especially acute for major energy users, who are now feeling the full force of volatile electricity prices.
According to a recent article by RNZ, major commercial energy consumers are grappling with unusually high power prices, making it difficult for many businesses to maintain profitability. The wholesale electricity market has seen substantial spikes, with prices sometimes doubling or even tripling within a short period.
These sudden increases are attributed to a variety of factors, including the declining output from hydroelectric sources, which have historically been the backbone of New Zealand’s renewable energy mix. With low rainfall and minimal snowmelt contributing to lower lake levels, hydroelectric power generation has become less reliable, forcing the country to rely more on coal and gas-fired plants, which are both expensive and environmentally damaging.
In this increasingly unpredictable energy landscape, businesses need to look for alternatives to shield themselves from these rising costs.
Commercial photovoltaic (PV) systems, or solar power, present a compelling solution.
Commercial photovoltaic (PV) systems are large-scale solar power installations designed to generate electricity for businesses.
Unlike traditional power sources, solar energy harnesses the power of the sun to generate electricity, offering businesses a way to significantly reduce their reliance on the national grid and volatile wholesale markets. Once installed, solar panels provide a clean, renewable source of energy that is not subject to the same price fluctuations that have become common in New Zealand’s energy sector.
By investing in a commercial PV system, businesses can not only lower their electricity bills but also contribute to a more sustainable and resilient energy future. The ability to generate electricity on-site ensures greater energy independence and price stability, which is crucial in the current economic environment. Solar power systems provide long-term cost savings while helping companies align with New Zealand’s ambitious climate goals by reducing their carbon footprint. In the face of mounting electricity costs, commercial PV systems offer a smart, sustainable solution.
Current Energy Landscape in New Zealand
New Zealand's energy landscape is facing unprecedented challenges as rising electricity costs and environmental factors strain the country's power supply. Traditionally, New Zealand has relied heavily on renewable energy sources, particularly hydroelectricity, which accounts for approximately 57% of the nation's electricity generation. However, in recent years, persistently low hydro lake levels due to lower-than-average rainfall and snowmelt have severely impacted the country’s ability to produce consistent and affordable electricity. This decline in hydroelectric output has forced New Zealand to increasingly rely on non-renewable energy sources such as coal and natural gas, which are not only more expensive but also contribute to increased carbon emissions.
One of the most significant consequences of this energy crisis is the sharp rise in wholesale electricity prices, which have doubled in certain periods. Major energy consumers, particularly in manufacturing and heavy industry, are bearing the brunt of these costs. The rising electricity prices have been especially tough on industries that operate energy-intensive processes, such as steel production, pulp and paper manufacturing, and food processing. These sectors often have limited flexibility to reduce their energy consumption, leaving them vulnerable to price fluctuations in the energy market.
According to the Energy Efficiency and Conservation Authority (EECA), New Zealand’s wholesale electricity prices hit a record high in 2024, peaking at NZD $800 per megawatt-hour (MWh) at times, more than double the average rate from previous years. These skyrocketing costs have had a ripple effect across various industries, with some businesses being forced to temporarily halt production due to the unsustainable cost of running their operations. For example, the Tiwai Point aluminium smelter, one of the country’s largest industrial power users, had to scale back production due to unaffordable electricity costs, even with a long-term power agreement in place.
Another example is the New Zealand Steel plant at Glenbrook, which has expressed concerns over the rising energy prices and their potential impact on operations. Steel production is energy-intensive, and any substantial increases in electricity costs threaten to undermine profitability, forcing industries like these to either reduce production or seek alternative power solutions to remain competitive.
These challenges underscore the need for businesses to consider more sustainable energy sources, such as solar power, to mitigate the risks associated with New Zealand’s current energy crisis. As reliance on fossil fuels grows and electricity prices remain unpredictable, the pressure on businesses will only intensify unless alternative energy solutions like commercial photovoltaic (PV) systems are adopted.
How Commercial PV Systems Work
Commercial photovoltaic (PV) systems are an innovative and sustainable way to harness solar energy to generate electricity. These systems rely on solar panels, which are made up of many photovoltaic cells that convert sunlight into direct current (DC) electricity.
To simplify, imagine a bakery that transforms raw ingredients into delicious bread. In this analogy, the solar panels act as the bakery's ovens. Just as an oven is necessary for baking, solar panels are essential for capturing sunlight.
When sunlight, like the raw ingredients, hits the solar panels (the ovens), it activates the photovoltaic cells (the baking process). The cells are made of semiconductor materials, like silicon, which are like the flour and sugar that come together to create the dough. When the sunlight strikes these cells, it excites the electrons, much like heat energizes the dough in the oven, causing it to rise and transform.
This initial electricity generated is in the form of direct current (DC), comparable to the dough coming out of the oven—it's still in a raw form. To make it usable for most buildings, it needs to be processed into alternating current (AC), which is like slicing the bread into loaves for serving. The inverter serves as this slicing tool, converting the DC electricity into AC electricity, making it suitable for the electrical systems used in commercial buildings and industrial equipment.
Once the electricity is converted, it can be used immediately to power the building, much like fresh bread can be served right after it’s sliced. Alternatively, if the bakery produces more bread than needed at the moment, it can store some loaves for later consumption. Similarly, excess electricity can be stored in batteries, allowing businesses to utilise the stored energy during times when sunlight isn’t available, such as during the night or on cloudy days.
Just as a bakery can provide delicious bread, commercial PV systems harness sunlight to generate clean, renewable energy, reducing reliance on traditional power sources and contributing to a sustainable future.
The installation process for a commercial PV system involves several key steps.
An energy assessment is conducted to determine the building’s energy needs, roof size, and sunlight exposure. This is where you would first engage us for a free quote.
We would then design a system to match the specific energy requirements of the commercial property.
Installation typically begins with the mounting of the solar panels, which are placed either on the roof of the building or in ground-mounted arrays, depending on the available space.
Once the panels are secured, the wiring and inverters are installed to ensure the energy captured by the panels is properly converted and directed to the electrical grid. In some cases, businesses may choose to install battery storage systems to store excess energy generated during the day for use during periods of low sunlight.
Finally, the system undergoes testing and is connected to the local power grid, allowing the business to start generating its own electricity and reducing its reliance on traditional energy providers.
Commercial solar systems differ significantly from residential systems, primarily in terms of scale, energy output, and financial impact. While residential solar installations typically generate enough electricity to meet the needs of a single household, commercial systems are designed to provide power for much larger facilities, such as offices, factories, and retail centers.
This means that commercial PV systems require more panels, larger inverters, and more extensive installation infrastructure. The energy output of a commercial solar system can be several times greater than that of a residential system, allowing businesses to cover a significant portion, if not all, of their energy needs.
Moreover, the financial savings for commercial properties are often far more substantial, as businesses consume large amounts of energy and can benefit greatly from reduced electricity costs and government incentives for renewable energy.
Benefits of Commercial PV Systems for Reducing Energy Costs
Commercial photovoltaic (PV) systems offer a multitude of benefits that can significantly reduce energy costs for businesses, making them an increasingly attractive investment. Here, we’ll explore the key advantages, including cost savings, price stability, and return on investment (ROI).
Cost Savings
One of the most immediate benefits of installing a commercial PV system is the substantial cost savings on electricity bills. By generating their own electricity, businesses can drastically reduce their reliance on grid power, which is particularly beneficial in New Zealand, where recent spikes in wholesale electricity prices have burdened many companies. By investing in PV systems, businesses can lower their monthly energy expenses significantly. Depending on the size of the installation and the energy needs of the property, savings can range from 20% to 50% or more on their electricity bills, freeing up capital for other operational needs.
Price Stability
Solar energy provides businesses with a degree of price stability that is hard to find in traditional energy markets. The unpredictability of electricity prices due to factors such as market demand, geopolitical tensions, and environmental policies can create financial strain on companies. However, with a commercial PV system, businesses can generate their own electricity and become less susceptible to these fluctuations. By securing a fixed cost for their solar energy production—typically lower than prevailing utility rates—companies can budget more effectively and protect themselves from the volatility of energy markets.
Return on Investment
The long-term ROI of solar energy for commercial properties is particularly compelling in high-cost energy environments. While the initial investment in a commercial PV system can be significant, the savings on electricity bills can lead to an attractive payback period. In New Zealand, where electricity prices are rising, the return on investment can often be realised in as little as 7 to 10 years, depending on the size of the installation and available incentives. Furthermore, once the system is paid off, businesses can enjoy years of free or low-cost electricity, translating into substantial profits over the lifespan of the solar system, which can exceed 25 years.
Conclusion
As businesses across New Zealand face rising electricity costs, commercial PV systems are stepping up as a smart and sustainable solution. By tapping into the sun's energy, you can save significantly on your electricity bills, enjoy more stable prices, and see great returns on your investment. It’s clear that going solar is a win-win!
At Steel Solar and Electrical, we’re here to help you make that leap into solar energy. As your go-to experts for Auckland commercial solar installations, we get that every business has its own energy needs. Our friendly team is dedicated to finding the perfect solar solution for you, from assessing your energy usage to designing and installing a system that fits like a glove.
If you’re curious about how solar can help your business cut costs and become more eco-friendly, don’t hesitate to reach out to us! We’re always here to answer your questions and guide you through the process. Just give us a call for a chat or a consultation, and let’s explore how our commercial PV systems can brighten your energy situation.