Jeanette Fitzsimons
Government Spokesperson on Energy Efficiency

23 November 2006
Media Statement

Switch on the sunshine

The Government is investing $15.5 million in a Green Party initiative to increase the use of solar water heating in New Zealand.

Government Spokesperson on Energy Efficiency and Conservation Jeanette Fitzsimons says with climate change accelerating and energy prices rising, it makes sense to use the sun to heat our water.

The programme will run for five and a half years from now, with $15.5 million allocated for the first three and a half years. Funding levels for the final two years will be decided after a review in 2009. The programme includes:

* Providing independent information to help consumers decide whether solar is suitable for them, and what kind of system they need;
* Motivating demand through promotion;
* Improving quality and cost effectiveness by working with industry including setting standards and encouraging training opportunities;
* Providing financial assistance to home owners;
* Putting more solar water heating systems into Government buildings; and
* Encouraging new ideas through an Innovation Fund.

"Our initial goal is to double the numbers of solar water heating systems being installed,"Ms Fitzsimons says.

This will see approximately approximately 15,000 to 20,000 systems installed by 2010. Assuming this electricity would have otherwise been supplied by coal and gas power stations, the estimated CO2 savings are equivalent to getting 5000 to 7000 cars off the road.

Solar water heating will help many New Zealand families reduce their power bills while also reducing their impact on the environment, Ms Fitzsimons says.

Energy and Climate Change Minister David Parker says the Government has developed this programme as part of its broad approach to promoting energy efficiency and renewable sources of energy in the home as well as reducing greenhouse gas emissions.

"Further initiatives in this area will be made clear in the New Zealand Energy Strategy and the draft National Energy Efficiency and Conservation Strategy, which will be out for public consultation shortly.

"I am pleased to be working closely with Jeanette Fitzsimons as we make progress in these areas,"Mr Parker says.

The finance assistance available from the Government for purchasing solar water heating systems will increase from $300 to $500 from February 2007. This is provided in the form of a contribution to the cost of interest on a loan.

Access to the increased finance assistance will be subject to systems meeting criteria on energy performance and cost effectiveness.

The criteria will mean taxpayer funding will only be available to the systems that deliver most effectively for homeowners.

"We know solar water heating is more cost-effective for larger households (four or more people) and that it is important that it is installed properly, to maximise the capture and transfer of the sun's energy. We want to help families select the system that is best for them,"Ms Fitzsimons says.

From May 2007 there will also be assistance for new home builders. Details are still being finalised.

Switch on the sunshine

Solar Water Heating Programme Outline November 2006

The Government has agreed to a five and a half year solar water heating programme, starting now, and is investing $15.5 million for the first three and a half years on top of existing EECA funding. Funding levels for the final two years will be decided after a review in 2009.
The proposed programme will increase demand through information, demonstration and promotional programmes, and direct financial incentives. This will be supported by measures to strengthen the industry's ability to respond to increased demand by delivering quality, cost-effective installations. The programme includes:
* Providing independent information to help consumers decide whether solar is suitable for them, and what kind of system they need;
* Motivating demand through promotion;
* Improving quality and cost effectiveness by working with industry including setting standards and encouraging training opportunities;
* Providing financial assistance to home owners;
* Putting more solar water heating systems into Government buildings; and
* Encouraging new ideas through an Innovation Fund.

This overview of the programme refers only to the first three and a half years, although it is likely that many of these activities would be continued into the final two years.
The core programme
The core programme enhances EECA's existing information provision, adds a new promotional campaign, and continues and enhances EECA's existing quality assurance and capability building activities, which are essential to support and strengthen the solar water heating industry to respond to increased demand. Key elements are:
* Enhanced objective information provision through upgrading the existing website and 0800 service to support informed decision-making;
* Promotion to raise awareness of government support and motivate consumers to access information through the website and/or 0800 service;
* Education and training of the industry (including architects and builders) about best practice and standards;
* Monitoring and auditing of training providers and the installation industry to ensure standards continue to be met;
* Short term assistance with training costs by paying approximately half the fee for approved solar water heating installation courses in the first half of 2007;
* Developing case studies and monitoring the performance of selected installations to support the commercial and government sectors'decision-making.
The government sector

The aim of the government sector programme is to demonstrate leadership by installing solar water heaters, including larger scale systems, in its own buildings. The programme will provide funding for feasibility studies, direct grants, and assistance with tender processes. Benefits will be demonstrated to other agencies, commercial operators and the public.
At least 12 potential projects have been identified across district health boards, the New Zealand Defence Force, Ministry of Agriculture and Forestry, Department of Corrections, Housing New Zealand Corporation, Child, Youth and Family and local authorities.
The first installation to go ahead will be at Auckland District Health Board's Greenlane Clinical Centre.
This element ties closely to the Govt3 programme led by the Ministry for the Environment, which also requires departments to accelerate the adoption of sustainable building practices and energy efficiency measures.
The residential sector

Solar water heating is most cost effective where capital costs are low and the operating costs of hot water usage are high.
The potential solar water heating residential market is large, so in order to maximise cost effectiveness the programme will target households of four or more people. The programme will deliver information to homeowners and developers to enable them to determine if solar water heating is suitable for them, and if so, what type of system is most appropriate.
Existing houses and new one-off houses
To retrofit an existing house or install a system on a new one-off or custom-built house, a homeowner will be able to apply for finance assistance.
The finance assistance available from the Government for purchasing solar water heating systems will increase from $300 to $500 from February 2007. This is provided in the form of a contribution to the cost of interest on a loan.
Access to the increased finance assistance will be subject to systems meeting criteria on energy performance and cost effectiveness.
Volume-built new houses
For volume-built new houses (major projects involving multiple houses built "on spec") the builder or developer will be eligible to apply for assistance from May 2007. Details are still being finalised. This will encourage volume builders to make solar water heating a standard feature on all suitable homes.
Innovation Fund
The aim of the contestable Innovation Fund is to provide support for projects not otherwise eligible for grants and loans. Strong weighting would be given to proposals that will result in the installation of a large number of systems, or can otherwise demonstrate significant impact on increasing the uptake of solar water heating.
Examples of possible projects could be demonstration projects with commercial applications, multiple dwelling building installations, lease to buy schemes or new technologies.
Heat pumps for water heating
Heat pumps for water heating compete with solar water heating systems and in certain applications are more cost effective. There are currently a small number of domestic heat pump water heating systems available in New Zealand. The heat pump water heating industry will be eligible to compete for support through the contestable Innovation Fund upon meeting appropriate criteria. When the SWH scheme is reviewed decisions will be made about whether the heat pump water heaters should participate in any other aspects of the programme.

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Frequently Asked Questions on solar water heating (SWH)
November 2006

1. How much can I save by installing a solar water heating (SWH) system?

The answer will be different for every home, depending how many people live there, how much hot water they use, how much sun the home gets, the electricity or gas tariff, and which SWH system they use.

In the average New Zealand household, about one-third of energy costs can be attributed to heating water. An effective SWH system will reduce electricity consumption for water heating by 50% or more over the course of a year. In summer months, the reduction of electricity consumption for water heating should be more than 80%, but in winter months it will be less.

An effective SWH system in a four person home saves about 2,200 kWh (kilowatt hours) of electricity consumption a year. At current electricity prices, that's around $350 to $450 a year, depending on the rate you're paying.

2. How does a solar water heating system contribute to reducing greenhouse gas emissions?

A SWH system contributes indirectly to reducing greenhouse gas emissions by reducing the use of electricity that might otherwise be generated from fossil fuels

3. How much does a SWH system cost?

The total cost of installing a SWH system in a residential property varies greatly depending on a number of factors but for a residential property can range from about $3,500 to about $8,000. In general, the cost of installation for new buildings is significantly less than for retrofits.

4. Has any public input been sought on this policy?

The Government issued a discussion document on SWH in September and received 135 written submissions and feedback from about 120 people at public meetings. There was general support for:
* The provision of objective information, quality assurance and industry capacity building;
* Government leadership through the installation of solar water heating systems on Government buildings; and
* Financial incentives.

5. What's included in the new programme?
* Providing independent information to help consumers decide whether solar is suitable for them, and what kind of system they need;
* Motivating demand through promotion;
* Improving quality and cost effectiveness by working with industry including setting standards and encouraging training opportunities;
* Providing financial assistance to home owners;
* Putting more solar water heating systems into Government buildings; and
* Encouraging new ideas through an Innovation Fund.

6. How long will the programme run?

The programme will run for five and a half years from now, with $15.5 million allocated for the first three and a half years. Funding levels for the final two years will be decided after a review in 2009. It is expected that in the longer term changes to the Building Code to increase energy efficiency requirements and the Home Energy Rating Scheme will contribute to encouraging people to install solar water heating.

7. What's the Building Code got to do with SWH?

The Department of Building and Housing is seeking feedback on proposals to improve the energy performance of buildings.

One of the proposals is to develop an acceptable solution for solar hot water heating systems, which will make it easier for territorial authorities to assess building consent applications for the installation of such systems.

The benefit of solar hot water heating systems is a reduction in consumer power or gas bills for heating water.

The energy efficiency discussion document is available at www.dbh.govt.nz

8. What's the Home Energy Rating Scheme and how does it relate to SWH?

The Home Energy Rating Scheme will provide a star rating (or similar) to householders based on the energy efficiency and energy performance of their houses, and is expected to be launched from December 2007.

As well as rating the building envelope and space heating, it is intended to include a rating of the efficiency of a home's water heating system. It will also provide home owners with recommendations of how to improve their rating, which could include recommending solar water heating as one option.

Overseas experience has shown that homes with better ratings are starting to be valued more highly by buyers, which creates an incentive for people to better their rating and to make improvements to their homes - including potentially by installing solar water heating.

Further information is available at www.eeca.govt.nz

9. What about heat pumps for water heating?

Heat pumps for water heating compete with solar water heating systems and in certain applications are more cost effective. There are currently a small number of domestic heat pump water heating systems available in New Zealand. The heat pump water heating industry will be eligible to compete for support through the contestable Innovation Fund upon meeting appropriate criteria. When the SWH scheme is reviewed decisions will be made about whether the heat pump water heaters should participate in any other aspects of the programme.
10. Why fund solar water heating?

The promotion of solar water heating is one of the initiatives in the Labour-led Government Co-operation Agreement with the Green Party. It gives people direct experience of using renewable energy in their homes and may provide a model for supporting uptake of other renewable energy forms in the future.

Solar water heating is one part of a broad approach to promoting energy efficiency and renewable energy sources. It's not the only option the Government is interested in, but it's an important energy choice for consumers.

11. What else is the Government doing about energy efficiency?

The government is working hard to ensure secure energy supplies and at the same time reduce carbon emissions by promoting energy efficiency and energy from renewable resources.

The government is developing a New Zealand Energy Strategy (NZES) that will set a long term strategic direction for the energy sector, and a new National Energy Efficiency and Conservation Strategy (NEECS) that will focus on managing energy demand into the future. The government is also working on a comprehensive work programme to help New Zealanders adapt and respond to climate change.

Other initiatives include:
* Improving energy efficiency in homes and buildings through the Building Code;
* Developing a Home Energy Rating Scheme (HERS);
* The existing Warm Homes programme, which helps New Zealanders to reduce the pollution effects of home heating while staying warm;
* The Govt3 programme which helps central government agencies to become more sustainable and to pursue energy savings;
* Proposals for a biofuels sales obligation, which would see a proportion of biofuels included in petrol and diesel sales by law; and
Measures to improve the fuel economy of vehicles.

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