Monday, August 14, 2023

The Greens' clean power policy

Over the weekend the Greens released their clean power policy, promising a "clean power payment" of up to $6000, interest-free loans of up to $30,000, deductibility for landlords, and a massive investment program in putting solar panels on state houses. Unlike the current Warmer Kiwi Homes programme, it won't be means-tested, and it will fund a much wider range of upgrades: not just insulation and efficient heating, but also solar panels, batteries, double-glazing, and fast-chargers for EVs. So basicly, if you own your own home, the Greens will make it much easier to make it warm and efficient. And if you live in a state house, the Greens are going to make sure you get free power in summer.

Looked at just as a solar energy programme, its obviously not the most efficient way of installing panels. Take the state housing upgrade program, which would see solar panels installed on 30,000 (of 67,000) state houses: putting them on rooftops would cost ~$525 million for ~150MW, about five times the cost of an equivalent-sized array stuck in a field. But this is about encouraging distributed home generation for home use, for the direct benefit of the people who live in those homes. State house users not having to pay power bills for a quarter of the year or more is going to significantly improve their welfare, and that is going to have flow-on effects elsewhere. And the same is going to apply to homeowners who use the grants and loans to install panels and batteries.

And of course, its not just a solar energy programme, but about insulation, heating, transport, and the elimination of fossil fuels as well. Aotearoa needs to make a massive transition in the next two decades to a cleaner, more efficient economy, which means upgrading all of those things. And this is about pushing that. Banks are already offering similar loans for these upgrades. But government grants will push things faster, and interest-free government loans will keep the banks honest.

But while this is excellent news for people who own their own homes, that's an ever-declining proportion of us. The big problem for the national upgrade is landlords, who face very weak incentives to provide solar panels, heat pumps, and EV chargers for the benefit of their tenants. Tax deductibility may help a little, but its probably better to see this as a carrot to go alongside the stick of the rental WOF scheme. And its not hard to see that being eventually extended to require such things alongside insulation, heating, and ventilation. And of course I'd like to think that if state houses provide them (at income-related rents, too), private landlords will feel some pressure to compete. Alternatively, i am more than happy to see the government build, buy, and upgrade more state houses, and put the private landlords who won't compete out of business.