Source: Radio New Zealand
While the rest of the world races to harness the power of the sun, New Zealand is languishing – as energy prices continue to climb.
An RNZ investigation has found that ministers were presented with clear evidence that rooftop solar is now among the cheapest sources of electricity households can access; that upfront cost is the primary barrier to uptake; and that Australia’s rapid expansion was driven by more than $11 billion in state subsidies.
But the coalition government chose not to follow the same path.
Documents released under the Official Information Act reveal that after studying Australia’s incentive scheme throughout 2025, the government rejected financial support and instead progressed regulatory tweaks expected to have only a “minor” effect on solar uptake.
Officials refused to release the full paper trail surrounding the solar work or their decision-making record. Of nearly 70 solar-related documents identified by the Ministry of Business, Innovation and Employment (MVIE), two thirds were withheld in full.
But the result is clear: although New Zealand has higher average sunshine hours than Germany, one of the world’s leading solar markets, only about one in 35 households has panels on its roof.
Meanwhile across the Tasman, one in three Australian homes now generates its own electricity, creating rock-bottom daytime power prices and saving those families an average 40 percent on their electricity bills each year.
“We’re really lagging in terms of solar uptake here, despite the advantages we have,” says Consumer NZ’s head of Powerswitch Paul Fuge.
Consumer NZ is forecasting that power prices could rise at least another 5 percent this year, after a 12 percent increase in 2025 – an issue advocates say solar could help address.
“The research shows it’s actually cheaper to make your own power via rooftop solar than it is to buy electricity from the grid,” Fuge says.
“That’s a real game changer…but only if you’ve got access to capital, and that’s the problem in New Zealand, it’s out of reach for many households particularly households that would benefit the most.”
“Kick the tyres”
The documents show that in early 2025, the Minister for Energy, Simon Watts instructed the Ministry of Business, Innovation and Employment (MBIE) to “kick the tyres” on barriers to solar uptake.
Officials listed a raft of issues relating to information, installation, and consenting timeframes. The amount of power allowed to be exported to the grid was also an issue, MBIE said. But the report said clearly that the biggest roadblock to home solar installation wasn’t technical – it was financial.
A typical 5-10kW system costs between $10,000 and $20,000. Batteries added another $10,000-$20,000.
“Rooftop solar can produce low-cost electricity for households as it generates where it is consumed and can therefore reduce some network costs,” the briefing said.
“For many consumers the up-front costs to have solar panels and batteries installed are relatively high, and this takes time to pay back for consumers.”
Ministers were presented with clear evidence that rooftop solar is now among the cheapest sources of electricity households can access; that upfront cost is the primary barrier to uptake; and that Australia’s rapid expansion was driven by state subsidies. RNZ
In other words, the cost of solar is in the set-up – but it pays for itself long term via a lower power bill.
Officials warned that without help to bridge the upfront cost, uptake would remain limited to households able to finance the investment.
The Australia example
As part of their work, officials prepared detailed material comparing New Zealand’s approach with overseas subsidy regimes, particularly Australia’s small-scale solar and battery incentives.
The documents noted Australia’s “solar revolution” was aided by $11.5 billion AUD in government grants, which reduced upfront costs by 30% and allowed the industry to achieve massive economies of scale.
Officials also examined risks – including grid congestion and poorly sequenced incentives. Those lessons were cited repeatedly as reasons for caution, with emphasis on avoiding poorly designed subsidies and unmanaged uptake.
“Subsidised uptake in Australia has been so high (including consumers installing systems that were arguably oversized for their needs) that in 2024 regulators enabled electricity networks to charge consumers for solar injection,” the briefing said.
“This is due to high volumes of electricity being injected back to the network during the middle of the day, causing congestion and other network infrastructure upgrade needs.”
The briefing then set up a second argument against a subsidy: that New Zealand’s solar economics differ from Australia’s. New Zealand has lower sunshine hours, and its electricity system peaks in winter evenings when solar panels don’t produce power – unlike in Australia, where daytime summer air-conditioning aligns more closely with highest solar generation.
That means while rooftop solar still makes sense in New Zealand, generation and consumption aren’t as well-matched as in Australia; and systems can take longer to pay off.
However, officials noted rooftop solar paired with batteries can shift load, reduce peak demand in shoulder seasons, and increase resilience. The cost of batteries remains high, but prices are falling.
Despite some complications, the core conclusion remained: rebates accelerate uptake.
Solar secrecy
By mid-2025, multiple workstreams to “boost” solar uptake were in train, the documents show, including improving consumer information and removing the need for council consents for rooftop solar.
A programme to accelerate solar on farms was also underway, run by the Energy Efficiency and Conservation Authority (EECA); while government-backed “green” loans were rejected, leaving banks to finance such initiatives instead.
Officials were still collating information on subsidies, but any substantive information was completely removed from the records released to RNZ.
Of the solar policy paper trail, just two documents of 69 deemed “in scope” were released to RNZ in full. Fifteen were partially released, and 47 withheld entirely.
The documents noted Australia’s “solar revolution” was aided by $11.5 billion AUD in government grants. RNZ
The withheld material includes draft Cabinet papers, tracked changes and feedback from July through to September; a detailed table of “cost drivers, barriers and proposed solutions”; modelling about the impact that high levels of rooftop solar would have on the market; a document called “solar calcs”; and ministerial communications.
MBIE said the information was withheld to protect confidential advice to ministers and “free and frank” opinions from officials.
“I do not consider that the withholding of this information is outweighed by public interest considerations in making the information available,” Energy Use Policy Manager Scott Russell wrote.
The titles suggest costed options were developed. But the public cannot see what was recommended to ministers – or rejected.
Watts refused to answer questions about whether subsidies were costed or taken to Cabinet.
Labour’s energy spokesperson Megan Woods said the level of secrecy was ridiculous, given it was officials doing the work on the taxpayer dollar.
“Why is it that the government won’t even release the names of the documents that they’ve received in terms of solar policy?” she said. “What are they trying to hide?”
‘Terrifying, loud, and wild’
At the same time the energy minister was receiving advice from officials on solar, he was also deeply engaged with another part of the sector – the power companies themselves.
Correspondence released from Simon Watts’ office shows sustained engagement throughout 2025 with large electricity generators on dry-year risk and wholesale market stability.
One industry report provided to ministers argued strongly against interventions that might soften “price signals”.
The report, sent to Watts by Mercury Energy, stated “wholesale markets are not supposed to be friendly or quiet.”
“They are supposed to be terrifying, loud, and wild… they are something to protect oneself from through investments, operational optimisation, and contracting.”
Correspondence released from Simon Watts’ office shows sustained engagement throughout 2025 with large electricity generators. RNZ / Samuel Rillstone
The report warns that “affordability concerns” should be addressed outside the electricity market rather than through structural changes to pricing or incentives.
Solar isn’t mentioned directly in the report. But the power companies have the most to lose if customers can generate their own power. For example, analysis by Rewiring Aotearoa found if 80 percent of homes had solar, it would provide as much backup as 29 days of added hydro storage and could have halved wholesale peak power prices in 2024.
Such a shift would significantly change wholesale price dynamics.
“What we know is a demonstrable fact is that putting rooftop solar on a householder in New Zealand substantially lowers electricity bills,” says Rewiring Aotearoa CEO Mike Casey.
“Yet what we’ve seen time and time again is we’ve kind of let the energy system up to its own devices – but electricity bills just continue to go up.
“That’s why I think it’s super important that we now look at making sure that if it’s not going to come from industry because it’s not necessarily in their best interests, well, then it really needs to come from central government.”
A “minor” change
When Watts made his long-awaited energy announcement on October 1, there was no new solar subsidy.
Instead the reforms remained regulatory – clarifying that most rooftop installations do not require building consent, fast-tracking consents for new homes with solar, and expanding permitted voltage ranges to allow greater exports to the grid.
In the supporting Regulatory Impact Statement, officials warned the changes would likely have limited impact.
“The Minister’s preferred options may meet the objective of incentivising demand for solar generation and sustainable buildings. However, the incentive effect is not clear and expected to be minor.”
The dominant barrier to uptake remained upfront cost, the RIS said.
Solar uptake continues – but largely among the small proportion of households able to finance the investment themselves.
Rewiring Aotearoa CEO Mike Casey says the government should introduce policy to support rooftop solar. Supplied / Rewiring Aotearoa
Meanwhile, electricity cost and demand are both expected to continue to rise in the coming years, due to both lines and energy cost increases.
Consumer NZ has predicted a 5% increase in power prices this year, following a 12 percent increase last year.
Meanwhile, demand for electricity is expected to grow sharply as transport and industry electrify.
Modelling cited in MBIE briefings shows demand could more than double by 2050 – from roughly 40 terawatt hours today to around 90 terawatt hours.
Officials have warned existing hydro generation cannot meet that growth alone, particularly as climate change increases the frequency of dry years.
Rooftop solar does not solve dry-year risk by itself. But analysts say it could have formed part of a broader package of responses, alongside storage and demand management.
Instead, the Government’s response to dry-year risk has been to back a multi-billion-dollar floating LNG import terminal.
Writing for Carbon News, energy expert Christina Hood said modelling commissioned by the Government itself showed the LNG option could lead to higher electricity prices than alternatives such as gas storage or demand reduction – even with its fixed costs subsidised by a levy on consumers.
Hood argued the Government failed to model cheaper alternatives such as demand reduction and accelerated renewables in detail, despite their potential for greater impact on prices and system security, leaving consumers exposed to higher long-term costs.
Supporters argue the LNG facility reduces the risk of extreme price spikes and underwrites renewable investment.
Port Taranaki is the preferred location for a new LNG import terminal. LDR / Supplied
Critics describe it as an “expensive detour” that locks in fossil infrastructure just as solar and batteries come down in price.
“Refusing to subsidize solar while underwriting a billion dollar gas terminal is like renting an expensive fossil fuel heater for a house you’re already planning to electrify,” said 350 Aotearoa Co-Director Alva Feldmeier.
She said the LNG decision clearly showed the government was willing to intervene in the market – and yet was unwilling to do so when it came to bringing power prices down.
“They’re more than happy to slap a gas tax on every New Zealander’s power bill to underwrite this expensive LNG terminal while choosing to shelve plans to help households generate their own cheap, clean power.”
‘Watch this space’
This is not the first time National ministers have considered – and stepped back from – financial incentives for rooftop solar.
Newsroom previously revealed the Government had actively explored a home solar support package during 2024, including potential rebates or finance mechanisms, before shelving it ahead of Budget decisions.
Despite that, Energy Minister Simon Watts continues to cast himself as an advocate for distributed solar.
“Rooftop solar and batteries will be critical for a modern distributed energy system,” he told the Bluegreens conference in February 2026, adding that his government had “made it easier than ever for households and businesses to harness solar.”
Watts also acknowledged New Zealand could do more, noting that Australia demonstrates “just how much further we can go” and saying National would continue to look at opportunities to support solar. “Watch this space.”
One proposal that may yet advance is a Ratepayer Assistance Scheme, which would allow households to finance solar through their rates.
For now, however, no national rebate or finance programme exists. In response to questions from RNZ, Watts said only he was “focussed on making energy more affordable.”
“I acknowledge the valuable role that solar and batteries can play in New Zealand’s energy system,” he said.
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
LiveNews: https://nz.mil-osi.com/2026/03/03/government-kicked-the-tyres-on-solar-subsidies-but-went-with-minor-tweaks-instead/