While the governments' (plural, all the recent ones) car-centrism and lack of action on new energy are disapppointing (so 20th century), I disagree for a couple of reasons.
Main reason: end-user subsidies of any kind (whether for cars or for rooftop solar or $asset) are merely a transfer from poor taxpayers to high-income or wealthy people, those who own their homes or can afford to purchase the asset. They entrench inequality.
I'd be able to tolerate subsidies if NZ funded them with a smallish fraction of a capital tax/land value tax and/or a capital gains tax. (Such taxes being recommended by the Tax Working Group but rejected by successive governments).
The idea of low-income people buying EVs is ludicrous. The typical budget for a "good" car where I work is NZD $2000 - $6000, and it's a very significant purchase.
Second reason. NZ doesn't actually have a lot of land suitable for solar that doesn't have higher-value uses, but it does have a lot of wind, and wind power can share land use. Although wind is not as cheap as solar, it's cheaper than everything else (except already-built hydro). Wind farms are being built now in unsubsidised projects with ordinary commercial leases from land owners.
Bonus reason: hydro operators don't need subsidies; it's worth them installing some solar on their lakes today. They are merely as anti-entrepreneurial as the governments.
Yeah, I mostly agree with your gist, although I feel you have straw-manned me with the points you brought up;)
> NZ doesn't actually have a lot of land suitable for solar that doesn't have higher-value uses
Do you have any references? I know somebody involved with a bid, and solar could heavily outbid farming ($ per hectare per annum) for the location they looked at. A solution only needs some land, not “a lot of land” as you put it, although there are constraints and objective function variables (hours of sunshine, nimby, high voltage network access, land value per hectare, , etcetera).
> rooftop solar
Expensive wasteful rooftop solar makes economic sense for some individuals, which really shows up the inefficiency of our electricity market design, since utility scale solar generation makes more economic sense in New Zealand. Government intervention would be useful if it fixes market failures.
> hydro operators don't need subsidies
Psychologically loaded point. An electricity market should be designed to price in long-term requirements (like security of supply, CO2 costs, network reliability), which could be thought of as cross-subsidisations. Of course, be very careful of perverse market incentives (law of unintended consequences). . . https://www.sas.upenn.edu/~haroldfs/540/handouts/french/unin... The government could invest in high-risk research, even if network generators/operators are freeloading, so long as it helps NZ much more than it costs, we all win.
Sometimes the government can take on risk, for example the broadband fibre rollout. I strongly disagreed with that at the time: the goal of technology literacy was a lie and the system looked to me like a subsidy to NetFlix et al. Although it happened to work out well during Covid lockdowns, and it looks like it will make financial sense to the government, and hopefully the social gains well outweigh the social losses.
Private markets can’t make long term investments if the cost of utility scale infrastructure is dropping too fast. This is a market failure that can be fixed by appropriate financial incentives (regulation or market design to pay for the long term gains to the country).
No, I don't have specific references - you got me! :-)
I live not far from "NZ's largest grid-connected solar power plant" (2.1 MW nameplate: feeble), and also not far from one of the larger wind farms. The solar plant is on valuable dairy land, that's true. I wish Todd would publish some figures for it, although it hasn't been operating for long.*
When I wrote "higher-value", I had just been thinking about NZ's trade problem: it exports dried milk, red meat and a few other low-value-add bio-materials in order to buy everything else. Land is valuable to the country as a whole for its export revenue.
I had also been re-reading Vaclav Smil's Energy in Nature and Society, in which he says the areal (per square meter) power intensity of PV production is approximately the same as the areal power consumption of cities, so we need the same order of magnitude of land that cities take up if we use PV primarily. And it can't be too erosion-prone.
That (value/national interest) is also an issue (and this is specifically what I had been thinking about) for carbon farming conversions of hill country sheep and beef stations into Radiata monoculture plantations. Privately profitable, but probably against the national interest, and due to policy.
> Private markets can’t make long term investments if the cost of utility scale infrastructure is dropping too fast.
Design, legal, permitting, interconnect, civil, structural and electrical balance of system, and present value of O&M collectively dominate now,* and they are not subject to the same rate of cost decline as panels and inverters (and batteries), so overall, the cost isn't dropping super fast any more. (The PV version of Amdahl's law, perhaps.)
* Total installed capacity of wind power seems to be at least two, possibly three orders or magnitude higher than that of PV solar in NZ. Maybe this is due to the "social licence to operate" / nimby factor, but maybe not. It does suggest that rooftop solar is a tiny niche in the ecosystem, so maybe the market structure isn't all that bad?
* In NZ finance costs a lot too, because policy privileges residential real estate investment so greatly.
Main reason: end-user subsidies of any kind (whether for cars or for rooftop solar or $asset) are merely a transfer from poor taxpayers to high-income or wealthy people, those who own their homes or can afford to purchase the asset. They entrench inequality.
I'd be able to tolerate subsidies if NZ funded them with a smallish fraction of a capital tax/land value tax and/or a capital gains tax. (Such taxes being recommended by the Tax Working Group but rejected by successive governments).
The idea of low-income people buying EVs is ludicrous. The typical budget for a "good" car where I work is NZD $2000 - $6000, and it's a very significant purchase.
Second reason. NZ doesn't actually have a lot of land suitable for solar that doesn't have higher-value uses, but it does have a lot of wind, and wind power can share land use. Although wind is not as cheap as solar, it's cheaper than everything else (except already-built hydro). Wind farms are being built now in unsubsidised projects with ordinary commercial leases from land owners.
Bonus reason: hydro operators don't need subsidies; it's worth them installing some solar on their lakes today. They are merely as anti-entrepreneurial as the governments.