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Increase to Grants for Solar Water Heating

Jeanette Fitzsimons

Government Spokesperson on Energy Efficiency

23 May 2008 Media Statement

Increase to Grants for Solar Water Heating

Government Spokesperson on Energy Efficiency and Conservation, Jeanette Fitzsimons, today announced changes to the solar water heating grants scheme for homeowners, including an increase to the grant from $500 to $1000.

"As we mark the first anniversary of the solar grants scheme I have made a number of improvements to make solar water heating an easier choice for New Zealand homeowners and to encourage growth in the solar water heating market," Jeanette Fitzsimons said.

"I am pleased to announce the following changes, which are now possible as a result of the work we have done on quality standards, installation guidelines, training and performance modelling of systems. From 3rd June 2008:

* Solar water heating grants for homeowners will increase from $500 to $1000, for the purchase of packaged systems that meet requirements for energy performance, cost-effectiveness and installation. The size of the grant will be reviewed after a year to ensure we keep within the available funding.

* The cost-effectiveness measure, known as the 'threshold for finance assistance', will be simplified and adjusted to reflect updated electricity price forecasts.

* Grants will be paid direct to the homeowner who has purchased solar water heating systems rather than via suppliers as it is presently."

"I hope this announcement will stimulate growth in the industry, which will be good news for householders, their power bills, the industry and climate change," Jeanette Fitzsimons said.

Hot water typically accounts for around 30 percent of homeowners' energy costs. A well designed and installed solar water heating system can provide up to 75 percent of annual hot water needs.

The solar water heating programme is part of the Government's commitment to sustainability. The programme also includes a website giving independent information for consumers; working with the building industry to encourage solar water heating on new housing; grants for solar water heating systems on publicly owned buildings; and a fund to encourage smart innovations that will lead to the uptake of solar water heating and heat pump water heating technologies.


Questions and Answers

1. How does a homeowner access the solar water heating grant?

Homeowners can apply for a grant directly from EECA. To be eligible, a homeowner must buy a packaged system (i.e. all components of a system) that has been energy performance modelled and the results published by EECA. More than 100 systems are already published on the website and this is growing. In addition the full cost of the system, including the installation and building consent costs, must not exceed the "threshold for finance assistance" set by the government.

2. What is the threshold for finance assistance?

The threshold for finance assistance (TFA) is one of the eligibility criteria for a solar water heating grant designed to promote cost-effective systems for consumers. It is the maximum cost that an individual solar water heating system may be purchased and installed for in order to qualify for a grant. The TFA is not a retail price or a recommended price.

Every individual system has a TFA calculated reflecting the discounted payback for the system over its expected lifetime. Factors used to calculate the TFA include the expected energy performance of that system and electricity price forecasts. Where a solar water heating system is purchased and installed for a total price (including installation and the building consent costs) that is less than the TFA, then the system may be eligible for the grant. If the cost of the fully installed system is higher than the TFA, then the system will not qualify for finance assistance.

3. Why will grants be paid directly to homeowners?

Feedback from homeowners has been that they would like to see 'cash in the hand' rather than as a discount off the price of the system. The change will also reduce the paperwork for suppliers and installers.

4. Why are the grants only available for a limited time period?

There is a fixed amount of funding available for the solar water heating programme and this includes funding for the other grants schemes (Innovation Fund, Volume Build and Grants for Publicly Owned Buildings). The size of the grant will be reconsidered after a year in light of funding available.


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