Category: Energy

10%+ ROI – the Holy Grail of solar panels?

Is managing a solar power installation to the point where it generates upwards of 10% return on investment the Holy Grail of solar power adoption? At that point the standard solar power installation would go from being something of an economic joke to becoming a worthwhile and in fact wise proposition for many NZ households.

But managing an installation to this point is not easy, and the claims involve assumptions. For that reason, my claims need to be fairly clinically examined.

To start with, I begin from the position that the solar power system in question will already be reducing net energy drawn from the grid by an average of 2.4 kWh per day. Given that a 1.5 kW system in my neighbourhood will generate on average of 5.4 kWh per day, this is not too much of a stretch – but it won’t be the case for every household. Most people who buy solar assume that every Wh that gets generated will get used, but it is often not the case. In fact, learning that the power generation needs to match power usage can be one of the most disenchanting things about investing in solar power, particularly given the variance between generation and usage during summer and winter months in the far southern hemisphere.

If so, a 2.4 kWh offset would work out to around a 4.4% return on investment on a $6000 system. Not good, but realistic.

This picture all changes with active management of the solar panels. With active management, you notice when the days of surplus occur, and plan ahead to intensify your energy usage on these dates. The best example is reserving the process of managing a weekly batch cook on the day of the greatest sunlight and then storing and reheating meals in a microwave throughout the week. This means you intensify your usage during daylight hours on one day in order to minimise usage on other more overcast days.

An example of this might be where a sunny day produces 7.4 kWh and you end up using 7 kWh of it for batch cooking. During the batch cook you end up making 14 servings at an energy cost per serving of 0.5 kWh.

A simple way of looking at that is that just an average of 1 kWh extra per day has been saved. But I would argue this does not reflect the true saving to the household. During a batch cook, you will often have three things on the go in the oven at once. This leads to efficiencies that are not reflected in the direct drawing from the power generated.

The real way to look at this is the average energy saving per serving per week under normal conditions, compared to the reduced cost of batch cooking and reheating meals.

A typical meal involves several different components separately prepared. There is often a ‘greens’ component, a ‘meat’ component and a ‘staple’ component. Each of these has an energy cost to produce. The energy cost can range depending on the meal, but it is not unusual for a single meal to ‘cost’ between 4 and 5 kWh. While a typical meal may make two serves, one for the meal and one for leftovers, this still results in between 2 and 2.5 kWh per serve. (I’m working the math from the perspective of a one person household, but the same principles apply for larger households. In fact my father visits me several days of the week, making it a two person household on those days, and at work I just make a salad, so it all evens out to 14 serves per week regardless.)

This energy will often be used in the early to mid evening, when there is peak energy use and solar is not often available.

Multiply that across 14 weekly serves and you have cut an extra 28 to 35 kWh from weekly consumption.

Even at the lower end of the spectrum, when added to the original 16.8 kWh, this would add up to a total of 44.8 kWh saved. At $0.262 + GST per kWh, this would add up to over $700 per year saved in direct electricity costs. This is without even including the cost of future retail energy price inflation, which I have at around 3.11% per annum. On a $6000 system, this works out to a return on investment of 11.7%. The efficiency here is achieved not so much through the panels themselves, but through the process of batch cooking – having an oven running at 170 degrees containing 3 separate dishes instead of 1 is far more efficient than cooking each meal steadily one at a time.

This does assume, however, that the cooking processes can be consistently managed. One reality that many families will have to face is that you may not always find a sunny day in the weekend to do a batch cook, and resources to do batch cooks during the working week may be scarce.

Next, you must consider the impact of microwaving the defrosted meals. A 1 kW microwave should consume 100 Wh per 6 minutes, and 6 minutes is usually sufficient to microwave most servings provided they have had overnight defrosting. This would result in 12 serves x 100 Wh, or 1.2 kWh, assuming that two of the serves are consumed on batch cook day. This would reduce weekly energy savings at the lower end from 44.8 kWh down to 43.6 kWh per week.

Also, while my batch cooks to date have been fairly efficient at drawing available solar energy, there is quite often an unavoidable overage. The exact amount drawn from the grid by an electric oven set at a certain temperature cannot be controlled. As a result, quite often I end up drawing a net of 2.6 kWh from the grid for the batch cook. For integrity’s sake, it makes sense to deduct this overage from the weekly savings figure, bringing it down to 41 kWh per week.

There is the other issue that solar panels will gradually degrade in efficiency over 20 years, and dates of peak consumption will be most heavily affected. However, this is most often offset by the increase in the cost per unit of energy caused by inflation.

Even with these adjustments, I have it that a 1.5 kW system used in such a way can easily result in an annual saving of $642.37 inc GST. Assuming installation costs of $6000, this still results in an annual return on investment of 10.7% even before taking into account inflation.

So – it’s a lot of work – but you can make a set of solar panels achieve over 10% return on investment. Although the improved return on investment should not be viewed as a product of the panels themselves, but as a process of active management of facilities that looks at restructuring the household’s energy use around solar panels plus other available equipment, such as a freezer and microwave.

10%+ ROI – the Holy Grail of solar panels?

Is managing a solar power installation to the point where it generates upwards of 10% return on investment the Holy Grail of solar power adoption? At that point the standard solar power installation would go from being something of an economic joke to becoming a worthwhile and in fact wise proposition for many NZ households.

But managing an installation to this point is not easy, and the claims involve assumptions. For that reason, my claims need to be fairly carefully examined.

To start with, I begin from the position that the solar power system in question will already be reducing net energy drawn from the grid by an average of 2.4 kWh per day. Given that a 1.5 kW system in my neighbourhood will generate on average of 5.4 kWh per day, this is not too much of a stretch – but it won’t be the case for every household. Most people who buy solar assume that every Wh that gets generated will get used, but it is often not the case. In fact, learning that the power generation needs to match power usage can be one of the most disenchanting things about investing in solar power, particularly given the variance between generation and usage during summer and winter months in the far southern hemisphere.

If so, a 2.4 kWh offset would work out to around a 4.4% return on investment on a $6000 system. Not good, but realistic.

This picture all changes with active management of the solar panels. With active management, you notice when the days of surplus occur, and plan ahead to intensify your energy usage on these dates. The best example is reserving the process of managing a weekly batch cook on the day of the greatest sunlight and then storing and reheating meals in a microwave throughout the week. This means you intensify your usage during daylight hours on one day in order to minimise usage on other more overcast days.

An example of this might be where a sunny day produces 7.4 kWh and you end up using 7 kWh of it for batch cooking. During the batch cook you end up making 14 servings at an energy cost per serving of 0.5 kWh (or effectively nearly 0 kWh per serving, since it all came from the sun).

A simple way of looking at that is that just an average of 1 kWh extra per day has been saved. But I would argue this does not reflect the true saving to the household. During a batch cook, you will often have three things on the go in the oven at once. This leads to efficiencies that are not reflected in the direct drawing from the power generated.

The real way to look at this is the average energy saving per serving per week under normal conditions, compared to the reduced cost of batch cooking and reheating meals.

A typical meal involves several different components separately prepared. There is often a ‘greens’ component, a ‘meat’ component and a ‘staple’ component. Each of these has an energy cost to produce. The energy cost can range depending on the meal, but it is not unusual for a single meal to ‘cost’ between 4 and 5 kWh. While a typical meal may make two serves, one for the meal and one for leftovers, this still results in between 2 and 2.5 kWh per serve. (I’m working the math from the perspective of a one person household, but the same principles apply for larger households. In fact my father visits me several days of the week, making it a two person household on those days, and at work I just make a salad, so it all evens out to 14 serves per week regardless.)

This energy will often be used in the early to mid evening, when there is peak energy use and solar is not often available.

Multiply that across 14 weekly serves and you have cut an extra 28 to 35 kWh from weekly consumption.

Even at the lower end of the spectrum, when added to the original 16.8 kWh, this would add up to a total of 44.8 kWh saved. At $0.262 + GST per kWh, this would add up to over $700 per year saved in direct electricity costs. This is without even including the cost of future retail energy price inflation, which I have at around 3.11% per annum. On a $6000 system, this works out to a return on investment of 11.7%. The efficiency here is achieved not so much through the panels themselves, but through the process of batch cooking – having an oven running at 170 degrees containing 3 separate dishes instead of 1 is far more efficient than cooking each meal steadily one at a time.

This does assume, however, that the cooking processes can be consistently managed. One reality that many families will have to face is that you may not always find a sunny day in the weekend to do a batch cook, and resources to do batch cooks during the working week may be scarce.

Next, you must consider the impact of microwaving the defrosted meals. A 1 kW microwave should consume 100 Wh per 6 minutes, and 6 minutes is usually sufficient to microwave most servings provided they have had overnight defrosting. This would result in 12 serves x 100 Wh, or 1.2 kWh, assuming that two of the serves are consumed on batch cook day. This would reduce weekly energy savings at the lower end from 44.8 kWh down to 43.6 kWh per week.

Also, while my batch cooks to date have been fairly efficient at drawing available solar energy, there is quite often an unavoidable overage. The exact amount drawn from the grid by an electric oven set at a certain temperature cannot be controlled. As a result, quite often I end up drawing a net of 2.6 kWh from the grid for the batch cook. For integrity’s sake, it makes sense to deduct this overage from the weekly savings figure, bringing it down to 41 kWh per week.

There is the other issue that solar panels will gradually degrade in efficiency over 20 years, and dates of peak consumption will be most heavily affected. However, this is most often offset by the increase in the cost per unit of energy caused by inflation.

Even with these adjustments, I have it that a 1.5 kW system used in such a way can easily result in an annual saving of $642.37 inc GST. Assuming installation costs of $6000, this still results in an annual return on investment of 10.7% even before taking into account inflation.

So – it’s a lot of work – but you can make a set of solar panels achieve over 10% return on investment. Although the improved return on investment should not be viewed as a product of the panels themselves, but as a process of active management of facilities that looks at restructuring the household’s energy use around solar panels plus other available equipment, such as a freezer and microwave.

The Gantt Chart told me I should have soaked the beans

Nobody lies in the bathtub at 5.50am reading management theory textbooks. Nobody, that is, but me.

A recent management theory textbook introduced me to the concept of the Gantt Chart. It definitely did not leap out at me as revolutionary. It was the sort of thing that anybody with a modicum of organisational skills would look at and go ‘ho-hum, so this is what they are passing off as management to justify the price of an MBA qualification.’

The magic came when I started applying this newly discovered (for me, anyway) methodology to my recently avowed process of organising weekly batch cooks during peak sunshine hours so as to maximise the return on investment from my solar panels.

Batch cooking for a week is not a simple process. I envy the soulful spirits who have been organised enough to do this for years. There are a lot of logistics involved. Logistics and a degree of jeopardy.

It adds an extra stage to your organisation that often reveals, and in this case did reveal, the gaps and deficiencies in the planning process.

The Gantt Chart is organised along two dimensions – on the x axis, the list of tasks to compete, thoroughly broken down. On the y axis, you include the resource limitations, most notably time. The Gantt Chart will force you to think through each of the stages that need to be completed, and the time allocation to each, as well as the points where the various tasks need to overlap. The Gantt Chart eliminates the demotivational complexes that flow from simple disorganisation and project cluttering. It uninhibits motivation.

It can reveal the exposure of tasks to resource limitations beyond the resource of time. For instance, in my kitchen I have a cast iron skillet, a Dutch oven, some trays for baking. I also have only three (yes, I know) functional elements on my stove top and limited shelf space and height in my oven.

The steps to arrive at a proper Gantt Chart are equally important. Any fool can write a shopping list. And just about anyone can list out a sequence of activities and then map them from first to last. It’s what happens when you list out these items, then attach them to a particular time use or resource, that you can begin to see where the gaps lay in your planning.

You think you’ve got it all mapped out. You think you’ve included every last item on your list. Believe me, you haven’t. Particularly with cooking. When I went through and attached every cooking and reading stage to a particular 15 minute time slot, I realised: I hadn’t soaked the beans.

These are black-eyed beans and rajma beans we are talking about. Basically, the most incendiary of beans for delicate digestive systems. What was perhaps worse, the recipe for black-eyed beans is to boil them, then let them sit for a full hour, before draining and rinsing and recooking. I hadn’t allowed time to let them sit.

The great thing about the Gantt Chart is it allows you to see in advance just how best laid your best laid plans really are.

Apart from that little disaster, however, the batch cook was a resounding success. The Gantt Chart enabled me to map out the entire day of cooking and food production, tying the most energy intensive processes to the peak sunshine hours. It even led me to totally reorder the day for maximum energy efficiency, as the task I had left until last was the biggest solar guzzler, and when I saw it I realised I had to go back to the drawing board.

They say little about Gantt Charts in your classic Jamie Oliver cookbook. But every kitchen should have one.

More for my own use (I do not expect anyone to ever download an actual Gantt Chart from my blog), I have included the Gantt Chart that I used today as a template spreadsheet which can easily be customised to a billion different occupations, only some of which need apply to dramatically reducing household energy consumption and increasing the ROI of solar panels.

Why we need better bike ways leading into Levin

This a blog on two levels. On one level it’s a bitter personal lamentation about how I can no longer ride my bike into work. On another level, it’s a broader complaint about the way in which Levin is being shut out of the regional growth that is happening in Kapiti as a result of being too disconnected.

Kapiti showed 9.9% economic growth last year – greater than Auckland and Wellington combined. The region is growing more rapidly than any other region in the country. This is a result of a massive transfer of wealth happening as people head up the line, many of whom were originally drawn by low property prices, but who now have settled into functional employment and started new businesses to cater to the slowly changing demographic.

Next step on the Lower North Island growth spurt is Levin, and with plans for the new expressway now confirmed, although still a few years away, my view is that a lot of smart capital will head that way in the next few years and the town will profit and become gentrified. At the present moment, however, a lot of growth and traffic headed into Levin is being stymied by the choke points along the way. 

One of the great points of disconnection is the total absence of a bike track leading into the town from the south. While bike tracks do exist along the Otaki to Levin route, the bridges leading into Levin are simply too much of a hazard to cross, being tight two-lane State Highway 1 lanes with vehicles inclined to travel close to 100 kph despite the changed terrain. 

I’ve tried many times to get across these bridges. I’ve succeeded once, but at great peril to myself, and in a matter that does not bear being repeated. Sadly this means that a daily commute into Levin from Otaki each day for work, which would be easily achievable on an ebike, is not a possibility. 

This is a problem not just for me, but for Levin’s changing demographic. I am already seeing an increased number of people biking in to work from Otaki to south Kapiti each day. It makes sense for the same amount of traffic to head in the other direction. But where the way is not safe, this cannot happen. The question for me is, with the lack of a serious bike lane to provide a safe way for cyclists, what will this mean for people’s change in habits, and in the end for unnecessary carbon emissions?

We need a better bridge between Kapiti and Horowhenua. Hopefully this will come with the new expressway. But that is years away. 

Submitting a test case to the Green Fund for consideration

The $100 million Green Fund was announced last year in order to showcase the coalition’s commitment to finding scalable ways to fight climate change.

But since then, not a lot has happened. On the 1st of March I received an update on the progress of the Green Fund. The update read as follows.

Good afternoon, 

You are being sent this email because you have asked to receive updates on New Zealand Green Investment Finance (NZGIF). The following update has been placed on our webpage : https://treasury.govt.nz/information-and-services/commercial-portfolio-and-advice/new-zealand-green-investment-finance and also on our LinkedIn page.

What now?·       NZGIF is in its establishment phase. This follows the appointments to the board late last year of Cecilia Tarrant (Chair) and David Woods (Director). There is a lot to do before NZGIF will be fully open for business.·       

The next step is to complete the Board appointments.  Applications have closed and are being considered. Appointments will be completed by mid-May.·       

We’re also working on company incorporation. We are in the process of developing the company constitution and other foundation documents, which will enable NZGIF to be incorporated by mid-May. ·       

When will NZGIF be operational? Exact timelines will depend on decisions directors make; however, we expect to see NZGIF fully operational by the middle of the year. Thank you for your continued interest in NZGIF.  We will provide further updates on the priorities and the process for applying for investment as this is made publically available. 

Regards,New Zealand Green Investment Finance

I guess that from an avid viewer’s standpoint, who has read the headlines but who is as yet uncertain how the fund will work, I am a bit worried from the above email that the fund may be losing traction. Which is a shame, because I desperately need some money to go green. 

I recently realised by way of a spreadsheet that I can reduce my travel emissions working as a sales consultant by as much as 20% by switching to a hybrid electric car. The decision was first of all a financial one: switching to a hybrid would pay for itself over ten years in the cost of fuel savings that I would achieve alone, essentially providing close to a 10% ROI. (The return on investment is so high because I am looking at second hand hybrids in the $7k range. A new hybrid will not achieve this.) I need soon to update my car anyway, so this seems to be a wise way to go about things.

In my view, this is the sort of investment that the Green Fund should be exploring – environmentally friendly initiatives that also achieve a return on investment in excess of the long term government bond rate. But it remains to be seen in practice whether this would ever happen. The nature of the second hand car market is that it is rapidly moving, with good deals disappearing off the market every day. The fund, on the other hand, seems to be moving fairly slowly. 

So I am going to test the waters by sending them an email with the spreadsheet attached. I am interested to hear whether they respond at all, and if so, whether they will be able to assist at all in my scenario. 

How buying a second hand hybrid can yield a 15% ROI

The bane of my existence has become the bridges in and out of Levin. Having accepted a new and challenging role in the Horowhenua region, I now am forced to relinquish my good habits around cycling to work (which have netted me an 8kg weight loss in the last few months in addition to hundreds of dollars in savings) in exchange for driving the admittedly slightly shorter distance, simply because the bike cannot negotiate the challenging high speed bridges in and out of Levin safely.

This is a big step backward for my plans to reduce my environmental footprint and lower my petrol costs. Not to mention that with my new role, I may be expected to travel great distances each week. But with each change comes the opportunity for positive adjustment.

I basically need to replace my car anyway. There’s no rush, but there has been an unsightly bit of cosmetic damage that would cost almost as much as the car is worth to repair. The main question is what type of car do I aim to get next – a petrol car or a hybrid? My main focus is to drive a car that at levels of high (read: sales career) usage, realistically pays for itself over time. There’s no point buying a car that’s cheaper upfront if the operating cost is over $1000 or more extra per year. If this leads to a reduction in carbon emissions that is all well and good as well. 

The main problem with hybrids has been cost efficiencies. Hybrid cars have often been reviewed negatively in the past, particularly in the US where many of these reviews originate from, simply because the economics do not stack up – the comparatively miniscule savings in fuel does not offset the higher capital cost of the new product. But this is not so much the case in NZ, and in particular is not so much the case in the second hand hybrid market, which is now flooded with apparently reasonable quality vehicles available for even less than $10,000. Part of the reason for this is that New Zealand taxes fuel far more heavily than the US, meaning that many of the reviews you read about hybrids ought to be discounted in the New Zealand context. 

I’ve scoured online sites and found a number of second hand hybrid cars for what I would consider good value – there is even one currently on sale for $2.50 with no reserve, although it has over 170,000 kms to its name. But, more to the point, there are a range of cars in the $6,000 to $8,000 price range, available for immediate purchase. It’s not like there’s just one or two of these options – there are dozens in this price range, each with well under 100,ooo kms to their odometer. Of course, with Trade Me, you’ll almost certainly need to make a trip up the line to get to it. 

I’ve done a spreadsheet which covers the calculations to justify a ROI of over 15% at the price point of $6995. It’s important to note that this calculator assumes continued fuel price inflation of 2.2% per year (around about the 10 year average in NZ). Because I’m replacing my car anyway, all I’m really doing is stripping the operating cost in a way that saves me money and pays for the new investment.

https://www.balancetransfers.co.nz/wp-content/uploads/2019/03/Jazz-vs-Hybrid.xlsx

The next thing to look at is how I can finance it, or if I have to pay cash. That is a question for another article, but one of the benefits of having a profitable business is that I can potentially put a lease through it. 
A car that pays for itself in six years that’s significantly more eco-friendly for a traveller? Hard to say no to. 

Understanding limitations and nuances of renewable power

I guess a theme that is emerging from this blog and from my life in general is around the whole idea of how hard it is to actually go green, how many ideas need to be trialled and discarded before you come up with a way, a simple clearcut unequivocal way, to make a meaningful dent in your carbon emissions.

It can be discouraging. Often, it’s a process of two steps forward, one step back, as are most things in life. It requires a lot of math to go green meaningfully. But it has many side benefits, and for me anyway, is a worthwhile side project.

I am always on the lookout for scalable strategies – stuff that might work, but that people might not have tried in detail before. And I like to produce honest case studies based on my experience. Sometimes the failure is more interesting than the success.

As I go through each one of these processes, constantly scanning for new content, I learn not only about the benefits of a thing but also the limitations and drawbacks. I learn that the process of going green is very much circumstance dependent.

It’s all part of a bigger long term vision. The other morning while I was writing in my diary at a cafe, I had a vision of all of Kapiti uniting as a single city, with the bright lights powered by renewable energy. The small things we do today I think create the future. The little tests, little experiments, build wisdom and resource for something far grander.

But the hard work and hard math has to be done first. Building the green city of Kapiti involves coming to an understanding about the limitations and nuances of renewable power. As much as anything.

Training kids to measure smart meters

This thought occurred to me on the way to work the other day, and might be one I develop a bit further in the future. 

In previous articles I wrote about how it was essential to measure one’s own home energy use during day time before going so far as to install a solar power system. Without a comprehensive knowledge of the details of your household power consumption, you really can’t make any intelligent decisions regarding solar power, and in fact, many installations completed without paying close attention to home energy use will fall a long way short of expectations.

The problem is, not everybody has time to go and stand outside the front of their smart meter each hour and record data for several weeks before they decide to install. People have lives, believe it or not, and recording the kWh currently consumed by your household each hour on the hour is not high on their list of priorities.

So, who would be good candidates to collect this data? Not the parents in the household – the children in the household. In fact, one could make a fun family project out of it. 

Need to keep the kids occupied during school holidays? Give them an exercise book and send them out to take readings off the smart meter. 

Of course, it may need some clever packaging to make it happen – but if kids could be convinced to collect this data on behalf of parents, it would then lend credibility to many households when making decisions about their renewable energy generation. 

Not to mention it would be a great way to teach your kids valuable skills in applied mathematics!

Reducing the mass of vehicles on the road might contribute to a climate change win

This little epiphany occurred to me when I was reconsidering some of the past work I had done on ebikes. Ebikes are incredibly eco-efficient when compared to petrol cars and even electric vehicles, not just because they utilise electric power as well as pedal-assist, BUT ALSO because the vehicle itself has a far lower mass than virtually all motor cars. In fact, I calculated in a previous blog article that an electric bike is roughly 21 times more eco-efficient than a Nissan Leaf. 

Currently, most climate change goals focus on switching petrol cars to the electric fleet. An equally valid goal might be to reduce the overall mass of motor vehicles on the road by a certain date. 

But if you think about it, what really does the damage when a car drives is not the fuel type that a vehicle consumes, but the amount of mass of that vehicle. The greater the mass, the more energy required to motor the vehicle. 

Putting incentives in place to get people to switch down from large gas guzzlers to smaller, more eco-efficient vehicles, even if those vehicles still run on petrol, could in some ways be very effective and another way (on top of the switch to renewable energy vehicles) that one could compound the reduction in carbon emissions from more efficient vehicle use. 

Switching to an ebike has reduced my carbon emissions from travel by around 900 kilograms last year. It has also saved me a pretty penny in fuel expenses. 

The point is that there are vectors to reducing carbon emissions through motor vehicle use that are not currently being considered and that ought to be forefront of people’s minds. 

Did CRC improve my ebike battery efficiency by 35%?

I noticed this on my way in to work this morning. December was a very busy month for me, and with the ebike having heavy use, I nonetheless had very little time to give it the TLC it deserved. In particular, I fed it no CRC across about 7 weeks and at the end of it the ebike was squeaking like a baby mouse.

My standard trip into work during this period consumed around 35% of the battery charge. This would leave me enough charge to get home and enough to pop down to the shops if I needed to.

Last night I applied CRC for the first time in a while. The result this morning was that the bike rode incredibly freely, with far less squeak, and in addition to that, only took me a 26% charge to get to work!

That is an improvement in battery efficiency (for the same ride, on the same settings) of just under 35%.

While this won’t make much practical difference in how I use the bike, the implications are massive.

It means I could go an extra 10 kms to and from with a well maintained bike for each recharge.

It also means that problems I attribute to the battery may in fact just be not enough oil on the chains.

I’ve always applied CRC in the past more as a chore, rather than something that could actually help me. I didn’t realise that by failing to apply CRC I was making my bike ride a third harder!

But now with ebike batteries, these sorts of minor things are much easier to quantify.