The Ministry of Business, Innovation and Employment has compiled electricity pricing data from 2006 to 2022. We dug through this data to get a clear idea of New Zealand’s power price trend. The most important finding was that the average electricity price increase in NZ is 3% per year.

Yearly power price increase in NZ

The data

In March 2006, just 16 years ago, each kWh of energy cost 18.87 cents per kWh. In March 2022, this number had risen to 30.22 cents per kWh. This is a staggering cumulative rise of about 60%.

Another interesting finding from the data is that the price barely ever drops. In the 16 years of collected data, there was only one instance when the cost of electricity went down - this was in 2006, when the price of electricity dropped by 1.7%.

The old days

In terms of monthly bill expense, a typical household paid about $1,440 in March 2006 in power bills. In March 2022, this number had shot up to $2,194. This increase is exceptional, even if you discount the effects of inflation. But to really understand if electricity prices rise disproportionately in the country, we need to compare it with something similar.

Relative to petrol prices

Let us talk about the prices of petrol, which is probably the most comparable commodity. In January 2006, a litre of petrol cost $1.37. In January 2023, it was $2.33/litre. This increase is just over 40%, significantly lower than the 60% increase in electricity prices.

The average annual increase in power prices in New Zealand is 3%.

• The factors that contribute to rising power costs include the cost of power generation, maintaining the grid, and the availability of fuel.

• Rising power costs can have a significant impact on consumers and businesses.

• Solar power is presented as a way to combat rising electricity prices.

Solar + Battery

If you have a solar + battery setup, you can save even more. In homes where spot pricing is applicable, batteries can be useful to shift the power consumption from on-peak hours to off-peak hours. For instance, a battery can charge itself from the grid at night, when the prices are low, and discharge during the mornings or evenings, when the prices are high. This is somewhat akin to buying cheap shares and selling them when their price boosts.

What about a battery on its own - no panels?

Think carefully

Considering all I have shared in this post you should do your homework regarding cost and payback. While the time to payback is not the only consideration.

Specifically with batteries which typically have a shorter useful life that the solar panels. Perhaps only 10 years for the battery versus 25+ for the panels.

And battery life is influenced by the number of charge cycles, depth of discharge, battery type which strongly related to cycle life. So it's really hard to predict battery life for any given installation.

Do some math

For example a $7,900.00 battery with a life of 10 years. The warranty is 10 years so let work with that figure from now on.

Depreciation per year is $7,900.00 / 10 years = $790

Savings
Example battery Hitek Lithium POWER UR WALL 6.4kWh Daily Cycle Solar Storage Battery $7,900.00 6.4 kWh for daily cycle application.

Now lets work out the savings for a $10,000 battery?

The math: 0.32 - 0.16 = 0.16 cents / kWh X 6.4 = $1.02 per day

That’s only 16 cents worth of power per day saved by the energy stored in the battery. Not much is it ?

So in the life of the battery, say 10 years thats $3,723 worth of energy saved in total.

That’s assuming NO price rise in that 10 years for clarity.

Given the above the battery would need to last 19 years to break even.

Now here it comes: For our $7,900.00 battery saving $3,723 over 10 years, ignoring purchase price. Saying that I know people who have spent more that $7,900.00 on drapes.

It cost $4,177 to own the battery. Really! Now thats without solar panels of course.

Pros

• You can be protected from power cuts by a battery.

• Feeling good about the ecology

• Daily power costs should be lower by $1.02 per day
  

Cons

• It actually cost money to own this battery without solar panels over 10 years.

• The example battery can only supply 3.4kW of power, so not the whole house at peak power by a big margin.

Summary

Rising electricity bills are among the most common woes worldwide, and Kiwis are no exception to it. Power prices in NZ have risen over the past years at an average 3% per year. If you consider a typical annual spend of $2,500, this means the average rise in a year would be about $75. This may not sound like much over just a year, but in 20-25 years, you would be spending around $1,800 more.

Note: Just work out what 20 years of power escalating at 3% per year costs…

It’s a lot

Currently, the best way to fight the power price rise is to reduce your grid power consumption as much as possible, and the best way to do that is to go solar. Solar panels generate free power from sunlight, thus avoiding high power prices as well as any increase in them.

Additionally, using a battery with your solar power system can help save even more by shifting your on-peak power consumption to off-peak hours.

Ultimately, things such as fossil fuel prices, storm damages, energy policy, etc. aren’t in your control. But there is one thing you can (and should) take control of - your source of power.