Government ‘Kicked The Tyres’ On Solar Subsidies But Went With ‘Minor’ Tweaks Instead

Kirsty
Johnston, Investigative journalist

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 (MBIE),
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.”

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
A$11.5 billion in government grants, which reduced upfront
costs by 30 percent 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
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.”

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 household 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.

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 percent 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.

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.

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