Solar growth signals lower costs and new client opportunities
New Zealand will need to dramatically upscale electricity generation capacity in the coming years, with solar set to play a central role.
“Solar is clean, with zero emissions. It is also adaptable. Solar can be installed anywhere and can be configured in many different ways,” said Paul Clark (pictured right), Westpac industry economist and report author.
Clark said this adaptability promotes both self-sufficiency and resilience.
“It not only promotes energy self-sufficiency, but also community resilience to extreme weather and seismic events. It’s also cost effective. Upfront capital costs of solar continue to fall, while operating costs remain minimal.”
Strong growth outlook
The Ministry of Business, Innovation and Employment (MBIE) estimates that solar generation could rise ten-fold by 2050, putting it on par with geothermal and wind.
“Not surprisingly, we think the outlook for solar is promising. So do others,” Clark said.
While New Zealand has historically lagged behind peers like Australia, adoption is accelerating. Solar accounted for 1.3% of electricity in 2023 and has risen above 2% in early 2025.
Challenges remain for large-scale projects
Clark said regulatory reform will be critical.
“Regulatory reform has a role to play in encouraging investment in solar to achieve this type of growth,” he said.
“Upcoming changes to the Resource Management Act and the Overseas Investment Act, for example, should help to minimise compliance costs and make it easier for on- and offshore investors to invest in solar power, especially utility-scale solar.”
Other barriers include battery storage costs, financing difficulties for large solar farms without offtake agreements, and potential community opposition.
“Early/ongoing stakeholder engagement and clarifying the benefits of having cheap distributed power is key,” Clark said.
Households seeing payback potential
Residential solar is also becoming more attractive. The average household now pays around $2,400 a year in electricity, up 23% since 2019. Westpac notes that the payback period for solar has shortened to five to seven years for a typical 5kW system.
Clark added that households are motivated by both independence and affordability.
“Recent surveys of US householders suggest the adoption of solar is mostly driven by energy independence and cost savings,” he said. “While similar surveys do not exist in New Zealand, Westpac customers that we talked to are saying very much the same thing.”
Why it matters for mortgage advisers
For mortgage advisers, the solar trend intersects directly with household finances and property values. Falling costs, shorter payback periods, and new financing models – such as adding solar costs to mortgages – are creating opportunities for homeowners to lower energy bills while adding value to their properties.
“Despite these challenges, we believe that solar power has the potential to transform our energy future, delivering lower cost, lower emissions and more reliable energy solutions for New Zealanders,” Clark said.
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