How to avoid getting burned by solar | EP 90

How do you separate solar facts from sales hype? Mike Casey from Rewiring Aotearoa joins us to discuss not only the significant opportunities solar energy presents for farmers, but also how to make sure you're getting the right system.

With more farmers exploring solar to reduce power costs, improve on-farm resilience and gain greater control over rising electricity prices, Mike explains why careful research is essential before signing a contract. He shares the warning signs of a poor deal, the sales pitches that should raise questions, and the common mistakes farmers make when choosing a solar system or finance package.

Mike also walks us through what a good solar proposal should include, how to compare offers, and the key questions to ask before making a decision. 

Useful links

Rewiring Aotearoa's Electric Farms Report

Transcript

SPEAKER_00 0:07

G'day everybody and welcome back to the Federated Farmers Podcast. This has been Chapman Smith. Well, solar has huge potential for farmers from cutting power costs to improving resilience and reducing emissions. But here at Federated Farmers, we're hearing more and more stories from farmers who are feeling disappointed, confused, misled, and even downright angry about some of the systems that they've signed up for. You only have to have a look at some of the farming Facebook pages out there to see some long and heated discussions around this issue. Some farmers are saying that the savings they were promised haven't stacked up, while others are feeling pressured into finance deals or systems that aren't quite right for their farm. So, how do you make sure that solar works for you? What questions should you be asking? And how do you separate the good operators from the cowboys? Joining us to unpack it all today is Mike Casey from Rewiring Altera. Hey Mike, thank you, mate, for joining us on the podcast again. It's great to see you. I think it must have been a year or two we had we had you on, eh?

SPEAKER_01 1:16

Oh, yeah, absolutely. Keilda Ben, it's amazing to be here. You've you've asked me to talk about solar. I'm like a pig in shit when it comes to solar. So um no, looking forward to it as well, mate.

SPEAKER_00 1:26

That's what we want, mate, because we need some uh we need some answers here. So we're hearing more and more stories from farmers out there who seem pretty hacked off by a solar deal that they've they were excited about and it hasn't sort of worked out. Are you hearing those two? And what are the most common complaints that you're hearing?

SPEAKER_01 1:46

Yeah, so first of all, super excited about um the solar, it's like farmers adopting solar around New Zealand. And I think it's been a, they're almost leading New Zealand on this uptake at the moment, which is super important for the whole of the country's energy future. But with that, and with an industry that's somewhat in its infancy still getting off the ground here in New Zealand, we're seeing a spectrum. We're seeing people who are really, really pumped with their solar installations and the way that they're doing things, right through to people that probably have been led down the garden path about returns or potentially a little bit of shoddy workmanship here and there. So there's a wide variety of different things. Um, and you know, unfortunately, that is the way that it the way that it goes. And I'm but my hope is that the industry just becomes far more mature and we start to really make sure that those tradies that are doing good jobs rise the bubble to the surface and and get lots of business, right? Because at the end of it, a good solar installation done well is a hugely good outcome for the farmer, and it's a hugely good outcome for rural New Zealand and then New Zealand as a whole.

SPEAKER_00 2:48

So you agree that the fact is some farmers are going into solar deals that are not actually working out well for them.

SPEAKER_01 2:57

Yeah, well, let's define there's different types of solar deals, right? And the first thing is that I've been this drilled into me by federated farmers, and I'm very much on board with this idea of property rights, right? A farmer should ultimately be able to choose what they want to do with their land. And with that, there comes two key possibilities when it comes to adopting solar. One is that they own the panels themselves on their land and they become a small generator and they get all that money coming back through their power bill on their on their grid connection. And the other is to rent their land to a um to an electricity company, right? Those are the probably the two the two key ways. And in both cases, there's good and bad outcomes. You know, what we're seeing at the moment is farmers leasing their land to energy companies at probably, you know, eight, nine thousand bucks a hectare, something like that. It will vary in price, you know, so on and so forth. Um, and ultimately to some farmers, that looks like a really good deal on marginal land or land that is not, you know, it might be making $5,000 a profit a year, you know, and very little work involved with needing to do it. And so you're seeing these big farm conversions happening in the utility scale space. That is important for some farmers if they're looking at succession planning, if they're mortgaged to the hill, you know, that is a really good way that they can start to generate more income from their land to get themselves out of a potentially sticky situation. However, I also have strong advice for farmers that if you do this yourself, that you'll make a hundred grand a hectare. So 10 times the money by financing the solar system and installing it yourself and owning it yourself. So you could end up with a way smaller system. You could keep farming, you might not need to sacrifice much in the way of farming land at all to get a better revenue outcome for your farm. And people need to be able to make that choice about what is right for them. Some farmers want to dive in head first and do the full installation themselves, like my my dad, right through to farmers that want a complete turnkey solution, right through to farmers that would rather negotiate with a large energy company. All of those are cool. Um, we just need to figure out what is the best the best one moving forward for that particular farmer.

SPEAKER_00 4:57

What are the biggest red flags that you see, you know, a solar salesperson or company, uh, you know, in terms of how are they overselling or embellishing or misleading? What should farmers be looking out for?

SPEAKER_01 5:11

So I think the utility scale solar, it's the real nickel and diming of farmers. Farmers don't really know the full potential of their land when it comes to energy production. So we can talk about that, and you know, the whole thing there is you've got an energy expert with a really long energy joystick stick against a farmer who doesn't know a lot about the energy system, right? And so part of the goal with this, what I'm really excited about feds doing and all of that, is just educating farmers on the true value of their land when it comes to energy, right? But we know for a fact that if it's a professional energy company, the farmer might not get a good great deal by leasing their land to them, but ultimately the installation is going to be great because they're a professional energy company that you know delivers very, very high standards. So if we part that to one side and then look at, well, if we're self-installing and self-running um, you know, the solar installation, then you get into engaging with much smaller businesses. Now, some businesses are absolutely fantastic with what they do. Some businesses are starting up for the first time and you know might have a few learning things to do along the way. And then you might have tradies like you have in every situation. Like you might have the good irrigation guy in your town and you might have the bad irrigation guy in your town, right? And it's the same thing with solar installations. The number one piece of advice here is you know, there are enough farmers in New Zealand now installing enough solar and batteries that there's enough credibility for the ones that are doing a good job. So ask that dairy farmer in Southland that's just put solar and battery on his farm how he found the whole process, what he learned. And maybe that can then be applied. You can probably go get the same company to do it. Or if it's not, you know, maybe that company could recommend another company that's, you know, might be in the North Islands that would do the same sort of service to the same sort of deliverables. So I think that's really important. The other thing is to understand, you know, what it costs to install on a farm. Um, and the short answer is, you know, to lay out a few facts for you. It's probably somewhere between 1400, maybe 1200 if you're installing everything yourself. You're drilling your own holes, you're pouring your own concrete, you're setting up the framing, you're putting all the solar panels on and bolting them in and you're wiring it up and just leaving the sparky to come on and do the last bit of the end. If you're fully involved and want to do that whole system yourself, 1,000 to 1200 bucks a kilowatt. Um, if you're doing some of it, but you've also got an expert to come and help you out with it, it might be more like $1,400, $1,500 a kilowatt, right through to a complete turnkey solution that you might get through a product like Farmlands Flex, which might be closer to $1,600, $1,700 a kilowatt, right? So it again, it depends on what is the right service, you know, for you. Um and yeah, the number one thing is I think if you've got, if if if you're engaging with a tradie or a solar installer, making sure that you're able to talk to another farmer, because the one thing I know for certain is you can always trust another farmer to tell you the truth, um, and understanding what the process was like with them and the good and the bad. Um and generally that is the best way to avoid, you know, some pretty shoddy workmanship. But usually it comes from people trying to cut costs, people driving down the price. The short answer here is, you know, you're probably buying power on your farm, you know, your irrigation pivot at probably something like 20, 25 cents a kilowatt hour. Finance on your farm mortgage at 5.5%. You could probably generate at nine, eight, nine cents a kilowatt hour. A slightly more expensive system might be 11, 12, 13 cents a kilowatt hour. Ultimately doesn't matter because you're still saving on that 20 to 25 cents a kilowatt hour. So it's really important to understand that the capital cost is something that farmers will want to reduce, um, obviously, because we like to spend less money, we're farmers, but ultimately financing the solar system over a longer period of time, um, ultimately the most important thing is to get the solar system right.

SPEAKER_00 8:45

Are there certain promises that should make people instantly skeptical? Like if they hear a salesperson say things like zero power bills or the system is gonna pay for itself.

SPEAKER_01 8:59

I mean, I think the system's gonna pay for itself as an as just economic certainty. Like it's going to happen, right? The amount of money that you can save from generating electricity yourself and using that electricity yourself provides incredible paybacks. In fact, we're seeing paybacks when financed on mortgages at five, six years, right? And this is on the top of a shed roof, you know, a dairy shed roof, for example. So the payback is remarkable. I think zero power bills, again, that can be, if you look at over a year, I can definitely achieve that on my farm. But there are still some months that I have massive credits and some months that I have massive bills, right? Because depending on the time of year and the time of year that you use energy as well. So I think a lot of it comes down to expectation setting and understanding. Can you get to the point on farm where you do not have an electricity bill over a year? The answer is absolutely correct. Can you do it in July or August? Maybe, maybe not, depends on your farming practices. Do you dry the girls off? Do you not? You know, like all of those kinds of things come into key into play here. In the height of winter, you'll probably be generating 10 to 15% of what you can generate in summer. So a lot of that comes into understanding your own farm practice. The other thing that I think is super important is to understand how modular this stuff truly is. You know, you can build a system, you can learn how to fix your power bill, and then you can decide whether you want to invest more. The only piece of advice that I have here is the most expensive thing is getting the guy to come to your farm to install the solar panels in the first place. So maybe to go slightly bigger, but knowing full well that you can test it out, you can put your toes in the water, you can see how it performs, and you can go one step further. Um, so that would be my advice there is you know, different farmers are going to have different levels of uh of risk appetite towards this kind of stuff. But I can put my hand on my heart and tell you that you're gonna save really good money by doing this. Um, that's something that I can genuinely offer you as a authentic recommendation here.

SPEAKER_00 10:59

You know, Mike, you know this. A lot of farmers and homeowners aren't electrical experts, and even things like terms like kilowatts are gonna put people some people to sleep, or you know, they just get confused. How do you separate genuine advice from clever marketing jargon when someone's standing in front of you trying to explain a system to you?

SPEAKER_01 11:17

So I've seen like a lot of solar install installers start up in the rural space. There's a lady by the name of Beck Smith out of the Mineotor who's is a sheep and beef farmer who has now started a solar installation company because she did it on her own farm and realized the problems that were existing, you know, in that in that space. And she wanted an authentic way of explaining, you know, how this stuff works. Everyone knows what a leader of diesel is. No one can conceptualize what a kilowatt hour of energy is, right? That's right. Um, you know, and so this is really hard. So you need to explain it in a way that far farmers are gonna understand. You can run 40% of your dairy shed in the morning milking, and you can run 60% in the afternoon milking. If you put a battery and if you do a slightly better, more efficient um, you know, water system, you can save this much additional energy. It's it's just a bit more complex when it comes to farming. And so that's why I think the having installers that have a root in farming is super important. Um, you know, there's farm gen solar that comes out of the Tatanaki, which is also just a brilliant, you know, solution for some different types of farming. I went out and saw a piggery out there recently that had just installed a huge amount of solar because they realized they could make money pushing back to the grid, right? So again, there is a piggery that's doing this up in Tatanaki. I went down south to Southland last week and caught up with maybe five, six different dairy farmers that had installed in Southland. Um, most of that was through an organization called Earnest Energy. That's a Southland Invercargle headquartered company. And again, the you know, the feedback from farmers was this is absolutely fantastic. So I think the answer there is you need someone who understands farming and you need someone who understands energy. And when it's combined like this, they don't need to trick you because the reality will sell, you know, it will sell itself. They just need to be authentic and really open. And in some cases, we see rushes, you know, a rush to the bottom of the barrel essentially when it comes to solar installers and what they're doing. And that's when it usually leads to overpromising and undelivering on products. And it is a problem that we need to figure out how to solve. Um, but a lot of it comes down to, I think, just selecting them selecting the guy that your mate used or your or your neighbor used that's had a good experience, and that's ultimately the way that we foster and grow the best businesses in New Zealand.

SPEAKER_00 13:30

Have you seen more farmers taking up solar in the last year? You know, I'm thinking about some of the pretty massive weather events we've had where there's been some major power outages, and one of the key messages out of those events has been hey, guys, we need greater resilience on farm. And I'm just curious to know whether you're seeing that on the ground.

SPEAKER_01 13:52

Oh, outrageous level. So uh Fairbank Farms, that's Mike and Chris are down there in Southland. I think they were the only farm that had solar and batteries installed. At least they're the only dairy farm that had solar and batteries installed down in Southland that I've heard about anyway, that you guys covered in Farmers Weekly. Not a single loss of milk production in Southland. Why? Because the sun came up the following day, recharged the batteries, they could milk, they couldn't run in fifth gear, they could probably run in second or third gear, which is enough to wait for the infrastructure to be rebuilt so they could keep going while everyone else was scrambling around for diesel generators because their one didn't start or they hadn't thought about resilience at all. The way the way that I would describe solar and battery setups is they pay for themselves in the good times and protect you in the bad times. Um, you know, Blair and Jody Drysdale, another one, uh, you know, down in down in Winton there, um, sheep and beef farmers, you know, power cuts for days when that happened and were still able to, you know, run their lives, could keep farming, even though, you know, it wasn't the the ideal outcome of having a full grid connection, they could still have warm showers, their staff could still have warm showers, they could still cook food, all of those kinds of things I think were super important. Um, and we're seeing this happen more and more. Like I think as resilience is becoming more and more of a hot topic, and we think about it from like a weather disaster kind of scenario, and that's really important because we know how fickle power lines and roads can be when macro carpetries fall down on them and when they fall into rivers and all that kind of stuff, right? So there's that angle which is super important, but there's also another form of resilience on the on the line now, which is what we're seeing out of the Middle East with the rise in the cost of foreign sourced energy. The there is resilience in making energy cheaply yourself and using that energy cheaply yourself. And the way that I describe a solar and battery setup now is it's kind of like having your over own private oil well in refinery. And I was speaking to the guys on the other day at um at Geely, they are selling that fully electric Ute now, the Radara, but also, you know, speaking to BYD about that BYD shark. The sales are through the roof. And one of the key reasons they're through the roof is because farmers are catching on and realizing they can pop their own energy into the tank rather than you know, energy from Saudi Arabia or Iran or wherever it is. And so when you see those economic arguments start to happen, it's almost like resilience and then obviously the climate emissions associated with burning fossil fuels is almost like it's a great, like nice to have on top of the actual thing that we're doing here, which is just really smart, sensible business decisions.

SPEAKER_00 16:24

What are the most common mistakes you're seeing people make uh when they're signing up for solar systems, Mike?

SPEAKER_01 16:30

I think it's probably rushing into it, maybe not understanding fully. Like if you find a solar installer that's really, really good that can coach you through it and you trust them and your neighbors had it installed and it's worked really well, then you know you can push that trust onto someone, right? But it's generally rushing into something with not fully understanding your farm energy business, so the energy business, the energy consumption on your farm, um, or installing a solar system and then wondering why the payback isn't where it should be, you know, and it's like, well, obviously you're only generating when the sun is up, when are you milking? Um, you know, obviously if you store it in the battery, you might be able to get some you know benefits there. But hang on a minute, you're still buying gas by the bottle and you're still running, you know, diesel machinery. Now, some machinery, of course, like a 200 horsepower tractor, cannot be electrified yet, but the road vehicles certainly can be. And so it's making sure that you also understand that, you know, every ever all the energy that you don't get that you buy from someone else is undermining the payback of your solar system. And then understanding as well that, you know, where are the biggest electricity uses where you can get an immediate economic slam dunk? I can tell you it's on your dairy shed roof, I can tell you it's with the chiller, and I can tell you it's with the pivots, right? And so that is just an economic slam dunk do it straight away. And some of the things that we're trying to fight for at the moment is, you know, most farms have multiple grid connections. I remember I think Andrew Hogarth said he had nine grid connections. One of the big problems that we have at the moment is that, you know, you export on one grid connection at 10 cents a kilowatt hour and buy it back on the other one at 30 cents a kilowatt hour. And that's something that we're massively fighting for. We're going to be in the Federated Farmers' Field Days tent this year because that is such an easy regulatory change to sort for farmers, yet no one is doing it. And then the second thing is around well, how do we make sure ultimately we allow farmers to sell power to whoever they want to? Because obviously dairy farmers selling surplus power back to Fonterra is a really smart circular way of doing things, right? Where, you know, and and so this is all part of the payback solution as well. So I think the other part of it going back to what are the mistakes you make, understand that the electricity system isn't perfect yet. And we're still developing this. You know, we only have 3% solar adoption in New Zealand when Australia has 40%. Understand that regulations and policy changes take way longer than the technology does. And I think probably half of it is getting to the other side and, you know, getting some good payback on your pivot system and then realizing that you're still buying power into your home and you're shared at 30 cents a kilowatt hour, and people are becoming quite frustrated by that. But that is part of the regulatory shift that we need to go down. And why I get so excited about working with feds and you know other rural advocacy groups is there's actually some pretty small changes that we can make to really return, like have a maximum ROI. Um, and so that you know, that's the other thing is just making sure that you understand the restrictions in the market now and that hopefully, you know, guys like you and me are going to fight for a better system moving forward that you know farmers will really benefit, uh benefit from and the whole electricity system will benefit from as well. So it is a lot to learn, and there's a lot of nuance, and it can be quite tricky. I think the number one thing is start with a good installer, let them explain where there is some inefficiencies in the market at the moment, and then once you're installed and you're up and running, fight for a better system like everybody else.

SPEAKER_00 19:46

Can I ask a maybe a dumb question here? Why wouldn't you buy your own system and put it in? Is the main obstacle there just the capital outlay? Is that the restriction?

SPEAKER_01 19:57

No, no, I mean I think you can. Like this is kind of what I did on my farm with a bit of guidance from um ThinkSolar uh in Wanaka, uh, where basically I ordered the panels and the structure from Panasonic wholesale. They came in and then helped me install it. We actually got a builder to come in and run the string lines and drill the holes and actually build the structure. Um, so we were quite involved in the whole process. My dad is like doing the whole thing from start to finish with just an electrician, you know. So there's different like levels to this as well. Just depends on how hands-on you are, how practical you are, and how much time you have is probably the key thing. And, you know, making sure that you don't half, you know, do what I do a lot of the time, which is half start a project and not finish it. This thing's not going to pay itself off unless you actually finish it.

SPEAKER_00 20:45

So we should we have got your dad on, Moy? Maybe we should have got your dad on the podcast.

SPEAKER_01 20:49

Oh, yeah. I mean, he's he's not a farmer by trade, he's uh a technology startup, but he's bought a lifestyle block and he's realized that you can't make any bloody money in lifestyle blocks. It's almost a sub-economic amount of land you can possibly imagine. It's like three, four hectares of land. You know, he grazes a few of the neighbor's sheep on his farm and makes no money off the land. And he's realized that he can continue to graze the sheep for the neighbor under solar panels and he can make, you know, 20 something percent IRR on this investment. He's realized that this is his retirement funds, and now his goal is to outlive his solar panels, which is great because my seven-year-old father has a new lease on life, which is just to go hard and you know make as much money in the energy system as you possibly can.

SPEAKER_00 21:28

Excuse me. I know we went over this last time we had you on the podcast, but can you step us through for absolute beginners to this topic, how it actually works? So you've got some solar panels up. Can you have a battery and not have a battery in terms of stalling the power? When can you or can't you sell power back to the grid? How much money do you get? Just some of that real high level stuff.

SPEAKER_01 21:51

So I think the first thing is to look at you know what size connection to the grids that you currently have. And you can think of a connection kind of like a water pipe. Water can flow in either direction. But it's limited to the size of the pipe, right? It's the exact same thing with a power cable going from your shed to the transformer. So that's an important thing to understand. And you can look at your power bill and you can go, you know, okay, what's the size of my connection? Now, ultimately, you're building more solar than your connection size, well, you'd only do that if you're self-consuming an awful lot of power at a particular point in time. Otherwise, you have to curtail the solar system or basically turn off a few panels to make sure that you don't blow a fuse, right? So it's understanding that part of it, I think, is really critical. Um, you don't need a battery, but if you're milking at four in the morning, maybe it's economical to get a battery. The way that I best describe this to farmers is you can probably get seven cents a kilowatt hour for solar when you finance it on your mortgage, right? If you're doing it at about 12, 1400 bucks a kilowatt hour. Sorry, a kilowatt for a full install. Batteries cost about 18 cents to cycle. So therefore, putting a seven seven cents into the um, you know, of generation into an 18 cents for batteries, it's about 24, 25 cents a kilowatt hour for the total cost of that, right? What are you getting from the grid? Is it less than 25 cents? If it is, then maybe the battery's not necessarily economical right now. But battery prices continue to come down. Regulations are starting to change to reward people for having batteries because it means less poles and wires need to be built in the future. So ultimately, it might be not now, but it could be later on. Just make sure you tell your solar installer, I might want a battery one day and I'll install it later. But that being said, if you don't have batteries, there's pretty much still zero resilience. If the power's cut, you know, because the macrocarpentry's fallen down, the solar panels immediately have to turn off. Because if you're doing nothing but pushing power back to the grid, there's a real safety risk to the linesman, right? So it has to island. With a battery, that is the buffer, right? You can cut the connection between uh the grid and your system while still running the solar to fill the battery up to then continue to power the irrigation pump or whatever it might be. So it really comes down to, you know, my argument here is no one ever asks for what the return on investment of a life jacket is. You kind of wear a life jacket and you really value the fact that you bought one when you're in the drink when you're in the drink, right? The kind of same thing at the moment, I think, applies to batteries, and it really depends on how resilient you want to make it. But everyone is on that journey. And I wouldn't say that buying a battery is a good decision or a bad decision. It really depends on what you're thinking in that space. But to answer your question, absolutely you can go with your solar first. You can start with a smaller system, you can scale it over time. Eventually, you might want to upgrade the grid connection because you're electrifying more of the machines on your farm. Eventually, you might want to put a battery in. All of these things can happen. They can happen sequentially. They don't need to all happen at once. There's no need to panic about this. This is uh, everyone is on their journey. This is not an overnight project. One day, I almost guarantee you'll have a 200 horsepower electric tractor and it will be far cheaper than running a diesel tractor. When that happens, you'll want to use more electricity. Again, you might want to upgrade the system. Probably think, you know, what is my farm going to look like in five to 10 years in terms of electricity consumption? I'm gonna get gas out of the home, I'm gonna get some electric Utes. You know, maybe, maybe there's getting rid of that diesel generator that runs that, you know, that last pivot or whatever it might be, you know, there are things that you will be doing over time. You probably want to build your solar system to take into account the additional consumption that you're gonna have. Um, and then ultimately just keep growing, just iterate as we do in farming all the time.

SPEAKER_00 25:34

So if you don't have a battery, you can only be using solar if the sun's out, like in terms of its real real-time energy generation. Is that correct?

SPEAKER_01 25:43

Exactly right. And there's no grid connection cut. There is a way that you can kind of like island with a special type of what we call an inverter, which is the thing that basically takes the power from the solar panels and turns it into power that you can use in your wall sockets and whatever. Um, there is a special type of inverter that you can do that can run on solar even when there's a good connection cut. But the problem is it has to have high enough voltage for it to work. So it only works at very certain times in the day. And the moment that you get to the shoulder hours of the day, as soon as that production goes down, as the sun begins to go down, then the cut happens. So the short answer is it's not really a good solution for resilience. If you care about resilience on your farm, then I 100% recommend getting a battery. A battery will probably cover its costs over its lifetime, but you're not going to make money on it, right? A solar system will cover its costs in five years and it lasts for 25, 30 years. So you can see where the real economic incentive is right now, it's on generation rather than on storage.

SPEAKER_00 26:44

Generation meaning selling it back to the grid.

SPEAKER_01 26:47

Yeah, exactly right. Well, using as much of it as you can yourself and then selling the remainder back to the grid. Now, what I get so excited about the role farmers are gonna play in this space is in order to electrify a whole economy and run on New Zealand-made energy rather than Saudi, Saudi energy, we need like twice as much electricity as we currently are gonna have, right? Now, if every farmer in New Zealand, the 50,000 of us, did exactly what I did on my farm, we would generate 60% more renewable energy for New Zealand's electricity system. So farmers are gonna play an absolutely massive role at a time where the rest of the New Zealand's energy system is failing New Zealanders. We can scale this stuff up quite quickly. And then so farmers will naturally ask me, well, you know, is the the prices on the grid going to be as good as they are now? And the answer is, well, it largely depends on how fast you think New Zealand's going to electrify. Because every petrol vehicle that is bought into New Zealand that runs off foreign energy is undermining a farmer's return on their investment from a solar installation. Every electric vehicle that's bought uses that farmer's energy. And so you can sort of see, well, it depends on where you think the future is going to go. Are we going to be one of the leading electric companies, countries in the world? Because I sure think that's where we should be going, because our prosperity is going to be so much greater when we don't run on foreign energy anymore and we run on the majority of our economy on New Zealand-made energy. And that means the return on investment for farmers is really going to be really, really good. If we keep floundering around L and G terminals, petrol and diesel, you know, and we don't electrify that vehicle fleet, well, then it's going to take, you know, it's it's probably not going to have the return on investment that we're looking for. So it all comes that that's all part of the dynamics of sort of understanding whether you take that hunt or not. But right now, with current prices, five, six years is totally achievable.

SPEAKER_00 28:33

I just want to carry on down that route of what you were talking about there before we come back to sort of the the core focus of this uh conversation. But just going off down that route there, why are we lagging behind Australia? You know, what I know you meet with the politicians, what sort of regulatory changes need to happen for us to start getting some real momentum in this area?

SPEAKER_01 28:54

It's hard to talk about this number with farms because every farm is so different, right? But let's just take, imagine the house on your farm because houses are very, very similar, right? If you put solar on your rooftop of your home, right, the savings that it will generate will be enough to pay back the interest plus the capital repayments and still give your family a thousand bucks a year. That is how remarkable this is right now, right? And so one of the biggest problems that we have is the upfront capital cost for regular New Zealanders. It costs $10,000 to $20,000 to put solar on your home. It is expensive. Why is it expensive? Because you're buying 25 years worth of electricity up front when you think about it, right? That's the way solar ultimately works. But you're buying it at on a house like 11 cents a kilowatt hour compared to 40 cents a kilowatt hour from the grid. So you can see how the economics works out there. The issue is the upfront capital cost makes it totally unachievable for so many New Zealanders. If you've got a mortgage and you can get access to one of those green loans from the bank, great. About 20% of New Zealanders are eligible for those green loans. So 80% of New Zealanders are not. One of the parts of New Zealand that is not is our farming community. Anything that is rurally zoned does not get access to those 0 to 1% loans. So it becomes an issue for a farmer who simply wants to put solar on their own rooftop to save on their electricity costs in their own homes, right? So there's this finance thing, is the thing that I think is New Zealand's wicked problem to solve. Because we know that the savings will cover the finance repayments and give that money left over. So how do we get more finance options out to more New Zealanders? In particular, how do we get more finance options out to farmers? The big thing that I'm all about is this thing called the ratepayers' assistance scheme, which is low interest, long-term, and flexible finance for any rateable property in New Zealand to be able to do these upgrades. Now, for farmers, that can be on their own homes, but it can also be the solar upgrade that's needed to run the pivot, right? Where all you have to do is prove, and this is where the solar, you know, a trusted solar installer can really help. This is what the payback on the solar system is going to be. And it's going to be more than the repayments on this, on this. And all of a sudden, the payback is day one because you're deciding to build a solar system and lowering your immediate outcomes. The one thing I love about farmers, you know, a lot of New Zealanders really struggle with finance. I don't know about you, but my mum told me, never go into debt, son. It's a bad outcome, right? So people have this really serious adversion to debt. But farmers are a little bit different because we're all in debt and we know we're all in debt. Um, we understand finance a lot better, and we understand where using finance to invest in something is actually a better outcome. And so this is why I would love to see a product like that available to all households in New Zealand, all farmers in New Zealand, all small businesses in New Zealand to be able to finance that. Kind of, it's a very, very similar product to what the government has just announced only a couple of days ago with helping to finance large businesses to get off gas because we're running out of gas in this country, right? That's finance for the big end of town. I think that's amazing. And I really commend the government on that. Just like putting my hand up and going, well, what about all the farmers, the small businesses, and the households in New Zealand that also need to transition off gas that you've supplied nothing for? Here is the ratepayers to assistance scheme. It's a really good idea. So that's the finance piece. Other regulation is largely energy system nuance problems. It's making sure that you can buy sell power on one grid connection and buy it back on the other one at the same price, um, you know, especially if it's related to your farm. I think that is, you know, super critical and important. I I joked with uh uh Todd McClay just the other day at the Out the Gate conference with um Beef and Lamb. It's like we need fair trade of New Zealand's electricity system, which means a farmer should be able to choose to sell power to his old lady down the road, potentially to the school in the local town. Right? We need choice at the moment, you're not allowed to do that. So it's unlocking those kinds of things so that ultimately we can grow more social license through the investments we can make in the energy system. And above all, it's paying people fairly for the contributions they're actually making to the energy system. You know, right now the forward pricing on the ASX for New Zealand electricity is 15, 16 cents a kilowatt hour. What are you getting on a PPA at the moment? Uh uh, you know, an agreement on export through an energy company might get 10 cents, might get 11 cents, might get 12 cents. They're just scalping your energy. And I think that's a real problem at the moment. They're just like literally, you know, buying your energy and selling it a moment later at a 50% higher markup. And they haven't been the ones that have invested in your energy system. So they don't deserve to do that. And when it comes to batteries, well, batteries will stop more poles and wires needing to be built. So our average utilization rate of our poles and wires sits at about 40%. We could conceivably squeeze twice as much electricity into our existing infrastructure if we can increase utilization rates. And that involves removing those congestion periods where everyone wants to use power at the same time. The best way to do that is to put a battery in a home. The second way to do that is the best way is to put a battery on a farm and have that farmer power those home, those homes. So my farm battery powers about 25 homes, and I'm not fairly rewarded for that contribution yet. So these are the regulations that we need to have changed. This is why I'm really, you know, keen to work with federated farmers on. These are actually simple things to change. The problem is that no one's really fighting for them yet. And that's what we're starting to really crank up now, is just being like, hey, this system's a bit shit for the everyday New Zealander. How do we make it a bit fairer for the everyday New Zealander? How do we ultimately crack open the energy system in the energy market to make it fairer? Well, it just means more people should be participating. So free access to the market is the number one thing we need. And maybe, maybe this gen tailor problem will solve itself when we've got 50,000 farmers injecting energy into the system.

SPEAKER_00 34:49

And are you also hearing stories of uh farmers uh having problems getting consent to put in solar panels?

SPEAKER_01 34:57

Big time. So, you know, one of the big things I'm really excited about is the work that we're now doing, you know, rewiring Altero, my charity, and the Ministry for Regulation, which has been kind of led by David Seymour, which is to look at a lot of these problems that are existing in the market. But yeah, to give you a prime example, CODC, Central Otago District Council, where I am, great, can install solar without a resource consent. 10 kilometers down the road, the border changes to Queenstown Lakes District Council, and the poor farmer down there has to spend tens of thousands of dollars to get his consent over the line to build a smaller system than mine, right? So there are things like that that are a massive issue where someone just needs to come along. And one of the things that I would like this review to announce with the Ministry for Regulation is solar is a permitted activity on farm. Fill your boots, right? Maybe up to a set limit, because I think maybe a megawatt of generation is all a farmer's ever going to need. And anything beyond that starts to become utility scale solar. But you get the idea of like defining what mass market truly is, which is, you know, it's it's bigger than households. It also includes farmers and all that kind of thing. But then it's like it's all the rules and regulations that exist with the utility companies. You know, one utility company is great, the other one's not. There's 29 of them in New Zealand. There's really inconsistent practices at the moment. The short answer is that you should have same-day turnaround on approvals for solar installations, right? Um, sometimes it can take weeks. Aurora, my utility company, namely because I've been badgering them for so long, now does 24-hour turnarounds or instant approvals really on residential installations, which is great because you can move forward really, really fast. Others take weeks, right? So it's the laws of physics are the same. The market is the same. Why are the rules so different from region to region? Um, especially for something like solar. You know, I can understand why the rules need to be different for something like fresh water, because the environments there is region to region are so different. The laws of physics do not change region to region, you know, and so therefore we should have standardized rules that allow people to do this stuff really, really quickly. And so that's one of the big things that I'm fighting for for this review. And if we get that over the line, we're gonna, you know, make New Zealand one of the most efficient places in the world to install solar, which is a great outcome for our whole energy system because we need so much more generation.

SPEAKER_00 37:11

Hey Mike, coming back to this uh theme of you know separating the good operators from the cowboys, apart from talking, you know, having your ear to the grindstone, finding out what your neighbors have, what's worked for them and and and so on, are there any other uh ways to work out who's trustworthy and who's dodgy? You know, in the building where we have like builders crack or whatever, you know, like you have these kind of websites that that rate providers. Uh are there consultants out there? You know, who can farmers turn to?

SPEAKER_01 37:42

There's a few things floating around. There's a few consultants around as well. Um, it is an interesting one. Like, I think like in rural New Zealand, we trade on our trustworthiness, don't we? Like a lot. And so one thing I would really encourage farmers to do is there's a lot of electricians who might be your industrial sparky for your pivots or something. They run all the, you know, variable frequency drives for your irrigation systems and things like that. They might be thinking about getting into solar for the first time. In fact, you'd be hard pressed to find a farmer who doesn't have a trusted relationship with an electrician. And so that would be the other place that I'd look at. But I'd also think about, you know, hey, this is your first installation. This is my first installation. You know, how about we start doing this together? Because what New Zealand needs is a lot more people who are clued up in this space. And so my industrial Sparky, for example, has just started for the first time installing solar on farms, right? Because he's realized he's the one that has the trusted relationship with so many farmers in New Zealand and so many farmers in New Zealand, or in Cromwell in particular, are looking at solar installations for the first time, right? So I think that's an important part of this as well, is that it shouldn't just be only looking at the reputable solar installers. Yes, they could do a really good job, but we also have to be business people helping other business people get off the ground in this space because this is such a massive energy transition. So I think that's an important thing as well, is finding those trustworthy people, the people that trade have traded on their trust for decades in this space already. And maybe if they don't want to do it themselves, they'll know the electrician that is doing this that they can trust. And I'd say that's the way through it. And, you know, if there's a flashy salesman giving you a cold call, maybe you know, treat that at arm's length. Um, sometimes cold calling is a great way to drum up business and you're a reputable business person. Sometimes it's not. Um, when it comes to subsidies of solar, you know, you know, we don't subsidize solar in New Zealand. It is an economic slam dunk now. So I think there's an argument that we don't need to. Um, but ultimately the industry is going to be scaling very, very fast, whether it's through subsidies or whether it's naturally that it happens, there will be people who try to, you know, fly by niters that occur. And I think half of it is buyer beware and just, you know, sniff it and see if it smells bad before you buy it. Ask a fellow farmer who's already installed solar to look at the quote. And you I'm pretty certain you'll come to the right answer. But I think really you know the biggest mistake we're seeing is probably people rushing into it and not, you know, not just taking a moment to see what they're you know, see see what it's what's what's actually behind the curtains, I guess.

SPEAKER_00 40:16

Is there a risk that if there are too many of these bad solar experiences that that's going to start putting people off even dipping a toe in? 100%.

SPEAKER_01 40:27

And so this is the biggest balance between the two, right? Like, why is it that solar is more expensive to install in Australia and New Zealand than New Zealand? It's a lot, but it's to do with regulation. So, how do we bring the capital cost down? We start to remove some regulation. But as you start to remove regulation on the other side, it's a tipping point where if you remove too much regulation or don't put the right regulation in place and you just unlock everything, then on the other side, solar installations get a bad name, right? So it's really about finding that right balance. Like I can put my hand on my heart and tell you now there is too much old regulation in this space that is stopping people from doing things and solar is too expensive to install on farm in New Zealand at the moment. We need to figure that out. But also with the Ministry for Regulation, we can't just cut everything. We have to make sure that we build a system that is reputable. Does that mean that every solar installation needs a live inspection? Maybe, maybe not. Does the inspection layer actually make sure that these things are high caliber? Uh, they probably don't at the moment because we see some compliant installations that look like someone's vomited up their last night spaghetti. You know, like it's just we have to, we have to build a system that ultimately is a really trustworthy system that more and more New Zealanders can trust. So that's something that I'm you know really heavily focused on with this initiative with David Seymour at the moment, is making sure that we cut the crap, but also don't make crap. If that, yeah, that if that makes sense.

SPEAKER_00 41:52

Hey um Mike, if people have some really basic questions about solar, do you have like a sort of an FAQs page on your website?

SPEAKER_01 42:02

We do at rewiring.nz. I've also got my electric farms report for those that want to download that. That's specifically a case study about my farm. Um there, but you know, one of the biggest ones I think at the moment is finally where, you know, when when Simon Watts was minister, we were working through getting ICA to start providing a lot more information around solar for farmers. They've now done a couple of dozen demonstration farms around New Zealand as well, which is all part of this. So their team is getting clued up in rural solar installations. So that is the other thing that I would recommend is you know, that we do have a government that is wanting to at least, you know, encourage more solar installations on farms. I'm quite proud that they've gone ahead and you know done that. Um, there is also plenty of information out there from the actual solar installers themselves. I think, you know, to put it simply, I can rattle off a few businesses that I really like the look of at the moment. Um, Farmlands Flex, obviously, um, that's a really reputable brand. They back it. If you're worried about this kind of stuff, it might be slightly more expensive. It's a bit more of a turnkey solution, but it works. And it works really well, right? You've got Beck Smith, Salea. You know, she's the farmer that's become a solar installer, like top girl. Like, I think she's doing amazing things for farmers in the South Island. You've got Earnest Energy uh down in Invercargle. You've got Farm Gen up in Tatanaki, you've got Future Energy, which has really come more from the industrial like rooftop space, but now doing solar installs on farm. Um, you've got um Light Force who are doing great things in this space now. You know, they've just done the Barrett's farm over in Tatanaki as well. So, you know, you've got lots of solar installers that I think they've come from the residential or commercial sector that are starting to realize how much opportunity there is in the farming space as well. Um, you know, and I think uh, you know, if you if you know Smiley well enough, give them a call and ask them how Light Force went. And if they went well, it's probably a good idea that you go get them installed. So, you There's lots of different options available. I think it's just we're very resourceful people as farmers. So we you'll find out the right outcome. Isaac's and the Hawks Bay is another one if you're over that way. Um, I've been to a couple of the farms that they have installed there. They've also done some, you know, some uh uh sawmills in the Hawke's Bay as well. Again, I met the ex-mair of Hawks Bay. I can't remember his name offhand, but he's got a solar installation on his farm now. Looks really awesome. He was he couldn't speak loudly, you know, he couldn't speak more proudly of his solar installation with Isaac. So, you know, they're everywhere and they're doing really well. They're doing really good things.

SPEAKER_00 44:34

Hey, just to wrap this up, Mike, I wondered if you could just step us through a very simple checklist for people who are thinking about going into solar, just some uh, you know, five or six points or something that they should work through to make sure that they're making a smart decision.

SPEAKER_01 44:53

I think the number one thing is how big's your electricity bill. You know, if you're a non-irrigating sheep and beef farmer in Southland, there might not be not be huge. If you're an irrigating dairy farmer in on the Canary Plains, it's probably going to be quite large. And so understanding your own electricity consumption is super important because the biggest savings is in avoiding buying power from the grid to continue to farm, right? Generating your own energy rather than buying it from the you might be buying at 20, 25 cents, you can generate it on your farm at seven cents. You can see how that's a big, big opportunity. Exporting back to the grid, you'll generate at seven cents and you might be able to sell it back into the grid at say 12 cents a kilowatt hour or 15 cents a kilowatt hour if you're on the wholesale market, that kind of thing. So it's still nothing gets wasted, but ultimately you're still, you know, you're not making as much money as the as you are saving money by avoiding taking from the grid. Electricity load is important. The second thing is think about what your farm's gonna look like in 10 years. The solar installation that you put on your farm is gonna last 30. So if you're installing it for that, you know, are you gonna have electric units? Are you gonna have electric machines? Are we gonna get rid of that diesel gen set? All of those kinds of things, you know, think about where you want to be in 10 years' time. And then that will ultimately decide, you know, the kind of solar system that you're looking to install. If you go to a solar installer and explain what you want, you're in a far better position than if you're asking them what you should have. Because they're not necessarily farmers a lot of the time. They don't know your farm. So I think planning for the future and understanding what it is that you want, and then they will make recommendations around the edges of the of what you want and be like, hey, actually, did you realize that if you put the solar and system on this uh or split it across these two connections, you'll save another five grand. You know, those are the kinds of things that you know they will be able to help with. But you want them to revive refine your vision for the farm. You don't want them making up the vision for your farm. I think that would be the number one piece of advice that I can I can uh I can give you. Um, and ultimately the rest is the rest is fairly sequential after that. The rest is okay, what's the quote? What's the capital? Can I get the finance? Let's pull pit, let's pull the figure out, let's get frustrated with the council for not doing this right, let's get frustrated with the EDB for being a pain in the ass. But ultimately you'll get a system that will be really, you know, an economic slam dog for your farm.

SPEAKER_00 47:12

And to finish on a quick fire round, what's one thing you think farmers should start doing, one thing they should stop doing, and one thing they should keep doing? And that could be related to solar, could be related to electrification, whatever you want.

SPEAKER_01 47:26

So the first thing is I think they should keep farming. It's the lifeblood of New Zealand's economy. I love farming. And really what I'm about is how do we best integrate new energy systems into farming practices. So please don't plant your farm and pine trees. Please don't give it away to a you know utility company for solar. Please keep farming and figure out how you can make this new technology, you know, fit in with this in this space. Um, in all honesty, one thing I'd love you to do is, you know, rural New Zealanders drive so many thousands of kilometers a year more than urban New Zealanders. The number of farmers that sit there and go, oh, you know, electric vehicles are great for people in the city, but they're not great for people in the country. A ranger costs like 40 cents a kilowatt kilometer to drive now, when you include RUCS plus diesel costs, an electric Ut is like 10, 12 cents a kilometer, which is largely RUCS, right? Especially if you can generate this energy on your own farm. So what I'd like you to continue to do, or maybe do new, is David Seymour probably said it perfectly. It's not woke if it works. And this stuff really works. So instead of being stubborn about it and going, why do these bringies want me to install solar? Like, understand how much of an economic slam dunk this is for you, for your farm, for your town, and for the whole of New Zealand, right? And what's the thing that I would I would get farmers to stop doing? I don't know. Like I generally love farming. I think like the one thing to stop, to stop doing is thinking, yeah, is probably that cultural, that that cultural divide around what is woke and what is not woke. Stop, just start thinking about what is right for your business. Start electrifying different things. For God's sake, start driving electric. You it's it's in everyone's best interest. The greenies win, the the farmers win, the righties win, the lefties win. Everyone wins when we run off New Zealand made energy. Everyone gets what they want. We can finally start bloody fighting about stupid shit and get on with making this country better. So there you go. There's my quick fire round for you.

SPEAKER_00 49:22

You're a good man, Mike. I love it, mate. You tell it straight. Mate, you're just as pumped about this as when I interviewed you last time. You don't look like you've lost any enthusiasm for it at all.

SPEAKER_01 49:32

It's getting more and more exciting. Like I think we're starting, I just we're just starting to see a transformation of New Zealand's energy system, which is in the best interests of all New Zealanders. That's really exciting. You know, at the end of the day, I am a farmer, um, a cherry farmer, so a different style of farmer to probably most people listening, you know, today. But I am a farmer who cares deeply about the primary sector of New Zealand. And what I want to make sure happens is that we we take full advantage of the opportunity that's on our plate at the moment, and that we get a good social license for farming because we've helped everybody else to electrify by supplying cheaper energy to New Zealand and our economy grows and prospers as a result of it. You know, like maybe in a couple of years' time, I'll be like, yep, every new you know we've we've we've gone down this path now. New Zealand's going to take care of itself because everyone realizes this is the path, and then everyone's on their own journey to get there. Right now, I'm still convinced there's not enough New Zealanders that believe this is the right pathway forward yet. And so that's what I get up every morning to try and make sure happens.

SPEAKER_00 50:32

Hey man, thanks for your advocacy in this space. You're like absolutely charging ahead with this. You're the leading voice on the whole issue, and um you're very well respected. So thank you. And thanks for giving up your time to do this. It's it's gonna be really helpful to a lot of our farmers.

SPEAKER_01 50:48

And then the one final thing is the the farmer that's listening to me right now that's you know swallowing the puke back down his throat, just from what I'm saying. The one other thing I want you to do here is I want you to electrify everything in your life that you don't love. So if you love that tractor or you love that you, keep it. It's an irrational decision. Love is irrational. So I'm not gonna be the guy that comes and guilt you because you're still driving around to that 1970s Hilux, right? I'm not gonna be the coming guy that comes and guilt you because you love your Massey Ferguson more than you love your wife, right? Whatever. Like keep it. But everything that you don't love, you're probably spending more money than you should right now. And so, therefore, let's focus on getting that out. And everyone is on their journey. The climate movement has made a disaster out of making people feel bad about their running their lives the way that they've always run their lives. And this is a really exciting opportunity to bring people back together. So electrify everything, but keep this, you know, don't electrify the things you truly love. And I'm sure we'll get along great.

SPEAKER_00 51:56

Thanks for tuning in to today's episode. If you've enjoyed it and you'd like to hear more, subscribe to the Federated Farmers Podcast on Spotify, Apple, or wherever you listen to podcasts so that you get notified when our new episodes drop. And if you have any feedback or podcast suggestions, we'd love to hear from you. Please drop us a line at podcast at fedfarm.org.nz. That's podcast at fedfarm.org.nz. Catch you next time.