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Generating your own electricity

Save on household costs by generating your own electricity.

Generating your own electricity can reduce energy costs and ensure your supply is secure.

For rural properties, it may be the only practical and cost-effective option. For urban properties, 'micro-generation' may also be an attractive option under the right circumstances.

There are several options, ranging from solar, wind and hydro to traditional diesel generators.

Why generate your own electricity?

Cost-effectiveness

Generating your own electricity may be cheaper in the long run than continuing to use power from the local lines, particularly for sites that have access to good renewable resources (wind or solar).

For properties in remote areas, connections to the local lines can cost tens of thousands of dollars. Generating your own electricity can work out cheaper. It can also be an option in urban areas. At the moment the set-up costs are relatively high, but they are coming down.

If you are connected to the grid and you generate your own electricity, you may be able to sell any excess back to your power company.

Guaranteed connection

If you can generate and store your own electricity, either individually or collectively with neighbours, you can have security of supply even if there is a black-out, or if your local electricity network is closed down. This gives you much greater independence from the grid and can be useful in times of civil emergency or bad weather.

Environmental impact

In 2016, almost 84 percent of New Zealand's electricity is generated from renewable sources such as hydro, wind, bio-energy and geothermal. The rest comes from burning fossil fuels such as gas or coal, a process which produces greenhouse gas emissions and contributes to climate change.

New Zealand Energy Quarterly on MBIE's website has information about New Zealand's energy generation.

As demand increases and additional electricity is generated, these emissions are likely to increase. By reducing demand for electricity from the local lines, and generating it yourself using renewable energy such as hydro, wind or photovoltaic cells, you'll be helping reduce New Zealand's greenhouse gas emissions and your personal carbon footprint.

How can you generate your own electricity?

Options for generating your own electricity include:

  • photovoltaic (PV) systems
  • wind turbines
  • micro-hydro systems
  • biomass and biogas engines
  • diesel or bio-diesel generators.

Wind, PV, hydro, biogas and bio-diesel all use renewable energy sources, produce no net harmful emissions and – depending on your circumstances – can offer cost-effective electricity generation options.

If you are already connected to the grid, changing to these systems can be a relatively expensive option. However, all are worth considering, particularly for properties in remote locations – and the price is coming down year after year.

Biomass and biogas

Biomass is organic material that can be used to produce electricity, heat and can be transformed into fuels for transport. Examples of biomass are wood chips, timber offcuts, paper products, crop residues, animal manure and sewage. If factories or farms produce a lot of biomass waste, it can be economic to use this waste to generate electricity.

Around the home, it is more efficient to burn dry biomass in a woodburner for heating and water heating or in the case of leaves and garden waste to compost it.

When organic waste decomposes in the absence of oxygen, it produces a mixture of methane and carbon dioxide. This biogas can be used instead of natural gas for heating, cooling, cooking and producing electricity. Methane and carbon dioxide are both greenhouse gases, but it is better to burn the methane than let it enter the atmosphere.

Biogas is useful for farmers who have to dispose of a lot of animal waste. However, a biogas plant does require maintenance and operational attention so may only be suitable for larger farms.

Diesel generators

Diesel generators have been used for many decades for generating electricity in remote locations.

They are also used for emergency electricity generation in case of power cuts. Hospitals, computer sites and other essential buildings all have them.

With a renewable energy system (especially wind or solar) you may still want a generator as a back-up. It may start automatically if the battery charge gets too low, for example on a windless or cloudy day.

They are simple to use and can be maintained by any garage mechanic. But they have drawbacks: noise, fuel costs, inconvenience of refuelling, exhaust fumes (including greenhouse gases and other hazardous air pollutants), wear and maintenance costs.

Storing and using the electricity

If you're generating your own electricity – especially with wind, hydro or PV systems – you can either be connected to the grid (and feed surplus electricity back into it) or be independent (a stand-alone power system). If you have a stand-alone system, you will need to either:

  • have batteries to store the energy as it is generated
  • have an additional generating option available to ensure an uninterrupted supply.

If you are grid connected, you will be connected to the local electricity network, and can export excess electricity, as well as using mains electricity as a back-up for your system. Using the grid for storage will mean that you can save on the cost of having local storage battery banks.

Batteries

If you are using batteries, you'll need enough capacity to store electricity for your needs when your generators are not working. This may need to be the equivalent of several days' supply if you rely on intermittent sources of generation, such as wind turbines or solar photovoltaics.

Your batteries will also need to be able to store electricity to meet your peak demand when several appliances are switched on at the same time.

They will need to be deep-cycle batteries. Most batteries, for example those used in vehicles, are damaged if you use up too much of the charge. Deep-cycle ones can survive regular discharge below 50%.

There are a range of options, but lead acid batteries are the cheapest for large-scale storage. Renewable energy systems usually use what's known as wet batteries, rather than sealed or gel batteries.

Batteries emit corrosive and inflammable gases during the final stages of charging, so they should be installed in a well-ventilated structure, separate from your house if possible.

They will need to be properly installed and maintained to keep them safe and in good condition. Check with your supplier and follow the manufacturer's instructions. They may need replacing every 6-8 years.

A bank of batteries sufficient for a stand-alone system for one home may cost anywhere from $10,000 to $30,000, depending on how much energy you need to store.

Other equipment

If you have your own power generation system and store power in batteries, you will need other equipment such as:

  • an inverter, to convert direct current (DC) stored by the battery to 230V alternating current (AC) used in standard appliances
  • a rectifier, to convert AC to DC before battery storage
  • a controller, to make sure the output is 230V and 50Hz and the battery doesn't overcharge (it sends the excess power to a resistance element which can get very hot)
  • cables, which should be thick enough to carry the highest current. The shorter they are, the less power you'll lose along the way. If they must be long, the voltage must be increased – which means you'll need more equipment to change the voltage levels.

Note that a licensed electrician is usually required to work on these systems.

Selling to the grid

Your power retailer will sell you power at one price and may buy power from you at another price. You'll need a contract with the retailer.

Depending on how your power is generated, the lines company may not accept very small quantities of fluctuating power. This may mean you have to use a battery as intermediate storage before sending the power back to the network.

Different suppliers allow different options, so check before you install a system. If you're connected to the grid, you'll have to pay monthly supply charges.

You will also need a control system that prevents power being sent to the grid when the grid is down to ensure the safety of anyone working on the lines.

Energy efficiency

Home electricity generation is expensive so you don't want to buy a bigger system than you need.

Before installing any type of home generating equipment, make sure you reduce your electricity use with insulation, energy-efficient light bulbs, gas cooking, solar water heating etc.

Note that this document is published by the Ministry of Business, Innovation and Employment Chief Executive as Guidance under Section 175 of the Building Act 2004. This is a guide only and, if used, does not relieve any person of the obligation to consider any matter to which the information relates according to the circumstances of the particular case.