National is promising a Home Energy Fund to help homeowners install solar without upfront costs — but how does it stack up against the green loans already available from banks?
National is proposing a new way for New Zealand homeowners to access solar, batteries and insulation without paying upfront — but the scheme differs in meaningful ways from the green loan products already offered by banks.
What banks currently offer
All major banks currently provide favourable loan terms for solar power systems and electric vehicles. These green loans typically charge no interest or just 1 percent for three or five-year terms, according to RNZ. However, accessing them generally requires having an existing home loan with the bank — a condition that has proven problematic for some homeowners, including retirees who may own their property outright.
The upfront cost of a solar system remains a significant hurdle for many households without access to savings or credit.
What National is proposing
National's Home Energy Fund would offer low-interest loans secured against the property and repaid through local authority rates over an extended period — potentially 10 to 30 years, with Local Government New Zealand previously suggesting such loans could be structured toward the longer end of that range.
The interest rate would be approximately 2 percent below the floating rate — which currently sits around 5.8 percent — implying a rate of roughly 3.8 percent under the proposed scheme. Unlike bank green loans, the repayment would be tied to the property rather than the individual, meaning it could transfer to a subsequent owner if the house is sold, or be repaid early without penalties.
Homeowners would still need to demonstrate 20 percent equity in their property, matching the requirement for bank green loans. The proposed scheme would also allow solar installation without requiring council consent, removing one of the current regulatory barriers.
The 7-year payback question
National argues that savings on power bills would exceed the repayment amount, with industry estimates suggesting most solar systems pay themselves off through electricity savings in approximately seven years. There would be an option to defer payments for households struggling to keep up.
For landlords, the scheme would be available — with National expecting many to take it up given the cost would sit with the property rather than the tenant.
Prime Minister Christopher Luxon said banks had a "quite high rejection rate" and were not offering loans at the scale required for New Zealand's energy transition, according to RNZ.
How they compare
The key difference lies in term length and accessibility. Bank green loans offer very low or zero interest but over short periods of three to five years, requiring relatively high monthly repayments. National's scheme would spread costs over decades at a modestly higher interest rate, reducing the monthly payment burden but increasing the total interest paid over time.
Whether the trade-off works in any individual household's favour would depend on their current electricity costs, the size of system installed, and how long they plan to remain in the property.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.