Supporters of solar power are shocked by Meridian Energy's moves to slash the price it pays to buy excess energy back from new solar customers - the second company to do so.
Meridian Energy will pay customers 7 cents per kilowatt hour in the summer and 10 cents in the winter for energy being sent back to the grid from 1 December.
The current solar buyback rates are 25 cents a kilowatt hour for the first five per day and 10 cents thereafter.
The company's move follows that of Contact Energy last week, which cut its prices from 17 cents for kilowatt hour to 8 cents, excluding GST.
Solar Electric Technology owner Frank Witowski said the solar energy business had been booming over the last two years and the new prices would be devastating to the industry.
"We've just got the trend of people adopting the idea of getting into solar," he said. "And now the blow of the power companies, saying 'we're just not giving you the same amount anymore,' which has a big impact for everybody."
Mr Witowski said families often bought bigger solar photovoltaic systems so they could increase the amount of power they sold back to the grid, thus offsetting their power bill.
He feared the lower rates would now deter people from going solar.
Blueskin Resilient Communities Trust manager Scott Willis said the cuts showed that power companies were all about profit, rather than service.
"It does create a strong sense of outrage at these privatised companies treating cusomers and small-scaled generators with contempt."
Mr Willis, who works on sustainable energy, said New Zealand needed a resilient electricity system that included solar, wind and existing hydro resources.
Buyback rates no longer viable - Meridian
But Sustainable Electricity Association chairman Brendan Winitana said he was not surprised by the cuts.
The same thing had happened in other countries as power companies realised that solar energy was a competitor, he said.
But he did not believe the new rates would hobble the uptake of solar power, given soaring power prices.
"It may initially be a hiccup in the number of installation that happen. But we certainly firmly believe that in time, as other countries have experienced, there will be an increase in [photovoltaics] because of those increasing power prices."
Mr Winitana said the changes would lead to people using solar more efficiently, including storing the electricity for later use.
Meridian Energy external relations manager Guy Waipara said the buyback rates were set at a time when solar uptake was in its infancy but were no longer viable.
"We've had a look at our rates and we're currently paying probably three to four times the market rate for electricity for solar customers, and we don't think it makes a lot of sense to continue quite a heavy subsidy."
He said wholesale prices for energy were about 7 cents a kilowatt hour, and solar customers - which had gone from 50 to 2500 in three years - were being paid retail prices.