Considering solar incentive caps

LIHUE — Solar power incentive programs can useful, according David Bissell, president and CEO of Kauai Island Utility Cooperative, but they need to undergo periodic evaluation.

“Properly constructed, state incentives and programs can help lower rates and move us further toward our goal of getting off of oil,” Bissell said.

But, in some of Hawaii’s counties, people are being shut out of solar incentive programs because of limits set by the state.

On Maui, a program that reimburses customers who supply energy to the grid reached its maximum in June. The cap likely will be reached on Oahu — the state’s most populated island — by the end of summer, experts say.

“We were going along fine at a pretty fair clip doing exactly everything that people in public policy in Hawaii want us to do, which is to get this stuff on people’s roofs so that we use less oil,” said Rick Reed, president of the Hawaii Solar Energy Association. “And then all of a sudden … boom. Things change overnight, and it’s been incredibly disruptive.”

In October, Hawaii ended its popular net energy metering program, which refunded customers at the full retail rate for electricity they supplied to the grid. The customer grid supply program that replaced it offers a lower reimbursement rate — and it’s filling up.

Critics say capping the amount of people who can participate boosts profits for the utility, which makes less money when people supply their own electricity.

“It comes down to a financial issue,” said state Rep. Chris Lee, chairman of the House Committee on Energy and Environmental Protection. “The more distributed generation, the more power that individuals generate themselves, the less of a customer base the utility ultimately has in the long run.”

Bissell said Kauai has achieved such a high level of renewable penetration during the daylight hours that the grid can’t physically take much more solar and KIUC is routinely reaching over 80 percent renewable penetration, with levels as high as 97 percent being achieved.

He contributed KIUC’s success to embracing “member-owned solar because we recognize it is part of the overall solution as we work our way toward 50 percent and eventually 100 percent of our power generated by renewable sources.”

He pointed out, as a cooperative, KIUC supports anything that members can do to lower their electric bills, while still maintaining the same quality of life.

“We are concerned with fairness amongst our members and certain solar incentives programs, rate structures, and tax credits may provide situations where one group of our members are being subsidized at the expense of others,” Bissell said. “The solar industry is rapidly evolving and the state government should periodically review the effectiveness of the various subsidy programs that are in place for the solar industry.”

In Hawaii, 14 percent of all new construction costs in 2015 came from solar installations on homes, according to the Hawaii State Energy Office. But in the past six months, 88 percent of solar companies polled by the Hawaii State Energy Association reported job losses.

“Folks have gone out of business,” Reed said. “There’s some walking zombie companies that are barely squeaking along.”

Hawaii has the nation’s highest electricity costs, in part because it relies heavily on imported oil. Two-thirds of Hawaii’s energy came from oil in 2014, compared with less than 1 percent for the whole country, according to the energy office.

But nearly a quarter of the state’s energy came from renewable sources in 2015, and 30 percent of that came from customers supplying energy to the grid, according to data from the Public Utilities Commission.

Randy Iwase, commission chairman, said the net energy metering program was never intended to be permanent, and reimbursing customers at the full retail rate was costly.

“That has to be paid by somebody,” Iwase said, adding it’s unfair to people who can’t install solar panels. He said the program met its goals because the state now has solar installed on more than 70,000 homes and businesses.

People who live in an apartment or a community with a homeowners association often can’t install solar panels, said Darren Pai, spokesman for Hawaiian Electric, the state’s largest utility.

“We want to make sure that those customers are treated fairly, and that customers who do have the option to can do it,” he said.

Another Hawaii program lets customers with solar power connect to the grid, but it doesn’t reimburse them for energy supplied. It hasn’t taken off.

Iwase said the customer grid supply program had to be capped because the grid can only handle so much renewable energy, and the state should have a mix of renewable energy sources, including utility-scale projects. Utility executives have argued the power generated — which varies when it comes from wind or the sun — must match customer demand for the grid to be stable.

Kauai County’s utility uses plenty of solar energy both from utility-scale and distributed sources, Hawaii Gov. David Ige said.

“During peak hours during the day, they get very close to 100 percent of their energy being provided by solar,” Ige said. “The challenge is to really examine what kinds of caps and limits make sense, and then drive those caps as high as we can while maintaining grid stability.”


The Associated Press contributed to this article.


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