One homeowner living in Manoa on the island of Oahu is a prime example of the benefits of solar power. Kenneth Chang is the first homeowner in the state of Hawaii to take advantage of the feed-in tariff program. In 2009, the Hawaiian Electric Company (HECO), which is the state’s largest utility, put the Hawaii Feed-in Tariff program into effect.
The simplicity of this program is different from many of the other solar incentive programs in place on Hawaii or in the United States. The typical rebate structure pays a solar system owner an amount, usually between $0.50 and $3.00, per installed watt of their solar system. The amount, usually up front, helps to offset the initial up front cost of solar.
A feed-in-tariff is essentially where your utility company has to pay you cash for the amount of energy your system produces above the amount you consume. So, instead of a large up-front payment, a system owner receives steady payments throughout the life of the system. Under the HECO program, a consumer with a system smaller than 20 kilowatts is paid 21.8 cents per kW hour of energy production. A system of up to five megawatts in size will receive a minimum of 19.7 cents per kW hour.
The photovoltaic solar panels installed on Chang’s roof took the sting out of the high rates paid for electricity in the state of Hawaii. Prices shot up when the cost of oil increased because petroleum-fired facilities are the source of most power on the islands. Chang was paying a monthly energy bill of $120.
Now, after adding 16.7 kilowatts above what is needed to power his home, he received a check FROM the Hawaiian Electric Company for $1,344 as payment for the feed-in tariff. This is in addition to paying $100 less per month on electricity to fuel his house. According to Chang, he estimates that it will take only ten months to pay for the installation costs on his photovoltaic solar system. After that, it will provide him with an income of more than $300,000 in the next two decades.
But, the picture for the future of Hawaii solar is not all bright. There is a government regulation imposed by the Hawaiian Public Utilities Commission (PUC) in direct response to a Federal Energy Regulatory Commission ruling. The PUC will allow only 15 percent or less of grid capacity to come from renewable energy sources. When the 15 percent is reached, a study is to be done to determine whether adding more solar storage capacity will destabilize the grid.
Hawaii’s grid is not yet close to the 15 percent point. However, companies will be hesitant to start new projects if they think the cost of a study will be prohibitive. Even more obstructive is the fear of not being able to access the Hawaiian grid after a study is completed. This may stop developers from planning any new solar energy construction. The situation is a serious hindrance to renewable solar energy growth in the state of Hawaii.
The Department of Energy (DOE) put the Hawaiian Clean Energy Initiative into effect. This initiative set the goal of making Hawaii’s small islands convert to using 100 percent renewable energy systems by the year 2030. The goal for the five major islands is to lower petroleum use by approximately 72 percent. The state will offer tax credits, feed-in tariffs, net-metering programs, low-interest loan programs and rebates on the installation of a Hawaii solar power system.
Like Kenneth Chang, who had a total of 88 photovoltaic panels installed on his roof, homeowners, and businesses, alike, will see the wisdom in making the transition from petroleum dependency to reliance on renewable sources of electricity.
Oahu sunset via shutterstock
Prior to joining Clean Energy Experts, Reggie ran operations for the first completely carbon-neutral water company in the U.S., Nika Water Company that donates 100% of its profits to support projects that bring clean water and safe distribution to under-developed areas around the world. Prior to Nika, Reggie was a corporate & securities attorney for Wilson Sonsini, Goodrich & Rosati where he represented high-growth consumer and technology focused start-up companies. Earlier, Reggie was a staff attorney for the U.S. Securities & Exchange Commission in Washington, D.C. He holds a LLM from University of San Diego School of Law, a JD from University of California Hastings College of the Law and an AB in English from Stanford University.