Clean Power

Published on July 30th, 2012 | by John Farrell


Hawaii Sails Past Solar Grid Parity, Surprised by Additional Roadblocks

July 30th, 2012 by  

Solar has crossed a major threshold in Hawaii. The state’s homes and businesses can cut their electric bills with unsubsidized solar power, but are also discovering that cheap solar is not a panacea. As the tide of solar costs has receded, a number of unexpected barriers have emerged.

An island state reliant on imported oil for 83% of its electricity generation, Hawaii is fertile ground for solar power. The recent combination of rising oil prices and falling solar prices created a dramatic shift toward people generating their own electricity. With solar economics virtually unmatched in the U.S., Hawaii’s situation begs this question: when unsubsidized solar competes favorably with grid electricity, can anything stand in its way?

Unfortunately, yes.

Hawaii residents and businesses have unearthed the complexities of shifting from an electricity system where everyone is a consumer to one where many people are self-reliant energy producers. While the economics of solar continue to improve, a number of unexpected barriers have arisen. ¼ of homes seeking solar require expensive electrical upgrades. Local governments are struggling with the tidal wave of permit requests for building solar – as many as 70% of permit applications in Honolulu are for solar power!

Utilities are also reluctant to give up their market dominance. Only recently did solar advocates succeed in overcoming the antiquated 15% rule that limited interconnections of solar power to 15% of grid capacity. The revised rule may expand the limit to 25%, but that still only accommodates half of the state’s solar potential on rooftops alone.

These low limits meant that, in recent months, nearly 90% of commercial solar projects were told by the islands’ utilities that they face a costly and lengthy interconnection study to come online. “The most common response to running into the specter of triggering a… study is for the customer to give up on their ambitions for renewable energy,” says a local solar developer.

The issue of cost hasn’t completely evaporated, either. Prospective solar producers can still get federal and state tax credits that considerably shorten the payback period for solar power. Political backlash led to a compromise bill for reducing the state incentive, which failed in the final minutes of the 2012 legislative session. It could go poorly for the industry if it doesn’t pass soon, since the value of going solar comes from taxpayers’ pockets.

The post–grid parity lessons from Hawaii will be crucial for cities and states on the mainland from San Diego to New York City to Phoenix. In all, 100 million Americans will live in cities (these and others) that the Institute for Local Self-Reliance (ILSR) forecasts will reach solar grid parity in the next decade.

Will cheap solar open the floodgates or will poor policies and reluctant utilities hold it back? The Aloha State provides some answers.

You can read more about them from ILSR’s new report: Hawaiian Sunblock: Solar Facing Unexpected Barriers Despite Low Cost.

Check out our new 93-page EV report, based on over 2,000 surveys collected from EV drivers in 49 of 50 US states, 26 European countries, and 9 Canadian provinces.

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About the Author

directs the Democratic Energy program at ILSR and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. His seminal paper, Democratizing the Electricity System, describes how to blast the roadblocks to distributed renewable energy generation, and how such small-scale renewable energy projects are the key to the biggest strides in renewable energy development.   Farrell also authored the landmark report Energy Self-Reliant States, which serves as the definitive energy atlas for the United States, detailing the state-by-state renewable electricity generation potential. Farrell regularly provides discussion and analysis of distributed renewable energy policy on his blog, Energy Self-Reliant States (, and articles are regularly syndicated on Grist and Renewable Energy World.   John Farrell can also be found on Twitter @johnffarrell, or at

  • Mark

    In Hawaii, unsubsidzed solar is cheaper than subsidized utilities. Hawaiian’s want solar power but are denied their energy freedom by politicians bribed by utility executives. Does that sum it up? Hawaiians refuse to fight for their freedoms?

    • Bob_Wallace

      Do you live in Hawaii?

      If so, are people starting to talk about elected officials blocking solar?

      A new set of elected officials is only one voting day away….

  • Pingback: Solar, wind, geothermal help Hawaii meet renewable goals 2 years early()

  • Hans

    The article also illustrates the tendency of governments to protect the status-quo. The irony is that the self-proclaimed free-market proponent politicians tend to be ones who do the most to protect the old energy giants from some good old competition.

    • Exactly.

      That’s essentially the full story on energy policy in the US, at least.

  • Edward Kerr

    To me, this is a glaring example of why “alternative” energy is having such a hard time being universally adopted. The way that coal and oil companies deliberately thwart efforts to move to safe energy production simply to maintain profits is, not only reprehensible, but stupid. I’ve often wondered how some of those responsible for this phenomenon are going to feel as their children die as a result of their greed(?)…

    Great post, John.

  • Matt

    Hawaii, for sure and the rest of the US also, would benifit if power producesor had to be split from power distribution. And managers in one could not own stock or recieve payments from the other.

    Then the distributor would welcome solar and wind, instead of fighting it so that they can keep using their oil plant.

  • H2osmb

    Finally some who took the time to investigate and publish the truth about what is happening in Hawaii. The state with the dubious honor of having the highest cost per kwh ($.40), because the company that runs their grid is a for profit company with no competitors.

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