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Hawaii's energy costs are the highest in the nation due to high reliance on fossil fuels. The utility said solar grid penetration is too high. Is it true?

Solar Energy

Solar Bottlenecks: How Hawaii Is Paving the Way

Hawaii’s energy costs are the highest in the nation due to high reliance on fossil fuels. The utility said solar grid penetration is too high. Is it true?


On Monday June 2nd, President Obama struck a decisive blow for the environment and against coal power. The plan aims to reduce CO2 emissions from 2005 levels by 30%. The EPA has been given the authority to enforce this reduction limiting power plant activities through the Clean Air Act of 1970. States are required to submit a plan by 2016 to achieve this goal by 2030. This new legislation highlights the importance of renewable energy use in the creation of electricity, making alternatives such as solar photovoltaic more vital than ever.

The State of Hawaii

Hawaii leads the nation in electricity costs. Costs range from 33.36 cents per kWh on Oahu to 44.64 cents per kWh on Lanai. The US National average is 11-12 cents per kWh. That means electric bills are over $175 per month or higher for the average Hawaii resident. Of this energy, 14% is generated by coal and the vast majority is generated by burning other fossil fuels, such as petroleum.

In order to combat these high costs and reduce environmental emissions, the state and federal governments have created a number of tax breaks to encourage the installation of solar energy on the islands. With a number of agencies working to provide breaks, the opportunities for consumers included: federal personal tax credits, state personal tax credits, state rebates, and low or zero interest loans.

The Proliferation of Solar

The greatest thing about these incentives was that they worked. Hawaii residents began to flock to the solar industry, promoting environmentally friendly energy practices to use rooftop solar for household electricity, attic fans, and water heaters. Solar has continued to grow since the Hawaii government began these incentives in 1976. By 2010, solar power had reached grid parity in many areas of Hawaii. Grid parity refers to the point at which purchasing solar power has reached a levelized point, making it less or equal to the cost of purchasing traditional electric power.

With plentiful sun and added incentives, including the high costs of staying on the traditional grid and strong government support with incentives to switch, Hawaii was ranked the #3 state in the nation for solar power in summer 2013. Unfortunately, this success was to be short lived. On September 6th, 2013, the Hawaiian Electric Company, also known as HECO, announced new solar installation policies on Oahu with instant and retroactive effects, which essentially sent the solar photovoltaic industry grinding to a halt.

Solar Saturation Levels

Scientific American describes Hawaii as “The Solar Boom So Successful, It’s Been Halted”. HECO’s “Call Before You Install” policy was described as a way to increase the use of solar energy within the power grid and promote safe saturation levels for forward and backward energy flow. Utility spokesman Peter Rosegg is quoted saying, “We can’t allow circuits to become unreliable because there’s too much PV on those circuits.”

But just what level of solar power saturation is safe? Numbers have been thrown out by HECO, the Sierra Club and even former U.S. Energy Secretary Steven Chu. Grid penetration levels between 10% and 20% are discussed, along with upgraded circuits and safety shut offs. The “Call Before You Install” policy describes itself as providing studies and approval based on these maximum penetration levels depending on a neighborhood, but only HECO seems to be setting what these maximum numbers really are. While HECO sets the policies and the deadlines, the rest of Oahu is left in limbo. Consequently, residents who were caught in the retroactive changes have been stuck with bills for both their systems and traditional electric with no timeline for relief. As the slowdown continues, both residents and businesses are left in a no-man’s land.

An Insider’s Perspective

Alternate Energy Inc., (AEI) is one of the top three contractors in Hawaii’s solar industry. As a locally grown, third generation business, we have prided ourselves on evolving with the times. Moving from plumbing to PV, we have grown to lead the way in an industry with over 300 suppliers of solar renewable energy.

Unfortunately, since HECO’s announced policy changes in 2013,we have had to substantially downsize the company to stay afloat. This is a change felt throughout the entire industry on Oahu, affecting everyone from roofing and new construction to even marketing and advertising. This policy is losing jobs and affecting the economy.

Yet despite the solar industry’s slowdown, consumer demand has actually increased. Oahu’s PV situation is stuck at a bottleneck with HECO acting as the clog in the works. Luckily, there is still a little good news. There are still many neighborhoods eligible for approval even with HECO’s pushback. We can install and assist consumers in getting permit approval in specific neighborhoods. Our hope is that by using transparent business practices, we can make sure our customers stay informed about all of the latest news and their existing project status.

Why Does this Matter to the Rest of the US?

The situation in Hawaii is the test case for the rest of the United States. As we move away from fossil fuels, we will see an increase in renewable energy on all our electric grids. HECO isn’t the only utility company struggling to keep pace with changing times. The handling of this situation in Hawaii will create a roadmap for embracing the technology of renewable energy – a roadmap for either success or failure. Much like Netflix’s disruptive technological evolution’s ability to upend the once-dominant video-rental chain, Blockbuster, new solar technologies will bring industry wide change to the utilities.

Take Action

The Public Utilities Commission of Hawaii has recently issued some decisive commentary and study on the solar situation in Hawaii. They have given HECO 120 days to come up with a more realistic plan on a dedicated timetable to increase the proliferation of solar power. Although protesters have lined the streets of the HECO board of investors, no real results have yet to be seen.

What can you do about it? Take action yourself. Encourage Hawaii state representatives to push HECO to move faster. Ask for legislation from regulatory commissions to remove the monopoly control of the electric grid. Sign the petition by Hawaii Two Futures to hold these groups accountable for their actions.

About the author: Mike Ito is the Director of Marketing at Alternate Energy, Inc.

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