The state is seeking regulatory approval to move forward with a plan that will allow utility customers in Hawaii to finance renewable energy investments.
The Department of Business, Economic Development and Tourism filed two applications Friday with the state Public Utilities Commission that will allow the state to issue bonds to provide funding for the Green Energy Market Securitization program. The program creates a fund from which utility customers can borrow to pay for solar photovoltaic systems, energy-efficient lighting systems and other "green" projects aimed at reducing the state’s reliance on oil for electricity generation. The program is expected to be available to customers by November.
The first filing is for a financing order to issue up to $150 million in Green Infrastructure Bonds and to authorize a Green Infrastructure Fee to secure the bonds. The fee will be assessed on all electrical utility ratepayer bills to ensure the bonds achieve the highest possible credit ratings, and thus lowering the amount of the fee, which is expected to be less than $2 a month for residential customers. As proposed in the financing order application, the Public Benefits Fee that is currently on electric utility customer bills will be reduced to offset the cost of the Green Infrastructure Fee, resulting in little or no impact to ratepayers.
The second filing is for an order to create a Green Infrastructure Loan Program that would use the bond proceeds to provide alternative low-cost financing for solar photovoltaic systems and other eligible clean energy technologies. Consumers will be able to repay the loans over time with the savings on their electrical bills.
GEMS will be administered at little or no cost to ratepayers, DBEDT said. DBEDT will oversee the program until a Green Infrastructure Authority is created to take over the administrative duties.
Eventually the state plans to have program participants repay their loans through a monthly charge on their electrical bills under an initiative called "on-bill financing," but that has not been finalized yet by the PUC. Until the on-bill mechanism is up and running, program participants can repay their loans directly to their lender.
"The GEMS program is a significant step toward removing barriers that have prevented many Hawaii residents from embracing clean energy and lowering their power bills," said Gov. Neil Abercrombie, who proposed the program in his 2013 State of the State address and signed it into law later that year. "GEMS will play an important role in the state’s pursuit of energy independence while helping to create green jobs and raising Hawaii’s profile as a global model for clean energy."
DBEDT Director Richard Lim, architect of the GEMS program, said one of the challenges was to come up with a financing structure that would channel capital to green energy investments outside the traditional financing model.
"While solar PV has grown exponentially, there is a market gap of consumers who cannot afford the high upfront costs or cannot qualify for loans," he said. "The GEMS program will open up access to solar PV for these market segments. This innovative financing approach leverages public dollars to achieve a long-term, sustainable financing solution to support clean energy project development."
The fund initially will be used to support the installation of solar PV systems, and will later be expanded to cover a variety of eligible clean energy technologies, energy storage, smart modules, monitoring devices and other technology to support the interconnection of PV systems to the grid.
Mark Glick, administrator of the State Energy Office, said the GEMS program is a key component of the state’s push to meet and exceed Hawaii’s 70 percent clean energy targets by 2030.
"GEMS is an example of the State Energy Office focus on high-impact, creative solutions in affordable financing that have the flexibility for broad application in Hawaii’s growing clean energy sector," Glick said.
