Forecast is ‘cloudy’ for solar industry, according to report

The once-booming solar industry continued its slump in May due to the removal of a state incentive program, according to a report released Wednesday by the Hawaii Solar Energy Association.

In October, the state Public Utilities Commission ended a popular incentive program that offered owners of solar-energy systems a credit equal to the retail rate for the excess energy that their systems sent into the grid. When ending the program, called net energy metering, PUC Chairman Randy Iwase said it had done its job by connecting 71,000 rooftop-solar systems statewide.

The PUC replaced net energy metering with two programs considered less attractive by the local solar-energy industry.

One program — grid-supply — credits new solar owners 15 cents a kilowatt hour for the extra energy their solar-energy systems send into the grid, roughly 8 cents less than the retail rate that had been offered through net energy metering. The PUC also put a 35-megawatt limit on the total amount of energy generated from the grid-supply program statewide. The cap for Oahu is 25 megawatts, which equals roughly 4,000 residential solar-energy systems.

The second solar-energy program — self-supply— encourages customers to buy battery systems because this program does not allow owners of solar-energy systems to send any excess energy into the electric grid.

The state agency said it placed the limit on new solar-energy systems to make room on the grid for other renewable-energy technologies.

In its Wednesday report, HSEA said the industry is living off a backlog of net energy metering projects — 11,493 applications that are approved and awaiting installation. The solar advocacy group said the future for solar power in Hawaii is “cloudy” because the grid-supply program is nearing the state’s cap and the self-supply program is not yet an attractive option because batteries are expensive.

There have been 58 grid-supply and no self-supply systems turned on since the programs began in October, the report said.

“The clouds in our monthly industry forecast keep getting darker, and the damage being done to Hawaii’s local solar industry may be irreversible unless stabilizing policy changes are implemented soon,” Hajime Alabanza, the group’s executive assistant said in a news release.

The association said the number of closed, or completed, building permits for solar-energy systems was down 27.5 percent in May compared with May 2015. The group said the closed permits are a good representation of the industry’s health.

“The fall in permit numbers for the second month in a row shows that fewer solar projects are being built, which is further supported by the fall in employment in recent months,” HSEA said.

In a report in May, the association said solar-energy firms were forced to cut staff since the elimination of net energy metering.

However, grid-supply solar-energy system approvals grew by 444 applications in May, a 43 percent increase, which marks two consecutive months of growth in the program.

The association said the number of submitted grid-supply applications represent close to 19 megawatts, or 54 percent of the interim cap.

Because of the growing interest, the grid-supply program could come to an end as early as August on Oahu and sooner on Maui if the PUC doesn’t raise the limit, HSEA said. In the October order creating the cap, the PUC said it would revisit the decision in two years.

Makena Coffman, associate professor of urban and regional planning at the University of Hawaii at Manoa, was in favor of ending net energy metering but said the limit placed on the grid-supply program was a harsh transition for the solar industry to face.

“Making it a harsh halt doesn’t make sense,” Coffman said. “Assuming prices are fair, there shouldn’t be a cap.

“It doesn’t really make sense that there is a cap on grid-supply because grid-supply got to a better pricing structure,” she continued. “It is hard for the industry to sustain through that. People are still signing up under grid-supply. The fact that that space is getting filled is indicative that the NEM wasn’t necessary.”