Oahu has hit the 20-megawatt milestone for solar power generation with the installation of a rooftop photovoltaic system at the Easter Seals of Hawaii headquarters.

The 20 megawatts of generating capacity installed under Hawaiian Electric Co.’s net metering program is spread across about 3,700 homes and businesses throughout Oahu. Under the 10-year-old net energy metering program, HECO’s residential and business customers receive credit for any unused electricity that they feed back into the grid. All renewable energy sources are eligible for the program, but solar is by far the most popular.

Power generation from photovoltaic panels, while still a relatively small contributor to the state’s energy needs, has grown exponentially since HECO and its subsidiaries implemented the net metering program for its customers in Honolulu, Maui and Hawaii counties. Maui and Hawaii counties have 7.5 megawatts and 7 megawatts of generating capacity, respectively, under the program.

The popularity of photovoltaic (PV) systems has been fueled by the chance for utility customers to cut their electricity bills to near zero in some cases, and the lure of state and federal tax credits that reduce the cost of such systems by 65 percent. On Oahu the number of net energy metering agreements doubled in 2010 from 2009. And so far this year, net metering agreements have already surpassed the 2010 total.

The Easter Seals PV system is expected to produce about 85 percent of the nonprofit’s energy needs and reduce its electricity bill by an estimated $410,000 over 20 years, according to Energy Industries, which designed and installed the system.

The 55-kilowatt system will generate approximately 85,688 kilowatt hours of electricity a year and result in the elimination of 132,816 pounds of carbon dioxide emissions annually.

The system was installed under a power purchase agreement in which Easter Seals paid no upfront cost. Energy Industries will own the system and sell the electricity back to Easter Seals for 20 cents a kilowatt hour, or about a 25 percent discount from what the nonprofit was paying HECO. That amount will go up 3 percent annually over the 20-year life of the contract. Easter Seals will have the option to buy the system from Energy Industries after six years.

Most nonprofits like Easter Seals opt to have PV systems installed under a power purchase agreement rather than own the system outright. That’s because with little or no tax liability, nonprofits cannot benefit from the state and federal tax credits that come with ownership of the PV system. In a power purchase agreement the developer of the photovoltaic system can claim the tax credit and pass along the benefit to customers in the form of lower electric rates.

The 20-megawatt milestone was recognized Wednesday during a ceremony at the Easter Seals headquarters. Hawaiian Electric donated $5,000 to the charity to mark the occasion.