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There is a growing backlog of solar energy developers applying to sell power to Hawaiian Electric Co. as part of a program aimed at encouraging the building of more renewable energy projects.
HECO wants to contract with individuals and companies to produce 80 megawatts of solar energy, or enough to power 15,000 to 20,000 homes, to feed into the HECO grid. HECO has accepted 245 applications so far for projects of varying size.
The program was started in October 2010, and interest from applicants was fairly tepid in the beginning. But there has been a surge in applications over the past year, and HECO now has 70 applicants on a waiting list.
One photovoltaic (PV) installer from Hawaii island has expressed concern that the program is being dominated by a few big companies that submitted a flurry of applications early on to quickly reach the maximum power production HECO will buy and squeeze out their competition.
HECO is aware there are concerns but says the application requirements are tough enough to prevent companies from applying if they don’t intend to complete the project. For example, applicants must own or have a lease on the land needed, as well as seek a building permit.
The program is known as "feed-in tariff," or FIT, so named because applicants feed power into HECO’s grid for a tariff, or set price. (Feed-in tariff is separate from the more common HECO program that allows homeowners with solar systems to receive a credit for any power they send into the grid in one month in excess of what their homes use. That program is called "net energy metering.")
The FIT program is divided into three tiers:
» Tier 1, smaller projects, which are paid 21.8 cents a kilowatt-hour.
» Tier 2, medium-size projects, paid 18.9 cents a kilowatt-hour.
» Tier 3, larger, utility-scale projects, paid 19.7 cents a kilowatt-hour.
The program is run by HECO and its affiliates, Hawaii Electric Light Co. on Hawaii island and Maui Electric Co. on Maui.
Of the 113 applications filed for Tier 2 projects on Oahu, 80 percent were filed by just four companies, according to a consultant hired by the state Public Utilities Commission to oversee the FIT application process. On Hawaii island three companies accounted for 87 percent of the 41 applications filed in Tier 2.
Tier 2 is the largest single category in the FIT program, accounting for 42 megawatts of Oahu’s total 60 megawatt limit. Tier 2 comprises 9.5 megawatts of Hawaii island’s total 10-megawatt allocation, and seven megawatts of Maui County’s 10 megawatts.
There are also questions as to whether some of the developers can finish their projects by the completion date listed in their applications.
There are 20 Tier 2 FIT projects totaling 6.1 megawatts of generating capacity on Oahu that were scheduled to be completed by the end of February, according to a list maintained by Accion Group, the PUC consultant. However, only 1.8 megawatts were listed as installed.
The Accion Group report did not list names of companies involved.
The report said one company filed applications for 18 Tier 2 PV projects totaling 6.5 megawatts in Hawaii Kai’s Kamilonui Valley but has yet to break ground on any of them even though it listed completion dates ranging from March 31 to May 18 of this year.
Marco Mangelsdorf of ProVision Solar in Hilo said there are several PV projects on Hawaii island that are not on track to meet their completion dates. "The FIT system for the Big Island has effectively been gamed by a small number of developers who were able to reserve the large majority of available kilowatts using project completion dates that were bogus," he said. For projects with listed completion dates of March and April 2012, "all of the necessary electrical and building permits have yet to even be issued," Mangelsdorf added.
A HECO spokesman said the FIT program was designed with requirements to ensure that speculative projects would not prevent participation of legitimate projects.
"All FIT applications must provide evidence of site control such as property title, lease agreement or letter of intent, which allows development on a site," said Peter Rosegg, HECO spokesman.
Tier 2 applicants also must seek a building permit before applying with HECO. "That requires the project developer to have engineering drawings and pay the permit fee. These requirements ensure that the projects are serious and legitimate," he said.
Applicants additionally must pay a variety of fees and deposits to participate in the FIT program. Tier 1 applicants are charged a $200 nonrefundable application fee. The fee for Tier 2 applicants is $15 per kilowatt, not to exceed $1,000. There are 1,000 kilowatts in a megawatt.
Tier 2 applicants also must pay a reservation fee of $15 per kilowatt that is refunded if their project launches on time. Applicants that don’t meet their projected start date and are not granted an extension may be required to forfeit the reservation fee.
In addition, applicants might have to foot the bill for an "interconnection requirements study" if their PV project is on a circuit, an area fed by one power substation, where solar or other forms of renewable energy already account for 15 percent of peak load. That 15 percent threshold is being hit increasingly across HECO’s service areas as the amount of PV installations has skyrocketed under the utility’s net energy metering program.
On Oahu 49 of the island’s 465 circuits are at now at or above 15 percent PV penetration. That is up from 15 circuits eight months ago. On Hawaii island 23 of 140 circuits are at 15 percent. The threshold has been reached in 15 of 128 circuits on Maui, two of five circuits on Molokai and one of three circuits on Lanai.
An interconnection requirement study can run anywhere from a few thousand dollars for a Tier 1 project to $35,000 to $50,000 for a Tier 2 project, according to Accion Group.
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