The installation of solar photovoltaic systems in Hawaii set another record in 2013, although the once-explosive pace of growth slowed significantly as electric utilities took a cautious approach to allowing PV systems to connect to the grid in areas where high levels of solar power generation are raising concerns about safety and reliability.
Hawaii residents and businesses installed a record 146 megawatts of solar generating capacity last year, a 34 percent increase over the previous record of 109 megawatts in 2012, according to a report from GTM Research and the Solar Energy Industry Association. The 2013 growth paled in comparison with annual increases of 169 percent in 2012 and 118 percent in 2011. And industry experts say Hawaii could actually experience a decrease in PV installations in 2014.
Nationally, PV installations reached a record 4,751 megawatts in 2013, up 41 percent from 2012. The growth rate slowed from annual increases of 76 percent in 2012 and 125 percent in 2011. The average price for an installed residential PV system fell by 9 percent to $4.59 a watt in the fourth quarter of 2013 from $5.03 a watt a year earlier, according to the report.
Hawaii ranked sixth nationally in total installed PV capacity last year but led the nation on a per capita basis at 104 watts per person. California was second at 68 watts per person.
Hawaii’s rapid adoption of solar energy generation has been driven in large part by the state’s high electricity prices, which are about three times the national average. However, the exponential growth has also created difficulties for the state’s main electric utility, Hawaiian Electric Co., and its subsidiaries.
The HECO companies are concerned that excessive amounts of solar energy being generated by rooftop PV systems could have an adverse affect on their electrical grids. Utility officials are most concerned with circuits, or neighborhoods, where the amount of electricity being generated by PV panels is 100 percent or more of minimum daytime load on the circuit. That situation is occurring on more than one-fourth of HECO’s 416 circuits on Oahu.
HECO last week revised its interconnection rules so that small, residential PV systems that meet certain technical requirements can be hooked into circuits where solar generation is up to 120 percent of the daytime minimum load. The new rules take the place of a September decision in which the utility slowed approval for systems on houses in neighborhoods at the 100 percent level.
Hawaii’s PV industry was also dealt a setback in early 2013 when the state Tax Department issued rules that effectively limited the number of tax credits that could be claimed for a PV system.
"While the market has adapted to the revised tax credit rules, the major bottleneck to growth is rather the evolving plan to manage PV penetration levels as higher levels of circuits exceed 100 percent and now 120 percent of minimum daytime load," said Cory Honeyman, solar analyst at GTM Research.
"As the U.S. market currently stands, Hawaii stands alone in dealing with these kinds of interconnection challenges. Even compared to states like California with record-breaking DG (distributed generation) installations coming online, Hawaii is the only market where PV grid saturation is an issue to be dealt with in the present, not the future," Honeyman said.
The state could see its first annual decline in PV installations next year since the industry took off nearly a decade ago, he added.
The first half of 2014 is expected to benefit from the backlog of customers who were unable to install PV systems in 2013 because of tighter interconnection rules.
"Looking at the second half, we expect to see a downturn starting in the third quarter as the market begins to witness the impact of installers that rolled back sales capacities in the second half of 2013," Honeyman said.
Another indicator of slower growth ahead in the solar industry is a continuing decline in building permits issued on Oahu for PV systems. The latest numbers from the Honolulu Department of Planning and Permitting showed that the number of permits for PV systems dropped to 567 in February, the fewest for any month in more than two years, according to Hawaii island solar veteran Marco Mangelsdorf, who tracks the DPP data.
"Though it’s good news that HECO will be allowing up to 120 percent of the gross minimum daytime load of equivalent PV generating capacity on a per-circuit basis, it will take some time for this announcement to translate to reality on the ground," Mangelsdorf said. "Also, there already are circuits across HECO, HELCO (Hawaii County) and MECO (Maui County) territories that are at or near that 120 percent mark," he said.
The 146 megawatts of solar generating capacity installed in Hawaii last year is enough to provide the energy needs of about 35,000 households using 600 kilowatt-hours of energy a month.
The majority of the installed capacity, 85.4 megawatts, was on residential rooftops. Commercial installations made up 48.8 percent of the total, while utility-scale projects accounted for 11.4 megawatts.
