When Hawaii’s photovoltaic solar revolution began years ago, the industry needed a powerful jump start to begin its development. Arguably, that was the justification for the subsidies offsetting the front-end expense of PV installations, as well as the credit on electricity bills for solar energy individual producers contributed to the grid.
The landscape is changing, and generally for the right reasons. What’s needed are safeguards to keep energy- and cost-saving strategies within reach of more people, not only those with the money to invest in solar at home.
The state Public Utilities Commission last week approved new solar-power investment strategies. They are geared to replace the existing "net energy metering" (NEM) program currently providing the electricity credit to PV system owners.
Additionally, the subsidies, in the form of federal and state tax credits, are shrinking: How long the state credits remain is a perennial question at the Legislature, but the federal program will sunset at the end of 2016.
Notwithstanding the predictable protest from industry representatives that curbing the programs will stifle further adoption of solar, both of these developments are rational. The subsidies were not meant to continue once the industry matures — as it has — and its growth should be driven more by market forces.
And the electricity credits often benefit the wealthier homeowner while the lower-income ratepayer picks up a disproportionate share of the cost burden, at least in part because of the reduced rates paid by solar customers.
It’s not only a Hawaii concern. Nationally 645,000 homes and businesses have PV solar, and the proportion of households earning less than $40,000 is less than 5 percent, according to the George Washington University Solar Institute. That’s not surprising, given that rooftop solar installations cost $20,000 or more.
This inequality issue is what helps to justify the PUC decision on NEM, as painful as it is to those who haven’t already made the leap to PV.
Hawaiian Electric Co., Maui Electric Co. and Hawaii Electric Light Co. will honor current NEM agreements and those with pending applications submitted before Oct. 13.
Under the PUC action, new solar producers approved thereafter will be credited with 15.07 cents per kilowatt-hour on their monthly bills for excess energy they send to the grid. This compares with the full retail rate of 26.8 cents per kilowatt-hour paid under NEM.
The two new programs that the commission also approved represent encouraging steps forward:
>> Self-supply systems would send any excess solar energy produced not to the grid but to battery storage. The utility will approve these systems under an expedited review, since it doesn’t cause fluctuations in available electricity that can affect the stability of the grid.
HECO unveiled a pilot program last week that will deploy a battery system from Stem Inc. to businesses and organizations with a combined target of 1 megawatt of energy storage.
That will be worth watching, but in general, participants in self-supply need to have the discretion to choose their own system. Battery systems are the next frontier of clean-energy development, and competition should not be constrained.
>> Time-of-use rates developed over the next month include three time periods: peak, midday and off-peak. The idea is to incentivize customers to use electricity off the peak time with more favorable rates.
However, the reason there is a peak time — in the evenings, when households are busiest and using electricity most — is because of convenience. To drive customers to alter their habits and use more energy at other times, the utility will need to offer a real potential cost-savings.
The bottom line is that off-peak rates must be lower than what customers are paying now.
Additionally, policy advances at the Legislature should help to further narrow the gulf between the clean-energy haves and have-nots. Gov. David Ige this year signed a bill that was seen as a way to democratize things: Senate Bill 1050, establishing a community-based renewable energy program.
People previously lacking the capital for PV systems will be able to buy electricity generated at an off-site green-energy facility, such as a solar farm. This will extend the benefits of lower-cost energy to renters, condo owners and others.
Clean-energy advances, especially in the solar sector, have curtailed Hawaii’s dependence on fossil-fuel imports; those who could afford to invest have enjoyed an advantage, too.
Now ratepayers in general deserve to reap the same benefits.