Energize GEMS to be more useful

The state’s troubled renewable-energy loan program, Green Energy Market Securitization or GEMS, is overdue for a course correction in its effort to connect more moderate- and low-income households with clean energy technologies, such as rooftop solar systems.

When Hawaii lawmakers created the program in 2013, their green-minded intent was to provide low-interest loans to qualifying consumers and nonprofits primarily for solar setups, which, while typically expensive to install, have the potential to eventually pay for themselves over years of use.

GEMS raised roughly $150 million through a bond sale and was to have lent that money by the end of November. But for various reasons the program has so far reaped poor results. To date, it has lent roughly 2 percent of the funds, while $33 million in interest on the bonds is being repaid by Hawaii ratepayers via a $1.50 “Green Infrastructure Fee” on every monthly electrical bill. The frustrating lack of progress is now prompting a call to expand the scope of GEMS to encourage consumers’ investment in photovoltaic with battery storage.

State lawmakers are eyeing GEMS as a possible funding source for rebates to consumers who invest in batteries connected to solar systems. Senate Bill 660 would set aside program funds for rebates and costs tied to administering a rebate program.

Interest in the pricey batteries has increased since the termination of an incentive program called Net Energy Metering, which credited customers the full retail rate for excess solar energy sent into the power grid. A replacement program encourages use of self-supply batteries as customers are no longer allowed to send excess energy to the grid.

While Hawaii’s solar industry is eager to see fresh incentives for storage technology, legislators must take a careful look at proposals to ensure that GEMS recovers from painfully slow progress and achieves its objectives rather than stumbling further.

The state’s consumer advocate, housed in the Department of Commerce and Consumer Affairs, warns in written testimony on the bill that a rebate could yield results that clash with intent to assist moderate- and low-income consumers.

“A rebate that might encourage wealthy consumers to decrease their contributions to the grid would have the potential unintended consequence of placing a greater financial burden on less affluent consumers who must remain connected to the grid without being able to offset their load with rooftop solar photovoltaic systems,” the advocate stated.

Also, the GEMS program is designed as a sort of self-sustaining loan program. The intent is to lend money with the expectation that it will be repaid by the consumer, and could then be applied to new loans. Rebate money would not be repaid. Once the funds are handed out, that money would be gone. Blue Planet Foundation is suggesting a tweak to the rebate idea that would involve GEMS issuing below-cost financing for approved storage projects.

“That financing could help to support the energy storage market, while preserving a larger portion of the GEMS funds that can be rolled over into additional loans and enable more and more consumers to benefit,” the nonprofit said in testimony.

Another proposal, Senate Bill 361, aims to make batteries more affordable by offering an income tax credit for taxpayers who buy energy storage systems — targeting single filers who earn $75,000 or less or joint filers who earn $150,000 or less. And SB 365 would provide an income tax credit for energy storage systems. It would also require the Department of Business, Economic Development and Tourism to complete a study on the impacts and benefits of the tax credit and its contribution to the state reaching its goal to achieve 100 percent renewable energy by 2045.

The Legislature has an opportunity to make much-needed corrections to the GEMS program, which hold potential to help Hawaii shed its energy dependence. This time around, though, better cost-benefit analyses must be employed, to salvage a program that so far has rated as a $150 million bust.