Bill would tap solar fund for rebates on home batteries

A bill moving through the state Legislature aims to shake loose money frozen in a $150 million failed renewable-energy loan program and use it to offer rebates of up to $10,000 to residents who buy battery systems for their homes.

House Bill 1593 offers rebates to residents who install batteries that can connect to solar systems to store energy for use at night or capture electricity from the grid at off-peak hours for use during peak times.

Proponents see home battery systems as a way to help Hawaii move closer to its goal of getting 100 percent of its electric power from renewable sources by 2045. Batteries make it possible to increase the number of rooftop solar systems without adding stress to the grid. They can also help cut maintenance costs for electric utilities.

Individuals making less than $75,000 or couples making less than $150,000 would be eligible for a $10,000 rebate on a home energy storage system. Higher-income individuals and couples could get a $5,000 or $4,000 rebate, depending on income level.

A Tesla Powerwall home battery system with enough capacity to power a three-bedroom home for one day costs $11,000, not including installation, according to the Tesla website.

The rebate would be available after July 31 for three years. The bill, which passed out of its final Senate committee Wednesday, proposes to use the money from the Green Energy Market Securitization program to fund the rebates.

Hawaii lawmakers created GEMS in 2013 to make rooftop solar systems more affordable. GEMS raised roughly $150 million through a bond sale and was to have lent all the money by the end of November. 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 intent of HB1593 is to help Hawaii residents tap the “dormant funds” of the loan program. A version of HB1593 said the program has failed to live up to its promise, especially for the groups originally intended to benefit from the program.

“Rather than obtaining immediate relief from high electric power rates, ratepayers are instead having to pay the debt service on a loan that is not being effectively deployed. This is particularly true for low- to middle-income homeowners, renters, churches, and nonprofit organizations,” the bill said.

An earlier Senate version of the bill set aside $10 million for rebates. The latest version passed out of the Senate Ways and Means Committee left the amount blank.

The bill also reduces the state Public Utilities Commission’s oversight of the GEMS loan program.

Gwen Yamamoto Lau, executive director of the Hawaii Green Infrastructure Authority, which oversees the GEMS loan program, said her agency “strongly supports the bill” because it streamlines the ability of the GEMS program to hand out loans.

“The current process of oversight for the GEMS Program does not allow the program to react in nimble or timely manner to market changes and industry demands,” Lau said.

The solar industry has said an incentive for battery technology is needed to reverse the industry’s current slump. Hawaii’s solar industry has experienced a decline in sales since state regulators removed a popular incentive for buying rooftop solar systems. The program, called Net Energy Metering, credited customers the full retail rate for excess solar energy sent into the grid.

“Industry is currently suffering a severe slump,” said Leslie Cole-Brooks, executive director of the Distributed Energy Resources Council of Hawaii. “Installations are down dramatically and we’re seeing businesses close and reduce staff. This rebate program would reduce costs for customers and thus encourage customers to invest.”

On the other hand, the Tax Foundation of Hawaii pointed out problems that could result from using GEMS money, originally intended to provide loans to solar customers, to fund rebates.

“First, it’s a financing program, not a grant program,” the Tax Foundation said in testimony at the Legislature. “If we are using GEMS money, we are supposed to be borrowing it. Principal and interest on the GEMS bonds were and are being paid by a surcharge on utility bills. If we use GEMS money, we need to pay it back in the future or we need to admit that the surcharge is an additional tax on the ratepayers.”

Another issue has to do with funding for an energy efficiency program. When the fee for the GEMS program was established, it cut into a different line item on residents’ electric bills called the Public Benefits Fee, which funds the state’s energy-efficiency program called Hawaii Energy. As GEMS was set up, the payments residents made on loans for their solar systems would be used to replenish the money being diverted from Hawaii Energy.

PUC Chairman Randy Iwase said if Hawaii Energy doesn’t get the money because of the rebate, the PUC might have to consider creating an additional charge on electric customers’ bills.

“If the moneys in (GEMS) are provided as a rebate with no repayment obligation, as is proposed in this measure (HB1593), then the Commission may be forced to replenish the reduced (Public Benefits Fund) through an additional surcharge to ensure that the statutorily mandated Energy Efficiency Portfolio Standards goals are achieved,” Iwase said.

Cole-Brooks, the solar industry representative, argued that using the GEMS money for a battery rebate program helps all those connected to the grid.

“Customers who receive a rebate under this program will invest in energy storage that is connected to the grid and available to provide a variety of grid services … This benefits all ratepayers.”