Sun shines for solar PV, despite tax credit step-down

For Johnnalle Keliikipi of Nanakuli, getting a solar photovoltaic system with a battery installed at her home has been a longtime dream come true.

Keliikipi recently hired Sunrun to install a 9.57-kilowatt solar PV system on her four-bedroom home, with three batteries for storage, to lower her electricity bill and help end her reliance on fuels imported from abroad.

“I started this process a long time ago,” said Kelii­kipi, adding that it has been a year and a half. “My electricity bill was just consistently going up in costs. I thought, it will never stop … so it made more sense to get solar.”

Keliikipi said her extended family, including two dogs, uses air conditioning often because it is hot where she lives — and was particularly hot over the summer. Her average electricity bill is more than $500 a month.

Sunrun earlier this month installed the system with 33 panels on her rooftop, along with three battery packs.

Keliikipi is still waiting for final inspection from Hawaiian Electric before the system can be turned on, but she is looking forward to it.

“I just wish I did it sooner,” she said. “Then I’d be reaping the benefits today instead of waiting for it to be turned on.”

She will, however, be able to take advantage of a federal tax credit before it declines next year.

Solar companies are rushing to finish up installations as part of the usual end-of-year crunch, but are particularly busy this year due to a step-down in federal tax credits for residential solar PV systems set to begin in 2020.

For years a 30% federal tax credit has been available to homeowners installing solar PV systems, with no caps. Starting in 2020, that tax credit goes down to 26%. In 2021 it is scheduled to decline to 22%, and in 2022 it ends.

Hawaii also offers an income tax credit of 35% of the total cost of a solar system, or $5,000 per system — whichever is less — with no expiration date.

Most solar companies are actually booked solid through the first quarter of next year, according to Will Giese, executive director of the Hawaii Solar Energy Association.

HSEA advocates that tax credits continue because they lower costs and make solar PV more accessible to homeowners in lower-income brackets. In addition, the solar industry employs about 6,000 in Hawaii, he said, at an average pay $3 to $7 per hour higher than comparable jobs.

Even with the lower tax credit, solar still makes sense and should be on every rooftop if the state aims to reach its goal of 100% renewable electric power generation by 2045, said Giese.

“The single greatest way for customers to save money is to install PV on their house,” he said. “As long as electricity prices remain at absurdly high prices, I think PV will always be in demand.”

Sunrun, which installed Keliikipi’s system, is booked solid as well.

“We’re still installing heavily, and anticipate no slowdown going into next year,” said Robert Harris, director of public policy for Sunrun.

The growing popularity of solar PV plus battery storage has also become a game-changer for the Hawaii market.

Battery storage has become a popular option, particularly after Hawaiian Electric’s Net Energy Metering Program ended in 2015.

Colin Yost, chief operating officer of solar company RevoluSun, said there has been unprecedented demand for solar this year, and almost all customers are opting for batteries.

“People are doing it in large part because of the step-down in that tax credit but in part because energy storage is so exciting and is now an affordable option,” he said.

His pitch to potential customers is also pretty simple: Pay less today, and the system should pay for itself in five to seven years.

“The financing is so good at this point that people who choose solar systems, in almost every case, will pay less money on Day One to finance their solar system than to pay utility for same amount of energy,” he said.

Applications for solar plus battery are also approved pretty quickly, he said.

“It’s much more controlled with advanced inverters,” he said. “Those inverters have new functions coupled with storage. That really reduces amount of energy coming back into the grid at unpredictable rates.”

Solar PV plus storage is soaring in popularity in Hawaii when compared with mainland markets, according to Marco Mangelsdorf, president of ProVision Solar in Hilo, who tracks permits.

Of the permits pulled for the first 11 months of the year, 74% included energy storage compared with 61% at the same time last year. In the second half of 2017, when he began tracking storage systems, the number was at just 25%.

Mangelsdorf said this is bound to get better, with more battery system options coming into the market in 2020.

With battery storage, backup power is available during outages. In aggregate, they even have the potential to provide power to the grid, when necessary.

Sunrun in September announced it would be delivering rooftop solar-generated electricity stored in approximately 1,000 Brightbox home batteries to the utility, from 2020 to 2024, during high demand as part of a pilot program.

Energy storage has become much more mainstream, according to Mangelsdorf, and the growth of solar plus storage is helping the utility move toward the development of a “smart grid.”

“My view is that energy storage is at least as important if not more so than adding more solar,” he said. “Back in the old days you just had solar but no storage. Now solar and storage are the winning combo in order for our grids to get to greater stability, greater resilience in case of a catastrophe like a hurricane.”

Hawaiian Electric Cos. has ambitious targets to meet, as well, in order to reach the 100% renewables goal by 2045.

As of year’s end, Hawaiian Electric said it is on track to surpass a count of 80,000 rooftop solar PV systems across its service areas on Oahu, Maui County and Hawaii island. To reach targets, it will need far more.

“We are hoping to continue seeing increasing levels of customer energy resources, for sure, not only next year, but well into the future,” said Lani Shinsato, director of customer energy resources programs. “We’re actually planning on customer energy resources being a large part of that mix by the time we hit 2045. It’s a big part of our renewable- energy goals that we’re going to depend upon to hit our 100% Renewable Portfolio Standards.”

Customers with solar PV and storage will play a large role in hitting those targets.

In 2019 Hawaiian Electric said it interconnected about 41 megawatts of rooftop solar and has reduced the time it takes to process solar contractors’ applications, which are now available online.

The solar industry has been through some wild swings in Hawaii over the past eight years, according to Mangelsdorf, who tracks permits and calls it a “solarcoaster.” But after two lackluster years, solar companies are once again picking up momentum.

The number of solar PV permits issued for the first 11 months of this year rose 46% — with 3,792 versus 2,597 — compared with the same time last year.

In addition, Hawaii’s solar PV installation ranking among states rose in the first three quarters of this year to No. 6 from No. 17 in 2018, according to a recently released U.S. Solar Market Insight report by the Solar Energy Industries Association.

Solar PV plus battery installations are also fanning out across Oahu, and not just clustered in wealthy ZIP codes.

Sunrun’s map of installations indicates that solar plus battery systems are now up and running from the Waianae Coast to Ewa Beach and throughout Central Oahu, Honolulu and the Windward side.

Keliikipi said besides reducing her electricity bill, she was motivated by ending a reliance on fossil fuels.

“A lot has to do with what’s good for our future and our children,” she said. “If we don’t do things now, they’re going to suffer 20 years from now.”

PERCENTAGE BREAKDOWN

Federal tax credit for residential solar PV systems:

>> 2019: 30%

>> 2020: 26%

>> 2021: 22%

>> 2022: 0

Source: Solar Energy Industry Association

SOLAR PV IN 2019

A look at solar PV in the isles from January to November:

>> 3,792 solar PV permits versus 2,597 during the same period last year, an increase of 46%.

>> 74% of PV permits include energy storage; 61% last year.

>> Top solar contractors ranked by permits pulled include RevoluSun (550), Hawaii Energy Connections (512), Alternate Energy (381), Haleakala Solar PetersenDean (280) and Sunrun (264).

Source: Marco Mangelsdorf of ProVision Solar Inc.