A controversial program that has been one of the main drivers behind the record-breaking growth of rooftop solar in Hawaii is getting curtailed, according to a ruling this week by state regulators.

Net energy metering, or NEM, allows rooftop solar customers to shift the cost burden of operating the grid to full-service customers, while still benefiting from access to the grid’s physical infrastructure to import and export power. The program credits rooftop solar customers at the full retail value of electricity. In 2013, Hawaiian Electric Co. said that the cost to its full-service customers due to this program totaled $38.5 million, representing about 1.3 percent of the collected rates for the Honolulu-based utility and its subsidiaries Maui Electric Co. and Hawaii Electric Light Co.

But some, including Kevin Landers, who works for an electrical construction company that has an alternative energy division, noted that rooftop solar decreases the demand for centralized utility generation, saving the utility fuel and transmission costs, as well as providing free generation, which the utility gets to sell for full price to the neighbors without solar.

On Monday, the Hawaii Public Utilities Commission made a ruling to close the program to new participants and approved new options for customers to interconnect distributed energy resources to the utility’s grid.

These resources include rooftop solar systems, energy efficiency measures, demand response measures, electric vehicles and energy storage systems.

The PUC said that its ruling initiates the first step in an evolution of distributed energy resource policies in the state, which will significantly advance the integration of these types of resources through the state.

Nothing about the NEM program will change for existing NEM customers or customers who have already applied and are waiting for approval, according to the PUC, which noted that applications submitted after Monday will not be eligible for the NEM program.

Instead, new customers will be able to apply for fast-track approval to interconnect their systems under the “self-supply” option or standard review for the “grid-supply” option.

The self-supply option offers a non-export solution for customers that provides the benefit of using PV to meet their energy needs, and allows a limited amount of inadvertent export to the grid, with zero compensation for any export.

Customers choosing this option will have a minimum bill of $25 for residential customers and $50 for small commercial customers.

The grid-supply option is intended to provide customers with the option of exporting excess energy to the grid in exchange for energy credits against the customer’s bills, to the extent such energy export provides benefits to the electric system.

This option is similar to NEM, although instead of getting credited for the full retail rate for NEM, customers will be credited for a fixed rate between 15 cents and 28 cents per kilowatt-hour, depending on the island the customer lives on.

The new grid supply and self supply programs are expected to be available to customers by Oct. 21.

“Hawaii is at a critical juncture in pursuit of achieving a 100 percent renewable portfolio standard in the electric power sector,” the PUC said. “Extraordinary high retail electricity prices, combined with dramatic cost declines in renewable energy and storage technologies, have combined to transform the competitive landscape facing the state’s electric utilities.”

The availability and economic attractiveness of the NEM program in particular has led to widespread adoption of rooftop solar among electricity customers statewide within the span of only a few years.

Despite the planning, operational, technical and regulatory challenges, no other utility in the country rivals Hawaii’s electric utilities in their accomplishments integrating rooftop solar into its grids.

“However, successes to date have not come easily or predictably to the utilities or their customers,” the PUC said. “Continuing frustration and confusion relating to the interconnection queue for thousands of customers waiting to install solar photovoltaic and other [resources] is just one example of the challenges that the commission is addressing in this proceeding.”

The challenge facing the state now is ensuring that distributed energy resources continues to scale in such a way that it benefits all customers as each utility advances towards 100 percent renewable energy, the PUC said.

Groups opposing the change in the NEM program have said that the utility will save money by using the customer’s exported power to serve the neighbors because the utility will avoid the costs of power that it would otherwise have had to generate at a more distant power plant and deliver to that local area over its transmission and distribution system.

In its ruling the commission instructs Hawaiian Electric to revise its interconnection rules and offer new tariffs to their customers that expand customer choice and provide new options for managing energy use, enable distributed energy resources to provide technical and economic benefits to each grid and establish a foundation for further policy adjustments that will be made as part of phase two of this proceeding.

“We see solar power as an important part of the diverse set of renewable energy solutions needed to help lower customer bills and meet Hawaii’s goal of a 100 percent renewable portfolio standard by 2045,” said Jim Alberts, senior vice president of customer service for Hawaiian Electric

Duane Shimogawa
Reporter
Pacific Business News