Hawaii Permits Residents to Generate Clean Energy, Feed It to the Grid

HONOLULU, Hawaii, October 14, 2010 (ENS) – The Public Utilities Commission of Hawaii has approved an initial rollout of feed-in tariffs, FIT, a rewards program to facilitate the acquisition and development of renewable energy in Hawaii.

Approved on Wednesday, the FIT program covers renewable energy generators of up to 500 kW in size. The program will allow homes and business to get paid for building renewable energy systems such as rooftop solar and feeding the energy into the electric grid.

Hawaii will be one of the first places in the United States to adopt such a program, versions of which have led to rapid and widespread adoption of renewable energy in Europe.

“We are pleased to launch the FIT program for the Hawaiian Electric Companies,” said Commission Chairman Carlito Caliboso. “The predictability and certainty that FITs provide to renewable energy developers should incent future renewable projects and ultimately advance the State’s efforts to wean itself off of imported fossil fuel.”

Lying out in the Pacific some 2,500 miles from the mainland, Hawaii is the most oil-dependent state in the nation, and relies on imported petroleum for about 90 percent of its primary energy. Most of this oil comes from foreign nations, with a growing percentage from the Middle East. Hawaii residents pay among the nation’s highest prices for electricity and fuel, and about $7 billion annually flows out of the state to meet Hawaii’s energy needs.

A solar electric generation system on a Hawaii home (Photo by RevoluSun)

Yet, Hawaii’s renewable energy resources include: solar, wind, biomass, geothermal, hydropower, ocean wave and ocean thermal energy.

The FIT program arose out of an October 2008 Energy Agreement between the Hawaiian Electric Company, HECO and the State of Hawaii that puts Hawaii on a path to supply 40 percent of its electricity needs and 70 percent of overall energy needs, including transportation, using clean sources by 2030.

The 2009 Hawaii State Legislature enacted this goal into law by establishing a renewable portfolio standard of 40 percent and an energy efficiency standard of 30 percent by 2030.

The Energy Agreement featured the FIT as a way to “dramatically accelerate the addition of renewable energy from new sources.”

In its order, the Utilities Commission rejected HECO’s proposals to cancel or delay the FIT program, or impose blanket bans on solar panels and other renewable energy systems on HECO’s grids on the neighbor islands: Kauai, Maui, Molokai, Lanai and the Big Island of Hawaii.

Instead, the Utilities Commission ordered the electric company to roll out the FIT program on all its grids statewide within six weeks.

The Hawaii Solar Energy Association, represented by Earthjustice, was among the non-utility parties in the proceeding before the Utilities Commission to establish the FIT program that opposed HECO’s proposed bans and delays.

“We’re pleased that the PUC decided against any further bans or delays, which would only prolong Hawaii’s addiction to imported fuels and weaken one of the few sectors of Hawaii’s economy that’s creating jobs,” said Mark Duda, president of Hawaii Solar Energy Association.

“This launch of the FIT program is a small, but important step forward that we hope will build some momentum towards weaning ourselves off of increasingly expensive imported fuels,” Duda said.

The initial two-year cycle of the FIT program includes a total capacity of 60 megawatts on Oahu and 10 MW each in Maui and Hawaii counties.

The FIT program specifies pricing, terms and conditions, a standard form of contract, and queuing and interconnection procedures.

The Utilities Commission is still working out the details of the FIT for larger renewable energy systems up to five megawatts.

But the Utilities Commission’s order raised concern and disappointment among solar industry and renewable energy advocates because it adopted HECO’s proposed program terms, which they say contain provisions that are unfriendly to renewable energy financing and development and undermine the FIT’s basic goal to streamline and make transparent the process of introducing renewable energy into the grid.

“At every point in developing the FIT, HECO has made it needlessly difficult for solar and other renewable energy to succeed,” said Earthjustice attorney Isaac Moriwake.

“We’re relieved that HECO’s proposed bans and delays failed, but also disappointed that HECO managed to skew the FIT program’s terms in its favor, in ways that will slow the deployment of renewable energy systems,” said Moriwake.

The solar industry association objected to provisions giving the utilities free reign to “curtail” or halt the energy production and, thus, the revenue stream of FIT systems.

The solar industry also objected to HECO’s power to impose unspecified grid interconnection costs, which undermine the bankability of the renewable energy projects.

In its order, the Utilities Commission noted that the stakeholders were unable to reach consensus on all issues and acknowledged that there may be “a multitude of alternative ways of implementing FIT and virtually unlimited adjustments that could theoretically be made to the program.”

But in the Commission’s view, “none of the issues that were raised” by HECO appeared to be “fatal flaws that warranted any further delay in the development and implementation of the FIT program.”

The Commission said, “the better course is to proceed, learn from experience, and make necessary changes and improvements upon the Commission’s next opportunity to review the FIT program in two years.”

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