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Hawaii denies solar parties' plea to allow more customers to supply grid

The Hawaii Public Utilities Commission has refused to grant solar parties their request to increase the amount of customer-sited generation that customers can use to supply utilities on all of the state's islands.

The PUC on Dec. 9 said it wants utilities to pursue renewable energy options other than customer-sited solar panels.

The commission on Oct. 12, 2015, closed the utilities' net energy metering, or NEM, programs, in which rooftop solar customers were able to get credits on their electric bills at the retail rate for each kilowatt-hour they supplied the utilities. The program's closure order grandfathered existing NEM customers to continue receiving retail rate credits, and the PUC approved two interim programs for solar customers to choose, the customer grid-supply, or CGS, tariff and customer self-supply tariff.

The solar parties asked for an increase in the 35-MW statewide cap the PUC set for the CGS tariff. The CGS tariff is similar to the NEM tariff in that customers receive credits to reduce their electricity bills when they send power from their solar systems onto the grid. However, CGS credits are of less value to customers because they are valued more at wholesale prices rather than retail rates.

The solar parties said the CGS option has been so popular that the allowed capacity under the cap was rapidly being filled. The CGS is popular because it is the only practical distributed energy resource option available to new customers, they said.

Hawaiian Electric Industries Inc. utility subsidiaries opposed increasing the cap, saying the solar industry should shift its focus to the customer self-supply tariff, under which customers do not export any electricity to the grid. The utilities said they are having problems integrating large volumes of grid-supply customers.

The PUC said it always envisioned the CGS as an interim measure that was not designed for distributed energy deployment on the scale that has occurred. Utilities are receiving energy from rooftop systems regardless of whether the power system can economically or physically accommodate it, the PUC said in its Dec. 9 order.

These export levels come at the expense of the utilities' opportunities to acquire lower-cost renewable energy from other sources, including community-based renewable energy, the commission continued. "One of the primary reasons for limiting the CGS tariff was to ensure that adequate grid space would be preserved for other renewable energy offerings," the commission said.

The PUC has repeatedly said more than rooftop solar will be required for the state to reach its renewable portfolio standard goals of 30% by the end of 2020 and ultimately 100% by 2045.

"While increasing the CGS tariff cap may appear to provide a solution in the short term, the commission must consider the long-term consequences of allocating increasing amounts of limited grid space to accommodate uncontrolled DER exports," the PUC said in its order.

The PUC noted the solar parties did not propose a specific cap increase. "This makes the long-term effects, and effectiveness, of the requested CGS cap increase ambiguous and indeterminable," the regulators said.

The PUC said it is open to other options and expects to issue an interim order in early 2017 in a second phase of its proceeding to investigate DER policies.

"Ideally this will result in an improved suite of interim DER offerings and increase stability as the market transitions into a long-term, re-designed DER structure at the conclusion of Phase 2," the PUC said.

The solar parties included the Hawaii PV Coalition, Hawaii Solar Energy Association, SunPower Corp. and Alliance for Solar Choice.

About 350 MW of net-energy-metered capacity had been installed by the end of 2015, according to a November 2016 Hawaii State Energy Office report.

However, the rooftop solar industry experienced a steep decline in business with the PUC's NEM-ending order, and the PUC's latest action is a further setback.
The number of building permit applications for photovoltaic installations in November 2016 was down 32.4% from November 2015, the solar association said in a Dec. 12 news release.

Still, the association expressed hope following the PUC's latest decision, saying Hawaii consumers are showing interest in "new and exciting types of solar systems" that include energy storage and even going off the grid without utility support.

"Data shows that the Customer Self-Supply program is beginning to slowly gain traction," the association said, noting that installation approvals more than doubled over the previous month.

The association said it would continue to work with the PUC and stakeholders in the solar docket, saying it "promises a new era of more stable and consistent renewable energy policy." (PUC Docket No. 2014-0192)