Hawaii utility commits to highest-in-nation level for rooftop solar on circuits, but can grid handle it?

By Anne C. Mulkern | 04/06/2015 08:10 AM EDT

A pitched battle that stopped a solar boom in Hawaii is over, at least temporarily. Rooftop installations are increasing again for the first time in two years.

Corrections appended.

A pitched battle that stopped a solar boom in Hawaii is over, at least temporarily. Rooftop installations are headed for an upswing for the first time in two years.

The biggest utility in the Aloha State, Oahu-based Hawaiian Electric Co., or HECO, has reopened a blocked pathway to adding more local photovoltaics. It will allow new rooftop systems on crowded circuits that the utility had all but shuttered 18 months ago. The utility at the time said the move was needed for safety reasons, as a bounty of solar came on the grid and threatened stability.


HECO now says it can handle more solar and is clearing a backlog of applications from homeowners who have been waiting to get rooftop systems connected. The utility has processed requests from 2,543 customers on Oahu, with 206 still in queue. HECO has cleared 333 applications on Maui and 336 on the Big Island.

Solar companies said some households have been waiting two years to connect rooftop PV systems, while HECO said the delays were shorter.

"We are committed to increasing the amount of solar, rooftop-distributed generation, to triple it in the coming years," said HECO spokesman Peter Rosegg. Of the crowded circuits, he said, "We are looking, based on experience and experimentation, to find a higher level [of PV] that’s safe."

The policy change follows pressure from the state’s Public Utilities Commission. It also takes place as HECO, which is part of Hawaiian Electric Co. Inc. (HEI), seeks to merge with renewable power developer NextEra Energy Inc. in a $4.3 billion deal. The PUC will have to approve the marriage before it can proceed.

HECO promised the PUC it would eliminate its installation waiting list by the end of April. That appears to have quickly had an effect. Last month, for Oahu — the most populous island — there were 610 PV permits issued, close to the 622 given a year earlier, said Marco Mangelsdorf, president of ProVision Solar on the Big Island who tracks the data. He also noted that HECO has sent out about 4,800 pre-approval letters to rooftop PV applicants on Oahu, with 3,000 issued last month.

"That’s likely to bump up PV permit numbers over the following months," Mangelsdorf said.

He added that with the high number of installations, out of more than 400 circuits on Oahu, 10 percent already have already hit the newly accepted 250 percent daytime minimum load, with another 20 percent in the 120 to 250 percent range.

At the same time, there remains a question about how the utility will change its policies and rate structure amid a surge toward solar, which has cut into its traditional customer base. HECO doesn’t earn money from electricity sales but must justify the need for any plants or projects that it wants ratepayers to fund.

"It’s very important to keep the utility alive," Mangelsdorf said. "There is no existing or near-term or even midterm alternative to the utility company as we know it today, and talk of significant, let alone mass grid defections, is more hyperbolic than reality-based."

Can circuits handle a new threshold?

Hawaii leads the nation in the portion of utility customers with rooftop solar. It’s now at about 13 percent, and that’s likely to rise when HECO clears the backlog of applications, Rosegg said. Locally based solar generates about one-quarter of the peak load on Oahu.

Solar adoption ballooned in 2012 and 2013 because the Aloha State uses fuel oil to make electricity, and prices for it jumped during that period. Electricity bills for moderate-sized houses averaged $250 or more per month.

Then HECO in September 2013 largely barred new solar on any circuit at 120 percent of daytime minimum load, or the low point of the total power used by customers connected at the site. The utility at the time said that step was necessary because energy from rooftop photovoltaics exceeded neighborhood demand. Excess power could flow back into substations or to nearby circuits, it argued, potentially damaging equipment.

Some critics charged that the utility was trying to protect its profits as residents flocked to solar. The policy change, while in force, cut in half the number of new rooftop PV systems added each month on Oahu compared to a year earlier.

After testing at the National Renewable Energy Laboratory showed it was safe, HECO now says in most cases it will allow solar on circuits until they reach 250 percent of daytime minimum load. That would be the highest level in the nation. Those wanting to install solar must have systems with inverters that can quickly switch off power if they detect voltage exceeding normal levels.

A group representing solar installers welcomed the news, while saying it was circumspect about HECO’s plans.

"They were slapped down pretty heavily by the PUC," said Robert Harris, spokesman for the Alliance for Solar Choice, a coalition of companies including SolarCity Corp. and Sunrun Inc. "Right now, they’re trying to figure out what to do next.

"I don’t see how they can argue anything else, because publicly they’ve said they can go up to 250 [daytime minimum load]," Harris added. "They are licking their wounds and being temporarily good, but I think they’re trying to figure out what their next step is."

PUC President Randy Iwase in February asked HEI’s president and CEO, Alan Oshima, to sign a letter saying that the utility will link customers with solar, Harris said.

"Simply stated, the policy is that the HECO companies have an affirmative duty to interconnect a potential customer … where that project does not affect circuit or system level security and reliability," the Feb. 27 document signed by Iwase and Oshima said.

But Mangelsdorf, president of ProVision Solar, said there will have to be changes made to accommodate more renewable power on much of Hawaii.

HECO saying it will allow circuits to go to 250 percent of DML is laudable, Mangelsdorf said, "but there’s no way that the grid that we know it today, tomorrow or in a year is going to be able to handle all circuits, or most circuits going to 250. It’s too much power."

Costs jump for non-solar customers

HECO in a January request to Hawaii’s PUC linked allowing more solar to phasing out net energy metering, a popular program that gives customers sizable bill credits for electricity sent to the grid. Net metering has been under attack by utilities in other states, including California and Arizona.

HECO said a change is needed because as the number of customers with rooftop solar grows, it is forcing customers without PV to pay more for transmission, grid maintenance and other ongoing costs. Many customers with solar pay monthly bills of about $20, consisting mostly of a basic service charge. The cost shift from customers with solar to those who don’t have it, HECO said, totaled $53 million on Oahu in 2014, up from $38 million in 2013.

"We’ve got an unfair system," Rosegg said. "People without solar are paying more so that people with solar can pay less."

The utility as part of its dealings with the PUC has said it will triple the amount of rooftop solar by 2030. "If we triple that without changing the payout system, that [fixed cost] shift is going to get even higher," Rosegg said. "We don’t think that’s fair."

HECO has also committed to decreasing customer bills 20 percent by 2030, Rosegg said.

Solar advocates argue that rooftop PV helps all customers in a number of ways, including reducing air pollution and cutting the number of new power plants that need to be built.

The PUC said it would look at net metering, Rosegg said, but not as part of the same proceeding examining the utility’s plans for adding renewable power.

"The PUC said they are going to look at net energy metering question, but go ahead and make the increase to 250 [daytime minimum load], so we are doing that," Rosegg said. "We would like to have some sort of interim resolution of the net energy metering question. But we’re going to go ahead and increase the cutoff point from 120 to 250 percent of DML on circuits."

Energy storage offers a potential solution to the issue of high PV on some circuits, Harris said. Solar City and other companies are testing batteries that could be used in homes. But there would need to be policy changes — like rate changes for different times power is used — to give customers the incentive to add them, he said.

A merger under pressure

Hawaii’s biggest utility and NextEra are facing pressures from numerous interest groups as they seek to merge.

One coalition argued that the PUC should consider HECO’s future business blueprint first and settle that issue, before looking at the merger. The PUC on its docket has cases with HECO looking at rates and net metering, solar growth, energy storage, and which plants will be retired in the future.

Settling all that before the merger would likely chill the union by making it less appealing to NextEra shareholders.

"The longer this potentially plays out, the less advantageous it seems to the folks in Juno Beach," Mangelsdorf of ProVision Solar said, referring to NextEra’s headquarters in Florida.

HECO argues that the future plans and merger should be looked at simultaneously. Joining with NextEra, a large renewable developer, will make it easier to add green projects, said HECO’s Rosegg.

But Harris with the Alliance for Solar Choice said that depends on what utility business model HECO and NextEra would follow after a merger. NextEra subsidiary Florida Power & Light Co. has been restrictive toward rooftop solar, he said, while NextEra bids on projects out of state. There were about 500 comments filed with the state PUC on HECO’s future plans, and "not a single one agreed with what HECO proposed," he said.

"Their plans are barely worth the paper they’re written on," Harris said, referring to HECO.

Corrections: An earlier version of this story misspelled the name of Hawaii Public Utilities Commission President Randy Iwase and misstated the relationship between NextEra Energy Inc. and Florida Power & Light Co.