Hawaiian Electric Companies propose new options to support continued growth of rooftop solar

News release from HECO

HONOLULU, June 29, 2015 – The Hawaiian Electric Companies today proposed to the Hawaii Public Utilities Commission recommendations for new customer options and programs to support continued growth of rooftop photovoltaic (PV) systems in Hawaii. These changes would help grow Hawaii’s local energy industries and economy, protect the environment, and lower the cost of energy for Hawaii residents and businesses.

“We know how much our customers want the benefits of rooftop solar,” said Jim Alberts, Hawaiian Electric senior vice president of customer service. “We support and expect continued growth of rooftop solar. With levels of solar energy in Hawaii that are twenty times higher than the nationwide average, these proposals provide greater access to rooftop PV while helping ensure the longevity of programs in a way that protects reliability, safety and fairness for all customers.”

Under Hawaiian Electric’s proposal, customers with a Net Energy Metering (NEM) agreement today and those with valid pending applications will continue under the present program. Hawaiian Electric proposes that any changes would apply only to new PV systems, and only after the PUC makes its final determination on the program. Ultimately, the PUC will determine how and when any changes impact customers.

“We’re supporting a plan that will help us triple the amount of distributed rooftop PV by 2030 and increase renewable energy to 65 percent by 2030 and 100 percent by 2045. To reach those goals, we will need a diverse portfolio of renewable energy resources and a smart, modern grid,” Alberts said.

Hawaiian Electric’s recommendations include:

• A new pricing structure for new rooftop PV systems that more fairly shares costs for operating and maintaining the electric grid. Currently, customers with rooftop PV are annually shifting about $53 million in grid operations and maintenance costs to customers who do not have rooftop PV.
• Nation-leading technical standards for advanced inverters, which will improve integration of high levels of rooftop PV.
• New options for customers, including battery-equipped rooftop photovoltaic systems.
• A pilot time-of-use rate to offer customers the opportunity to save money by shifting their energy use to different times of day, particularly when PV panels are most productive.
• An improved method of calculating the amount of rooftop PV that can be safely installed without impacting service reliability for other customers.
• Streamlined and standardized PV application processes to improve efficiency and provide further transparency of the status of applications.

The recommendations take into account feedback from customers, solar companies and other energy stakeholders.

Details of the proposals:

• For rooftop PV customers owners to share more fairly in costs for operating and maintaining the electric grid:
  • Crediting at a rate of 18 cents per kilowatt-hour (kWh) for all solar energy sent to the grid from future rooftop PV systems by Oahu customers. This represents a premium over the utility cost of producing energy on Oahu, which, based on current fuel and purchased power costs, is approximately 12 cents per kWh. Although the solar rate is still higher, it helps remove some of the existing cost shift from customers with solar to those who don’t have solar. (The rate for Hawaii Island would be 22.5 cents per kWh and the rate for Maui would be 23.1 cents per kWh, based on the utility cost of energy for those islands).
  • A minimum monthly bill of $25 for future residential PV systems on all islands. Currently, residential customers have a minimum bill of $17 on Oahu, $18 on Maui, and $20.50 on Hawaii Island.

Combined, these changes will reduce the shifting of grid operations and maintenance costs from solar to non-solar customers that occurs under the current program while still offering new PV system owners a significant benefit from their investment. With these changes, the “payback” period for new rooftop solar customers would remain very attractive, increasing only about one year compared to the current program.

• To help ensure safe and reliable service for all rooftop solar customers:
  • Nation-leading technical standards for advanced inverters -- components that can improve the integration of rooftop PV systems with the electric grid. The Hawaiian Electric Companies developed these groundbreaking standards in close collaboration with inverter manufacturers.
  • New options for customers that may include battery-equipped rooftop photovoltaic systems, which can improve integration in areas with high concentrations of PV and may allow for interconnection without the need for lengthy technical review.
  • A pilot time-of-use rate to offer customers the opportunity to save money by shifting their energy use to different times of day, particularly when PV panels are most productive. This would be a voluntary pilot program for residential customers who install new rooftop PV systems. It would be offered on Oahu in areas where Hawaiian Electric has started the initial development of its smart grid program. The maximum participation would be 500 customers.

• To improve the PV application process:
  • An improved method of calculating how much rooftop PV that can be safely installed without impacting safety or service reliability for all customers. This improved method, called Hosting Capacity, may open the possibility for further increasing the amount of rooftop PV in some areas.
  • Implementing software tools and standardizing the application process across all islands. This will improve efficiency and provide further transparency of the status of pending applications.

Public Utilities Commission Guidance and Background

Under the guidance of the PUC, the Hawaiian Electric Companies have been working collaboratively with local and national PV companies and others in Hawaii’s energy community to develop new customer options for rooftop PV that ensure all customers are treated fairly and embrace new technologies such as battery storage and smart inverters. The PUC will have to consider those proposals and recommendations from other parties before any new options are approved and offered to customers.

As part of its guidance to the parties involved in this effort, the PUC stated:

“…it is unrealistic to expect that the high growth in distributed solar PV capacity additions experienced in the 2010-2013 time period can be sustained, in the same technical, economic and policy manner in which it occurred, particularly when electric energy usage is declining, distribution circuit penetration levels are increasing, system level challenges are emerging and grid fixed costs are increasingly being shifted to non-solar PV customers.”

Currently, NEM customers use the electric grid daily, sending excess energy into the grid and drawing power from the grid when their systems do not produce enough for their needs, such as evenings and cloudy days. However, NEM customers get credit for electricity sent to the grid at the full retail rate.

The retail rates paid by non-solar customers include the costs of fuel or purchased power, maintaining and upgrading the grid and all other administrative costs to provide electric service. But because NEM customers today get full retail credit – more than is paid for any other electricity brought into the grid – many NEM customers are able to lower bills to the point that they are not fairly sharing in the cost of being connected to the electric grid.

Those costs are increasingly shifted from those who have solar to those who do not. At the end of 2014, customers were annually shifting an estimated $53 million, an increase of $15 million over the 2013 estimated total of $38 million. This cost shift would increase significantly if the present NEM program is allowed to grow unchanged.

“These changes will help reduce the unfair shifting of costs from those with PV to those who don’t have PV. Contrary to what some may think, these changes won’t increase our profits,” Alberts said. “We’re working to ensure fair rates for all of our customers while still preserving the opportunities to integrate more renewable energy for Hawaii.”

SA: HECO proposes to increase rooftop solar fee