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Hawaii Rejects Proposed Ban on Solar Energy

State's largest utility loses skirmish to solar industry group but could still halt feed-in tariff program

By Sara Stroud

Oct 22, 2010

The latest skirmish in an ongoing struggle between Hawaii’s largest utility and the state’s solar industry was settled earlier this month when state energy regulators rejected a proposed moratorium on new solar intallations and instead greenlighted a program intended to accelerate small solar development.

The state’s Public Utilities Commission that would allow renewable energy projects of up to 500 kilowatts to get paid for the power they feed back into the electrical grid.

The decision came despite requests from Hawaiian Electric Company (HECO) to postpone the program over concerns that added distributed generation resources could destabilize the islands’ power grids.

Centralized or Distributed Generation?

At the heart of the conflict is how to meet the state’s aggressive renewable energy standards—whether with large utility-owned generating stations or from dispersed privately owned systems, such as residential and commercial solar installations.

“Will system of the future be a biofuel-powered central generation [plant] or a fleet of distributed generation?” asked Mark Duda, president of the Honolulu-based Hawaii Solar Energy Association, which opposed HECO’s proposed delays.

According to Duda and other distributed generation advocates, HECO’s move to postpone the feed-in tariff is one of several attempts the utility has made to tip the scales toward central generation. Earlier this year, HECO proposed a moratorium on new solar installations on four of the Hawaiian islands until it could conduct a study about how added renewables could impact grid reliability.

While HECO retracted the proposed ban, it continued to push for a deferment of the feed-in tariff program. However, none of HECO’s objections “appeared to be fatal flaws that warranted any further delay in the development and implementation of the FIT [feed-in tariff] program,” according to statement released by the PUC.

, which serves about 95 percent of the state’s 1.2 million residents, and other utilities to rollout the program within six weeks. Next, the PUC plans to develop a program for larger projects.

Feed-in tariffs are designed to encourage investment in solar development by providing renewable power producers with a long-term guarantee to purchase the power they generate. In Hawaii, project developers have had to go through lengthy negotiations with the state’s utilities to sell electricity generated from renewable projects.

The program would streamline and accelerate the development process by providing consistent pricing and procedures, and assure developers and investors can sell the electricity the projects generate, the commission said.

Driving renewable development in the state, where the cost for grid power is more than twice the national average, is a clean energy mandate that is among the most aggressive in the country.

40% Clean by 2030

In 2009, state lawmakers established a renewable portfolio standard requiring 40 percent of the Hawaii’s electricity to come from renewables by 2030. The state’s Clean Energy Initiative includes to meet 70 percent of its overall energy needs, including transportation, from cleaner energy sources in the next two decades.

“There is a concerted push in Hawaii to meet fairly aggressive RPS goals, but all ideas being advocated by utilities involve central station generation,” said Isaac Moriwake, an attorney from environmental nonprofit Earthjustice, which represented the Hawaii Solar Energy Association. “[HECO is] predisposed to big projects and has a blind spot to DG [distributed generation], and that’s something we’re trying to work on.”

For HECO, the choice comes down to maintaining the reliability of the islands’ electrical grids, said Peter Rosegg, a spokesman for the utility.

The islands’ electrical systems were designed for central station power. Power grids on the mainland rely on interconnections to ensure a stable power supply. But the Hawaiian islands’ isolated electric grids are more challenging to keep stable, and are more vulnerable to power fluctuations associated with intermittent resources, such as solar, HECO spokesman Peter Rosegg said.

So the utility is also looking to “firm” renewable resources such as biomass gasification plants and geothermal power.

“They think we hide behind the reliability shield,” Rosegg said. “But we’re legally responsible for reliability. We’re the ones customers call.”

While the PUC’s decision was a partial victory for distributed generation advocates, elements of the feed-in tariff could keep it from supporting renewable growth as intended, Duda said.

Utility Could Still Curtail Program

Under the new program, utilities have the option to curtail or halt the power production of renewable projects and impose unspecified grid-connection costs.

While HECO said curtailment of renewables is sometimes necessary to balance generation and demand given the complexity of reducing output of larger central systems, it acknowledged that it also creates an uncertain revenue stream and can reduce incentives for project developers and investors.

“How do you sell something that has a big black hole on it?” Moriwake asked, referring to the uncertain payback from projects.

The answer to that question may not be revealed for a while, as the state’s solar industry waits to see how developers and investors respond to the new program.

For its part, the PUC acknowledged that the program is a work in progress. With a variety of ways to implement feed-in tariffs, there are “virtually unlimited adjustments that could theoretically be made,” according to the PUC.

The commission determined that the best course of action was to implement the program and make any necessary changes when it reviews the program in two years.

“If done right, this could definitely expand our market and our industry,” Duda said  “But we’re not sure what we’ve got at this point.”

See Also

Hawaiian Utility Fights Solar Industry Over Private Installations

DOE: Big Utilities Can Get Reliable Power from Small Solar PV Arrays

Aloha Oil: Hawaii Targets 70% Renewable Energy by 2030

New Hampshire Utility's Move to Control Green Energy Dollars is Rebuffed

Energy Co's Use Ballot Initiatives, Other Tools to Fight for Continued Market Dominance

Why Isn't the U.S. Embracing Feed-in Tariffs?

 

"Clarifications" to you article on solar energy in Hawaii

To clarify, the PUC never rejected a proposed moratorium because there was no moratorium proposed.  Instead, the PUC accepted the utility’s proposal that a working group be assembled to address the reliability standards necessary to add more distributed generation so that a moratorium in the future can be avoided.  


 Not even the most ardent proponent of renewable energy, even solar energy, denies that at some point an increase of DG on a circuit can result in reliability problems, for everyone on the circuit including the installer of the new DG and others.  The question is really what that point is, how to know when we are there and how to extend the amount of DG that can be integrated on the circuit and thus on the grid.  


As a utility committed to reaching very aggressive renewable energy goals in just 20 years, Hawaiian Electric has no choice; we must be open to large projects (wind farms, solar farms, biofuel, run-of-river hydro) as well as small-scale distributed generation to reach the goal. While some people like to see this as an either-or “skirmish” between central power and DG or between one technology and another, it is in fact a matter of all-of-the-above.  Hawaiian Electric is, in fact, open to all and we have a proposal before the PUC for a PV Host program which would allow even larger PV installations to be installed by the solar industry.


But we can not abandon our responsibility for reliability.  As you quoted me in the article, when there are reliability problems our customers call the utility, not the solar energy providers who installed the PV, not owner of the property where the PV is located.  And it is the utility with its obligation to serve that faces liabilities if the quality of power is not maintained.  That's a simple fact.


As to curtailment, ironically, it is the larger renewable projects on the transmission circuits – not the small projects on the low-power distribution grid – that are most susceptible to curtailment because they include supervisory control and data acquisition (SCADA) equipment that allows the utility to curtail them when necessary.  In most cases, small DG is more difficult to curtail.  Their power comes on the grid and power for their facilities is taken off the grid without warning to the system operator.  In the future, smart grid technology should solve some of these problems, but for now they must be managed to insure reliability.  Within the utility industry, Hawaiian Electric – and particularly our subsidiaries on Maui and Hawaii Island  -- are acknowledged as the most experienced leaders in integrating significant percentages of renewable energy on small grids.  


 

David vs. Goliath

Very nicely done story. It brings into clear view what's in play in the battle between centralized power producers and those who would prefer distributed energy production. I'm part of the latter group. I'm betting that as more and more people do what we just did (we put up a 5.59 kW home solar system in June), the balance of power is going to shift toward local, distributive energy. And, this, of course, is not something the Big Guys -- who control our power production right now -- want.


--Christof Demont-Heinrich
Editor & Founder, SolarChargedDriving.Com

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