From an energy perspective, Hawaii is unique. Located in the middle of the Pacific, the Aloha State runs on imported oil. But its island environment -- from sunny days to active volcanoes -- also holds the keys to a future powered by renewable energy.
Oil powers Hawaii’s cars, trucks, planes and boats, and generates 72 percent of the state’s electricity as well. Importing all that oil costs $4.5 billion each year. That’s $3,200 for every man, woman, and child -- every cent of it leaving the state to pay for oil. And thanks to its dependence on oil, Hawaii has by far the highest electricity prices in the U.S., averaging 34 cents per kilowatt-hour -- three times the U.S. average.
But this has also been a catalyst for change, and Hawaii’s energy picture is changing fast. Hawaii is a living laboratory for best practices in the integration of renewable energy into the smart grid of the future.
“We are seeing game-changing advances in technology and increasing customer demand for control over their energy usage,” said PUC Commissioner Lorraine Akiba. “It is transforming the electric industry here in Hawaii and all over the country.”
Hawaii first set renewable energy goals in 2001, later making them mandatory and expanding them. Revisions made in 2009 require utilities to meet get 70 percent of their supply from clean energy by 2030, with 40 percent from renewable energy and 30 percent from energy efficiency. The state has also offered tax incentives for solar and wind since 1976.
These policies, combined with the declining cost of renewables, have triggered explosive growth in recent years. In 2013 alone, customers of Hawaiian Electric (HECO) installed over 129 megawatts of solar panels on Oahu, Maui and the Big Island, boosting the total to 300 megawatts from over 40,000 systems.
To put that in perspective, HECO has only 2,400 megawatts of firm power capacity. Fully 10 percent of the utility's customers on Oahu have solar. With this growth, Hawaii is now a national leader in solar power per capita.
Such a density of solar is causing problems for the distribution grid. A distribution circuit may feed hundreds of customers in a neighborhood, stepping the power down from the higher voltage transmission system. This is traditionally a one-way trip, from power plant to customer. But there are times now in Hawaii when solar systems on a distribution circuit will produce more than the power demand on that circuit, causing the surplus power to flow backward into the higher-voltage system.
According to GTM Research, 40 percent of the circuits on Oahu are at or near full capacity. HECO has begun requiring that studies and grid upgrades be paid for by customers installing solar on circuits that may max out their circuits. This has caused a backlog for new permits, frustrating solar companies and slowing down installations.
Help may be on the way, however. Legislation in 2012 gave the state PUC the authority to create the Hawaii Electricity Reliability Authority (HERA), a third-party contractor that would “monitor, enforce and analyze” reliability standards and interconnection agreements. While the utility will continue to control the grid, HERA will “take a greater role in the oversight” of distributed generation.
The development is welcomed by state energy director Mark Glick. HERA “will allow for an objective third party to make the assessments of what can be safely and reliably entered into the grid,” he said. But the PUC must still determine “to what extent and whether it’s an oversight or direct role.”
While the PUC rules are expected soon, pressure from the solar industry is pushing the issue. The Grid Modernization Act, HB1943, would guarantee that “any person, business, or entity can make a safe and reliable interconnection on the Hawaii electric system in a timely manner and for a reasonable cost” regardless of location. Grid upgrade costs would be shared across the system.
The bill has drawn opposition from HECO and the state consumer advocate over the costs to non-solar customers, while the PUC expressed “strong concerns.”
“Distributed generation, as currently priced, lowers costs for the few and increases costs for the many,” testified Scott Seu of Hawaiian Electric.
The bill sponsor is the chair of the House Energy and Environment committee, Rep. Chris Lee. His committee passed the bill in late January in a 7-3 vote.
“I think it’s in the utility's own interest to make changes themselves to their business model -- to be a 21st century distributor of electricity so they can continue to thrive -- but they’re going to have to adapt in the face of new technology,” said Lee at the hearing. “If they’re not going to move there themselves, we have to help make sure they do, because we need a viable utility with a sound business model.”
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