Glorious blue skies and endless sunshine. Warm, balmy breezes. Isn’t that how you envision Hawai’i? Like the slogan, “Everything’s better in Hawaii,” right? Oops, one thing does dampen the impression of Hawai’i, though: its high cost of living, especially for energy.
Hawai’i’s citizens have tried to take control of their high energy prices by using more alternative energy sources, particularly solar. Did you know that Hawai’i ranks as the 7th state in the country in installed solar … enough to power 110,000 homes? Hawai’i homeowners have taken advantage of incentives and financing but also face serious challenges from energy utilities in the battle for energy reliability, cost efficiency, and independence.
Solar makes sense for Hawai’i. With its uniform day lengths, small seasonal variations in incoming solar radiation, and consistent temperatures, Hawai’i on level ground receives at least 67% as much solar energy between sunrise and sunset on a clear winter day as it does on a clear summer day.
By comparison, the percentages are only 33% and 20% at latitudes 40 and 50 degrees, respectively.
“Hawaii is a postcard from the future,” said Adam Browning, executive director of Vote Solar, a policy and advocacy group based in California.
Why is Hawai’i ideal for solar integration?
Life on earth is a result of solar radiation. All natural processes like wind systems, the hydrological cycle, and leaf photosynthesis emerge from solar influences. Increasingly, solar energy has become one of the most important sources of alternative energy for generating electricity. Solar radiation differs in its impact on the earth for several reasons, including the angle at which the sun’s rays strike, absorption and reflection by the atmosphere as the radiation passes through it, absorption and reflection by clouds, and shading by the surrounding terrain.
Sun angle and atmospheric influences are key variables that affect the intensity of solar radiation in predictable ways. In Hawai‘i, except for areas near active volcanic eruptions, the air is relatively clear and atmospheric effects on radiation are fairly constant.
Research around Hawai’i solar integration
A 2013 study commissioned by the U.S. Department of Energy, the Hawai’i Natural Energy Institute, and Hawai’ian Electric Co. called the Hawaii Solar Integration Study found that higher levels of variable renewables could be accommodated reliably by the bulk power system in a collaborative fashion. Here are some of their findings:
- Changes would be needed to utility equipment, operating practices, and variable generation equipment capabilities;
- Requests would be necessary for capabilities such as inertial and frequency response, voltage and frequency ride through, and provision of ancillary services from variable generating plants in grid codes;
- The study did not look at incentives, as they were not viewed necessary for the mitigation measures that they were considering;
- The importance and value of reviewing existing operating practices and adjusting certain assumptions such as minimum power generation levels and certain must-run generator rules were modeled and the impact on solar and wind curtailment was shown; and,
- The use and value of storage in a high-penetration system was modeled and discussed.
This report is illuminating in what the consortium chose to focus on and what they didn’t, particularly incentives. These decisions played heavily into the next few years of attempts to integrate solar as a pervasive energy source into the Hawai’ian energy infrastructure.
What’s behind Hawai’i’s high solar electricity prices?
Located in the middle of the world’s largest ocean, Hawai’i must import the fossils fuels it requires to produce centralized traditional electricity. Dense crude oil is more cost-effective to ship than natural gas or coal, so the vast majority of Hawai’i’s electricity has been produced from oil. To understand the expense involved in using oil to generate electricity, it is important to know that less than 1% of electricity generation in the rest of the United States is derived from oil.
Hawai’i’s geography as an archipelago makes it more expensive to build power lines than in other parts of the United States, so the centralized electricity utility company charges more per kilowatt-hour to cover those upfront electric delivery equipment costs. Hawai’ians pay about 34 cents per kilowatt-hour — nearly 3.5 times the U.S. average and more than double the second-highest state electricity price of 16 cents per kilowatt-hour in Alaska.
The allure of solar to Hawai’ians
Because grid electricity is so much more expensive in Hawai’i than elsewhere in the country, the economics for solar panels are fundamentally improved, and the effective price of solar electricity comes up a lot cheaper than in other states. Thus, due to the consequences of its unique location and its sunny weather, Hawai’i obtains a higher percentage of solar electric power than any other U.S. state, getting 3.66% of its electricity from solar. Out of the 50 U.S. states, only Hawai’i, California, Arizona, and Florida achieve more than 1% of electricity from solar power.
The upfront cost for a solar photovoltaic system in Hawai’i is similar to the upfront cost anywhere else, but a solar panel in Hawai’i captures a lot more sunlight over its lifetime than most other parts of the U.S.
A solar system that might take 10 years to pay off in New Jersey might pay off in under 5 years in Hawaii due to the higher Hawai’ian electricity price and greater amount of sunshine. As a result, approximately 12% of Hawai’ian homes now have solar panels installed.
According to the federal Energy Information Administration, this is the highest proportion of solar residential application in the nation. Demand for electricity is softening while home solar is rapidly spreading across the country. There are now about 600,000 installed solar systems in the United States, and the number is expected to reach 3.3 million by 2020, according to the Solar Energy Industries Association. But the relative success in Hawai’i is unprecedented.
Quick facts about Hawai’i and energy
The U.S. Energy Information Office offers the following energy data analysis for Hawai’i, updated in 2016.
- In 2015, Hawai’i generated more solar electricity per capita from distributed facilities than any other state, and solar energy from both utility-scale and distributed resources generated 35% of Hawai’i’s renewable electricity.
- With its mild tropical climate, Hawai’i had the fourth-lowest per capita energy use in the nation in 2014. The transportation sector accounted for half of Hawai’i’s energy demand in 2014, led by commercial and military aviation fuel use.
- In 2014, Hawai’i imported 90% of the energy it consumed, mostly as petroleum, and, in 2015, the state had the highest electricity prices in the nation.
- Hawai’i is one of 7 states with utility-scale geothermal capacity. In 2015, 17% of Hawai’i’s utility-scale renewable net electricity generation came from geothermal energy.
- Hawai’i is the first state to set a legal deadline for producing 100% of its electricity from renewable energy sources. The state plans to achieve that target by 2045.
Struggles with solar in Hawai’i
Electrically isolated from the mainland, with no power lines linking its small grid with the rest of the U.S., Hawai’i has experienced difficulties integrating its overall solar energy system. The utility has nowhere to dump extra solar power, unlike global solar leaders of Germany and California, which exchange power within their borders and with their neighbors to respond to solar variability.
Hawai’i also has no access to backup electricity generation from outside the state. Other grid operators can route power to areas where it is needed, but that is impossible in Hawai’i, as only a few operating power plants serve the state’s population of approximately 1.4 million.
The Hawai’i Public Utility Commission responded in 2013 by formally capping the number of new customers who could install solar panels that feed electricity back into the grid. The move came after the Commission and other stakeholders become aware of the technical and financial challenges of so many Hawai’ian residences having the capacity to produce their own electricity.
Solar-leasing companies install rooftop systems, which cost at least $10,000 — sometimes at no upfront cost to the consumer — because state and federal subsidies can make buying and manufacturing solar panels profitable.
Hawaii’s government has not favored solar power much relative to other states. It has passed 29 policies supporting it, far fewer than the national average of 51 policies. Most solar subsidies go to residential installations and include a 30% federal tax credit.
Addressing Hawai’ians’ access to solar: Centralized utilities
In 2015, under strict orders from state energy officials, the Hawaiian Electric Company approved a lengthy backlog of solar applications. This push came after indications that the system could, indeed, handle much more solar than the company had assumed and the decision to hold off was likely more indicative of a large utility’s failure to adapt its business model to a changing market.
Major utility inaction around solar has Hawai’i at the forefront of a global upheaval in the power business. Around the world, the reduced revenue jeopardizes electric company revenue. What’s the result? Many utilities are:
- reducing incentives for solar installations;
- adding hefty fees; and,
- attempting to push home solar companies out of the market.
But that’s not the end of the story. Solar companies in Hawai’i and elsewhere are fighting back through regulators and legislation, questioning and transforming:
- the relationship between power companies and the public;
- the responsibility for maintaining and operating the nation’s grid; and,
- the impact of power outages, voltage fluctuations, overloaded circuits, and brown/blackouts.
“Hawai’i’s case is not isolated,” said Massoud Amin, a professor of electrical and computer engineering at the University of Minnesota and chairman of the smart grid program at the Institute of Electrical and Electronics Engineers. “When we push year-on-year 30 to 40 percent growth in this market, with the number of installations doubling, quickly — every two years or so — there’s going to be problems.”
The move to decentralized solar for Hawai’ians
Solar system installers in Hawai’i whose businesses were stymied by the original cap continue to be frustrated by the pace of the state’s solar application processing. James Whitcomb, CEO and founder of Haleakala Solar, says a more radical — and expensive — solution for Hawai’ian homeowners may be necessary: Avoid the utility and its grid altogether. “I’ve actually taken people right off the grid. The lumbering big utilities that are so used to taking three months to study this and then six months to do that — what they don’t understand is that things are moving at the speed of business. Like with digital photography — this is inevitable.”
Breaking consumer reliance on the utility’s network of power lines may be the start to energy independence for Hawai’ians. A Tesla project on the Hawaiian island of Kauai in which batteries installed at a solar farm will help fuel the grid during the evening may be the beginning of a new normal for solar on Hawai’i.
“It’s the blueprint for how we want to operate in the future,” said John Conley, vice president of project development at SolarCity.