Most people may not know that Hawaii is emerging as a great leader in solar power. In fact, in 2010, Hawaii ranked 9th in the U.S. with approximately 18.5 megawatts of installed solar power. In fact, Hawaii is currently 2nd in installed solar power per capita, ahead of California! And according to the most recent U.S. Solar Market Insight report by GTM Research and the Solar Energy Industries Association, installed solar photovoltaic (PV) capacity in Hawaii grew to 7.2 megawatts in the second quarter of 2011. Installations in both the residential and non-residential segments increased from the first quarter of the year to 3.7 megawatts and 3.0 megawatts, respectively. Clearly, despite its diminutive size, Hawaii’s solar market is continuing to thrive.
One of the primary reasons for Hawaii’s solar success is that Hawaii imports approximately 90% of its energy from oil. As a result, Hawaii suffers from extremely high utility rates, some of the highest in the nation, between $0.25 per kilowatt-hour and $0.35 per kilowatt-hour. Ultimately, market reality is forcing Hawaii residents to look for other cheaper forms of energy, solar power being one of the largest. Hawaii has responded with state-sponsored financial incentives from the state’s investor owned utilities, Hawaiian Electric Company (HECO), Maui Electric Company (MECO), and Hawaiian Electric Light Company (HELCO). In addition, Hawaii has enacted a personal tax credit for installing solar as well as a feed-in tariff.
Unfortunately, Hawaii may be running into a growth issue due to grid penetration. As a result of a ruling by the Federal Energy Regulatory Commission, the Hawaiian Public Utilities Commission (PUC) has set a threshold of 15% of a utility circuit for renewable energy sources. What this means is the PUC is only allowing up to 15% of grid capacity to be sourced from renewable energy. Once this threshold is reached, the PUC then requires a grid interconnection study to demonstrate that the additional installation of renewable energy sources will not harm the stability of the grid.
Unfortunately, the study may delay or even stop future renewable energy development for fear of the cost of the study or for risk of an adverse finding that more renewable energy will in fact adversely impact the Hawaii grid. While Hawaii’s grid has not reached this this threshold yet, it may detrimentally impact the long term planning of other solar projects in the state for fear that the PUC may not allow them to access the state grid. So while Hawaii is experiencing solid, sustain growth in its solar market, this grid penetration issue will remain a barrier to full-scale solar penetration.