A decision issued last Friday by the Hawaii Public Utilities Commission could spawn new
clean energy investment through a state-wide feed-in tariff–a price guarantee for electricity produced by sun, wind,
and hydroelectric sources.
Advocates for clean energy are encouraged about the decision–which
lays the framework for the new policy but doesn’t set specific rates for the purchase of clean
power–although questions remain regarding the whether the policy will provide sufficient incentive
to drive major new clean energy development.
“This decision is encouraging and represents another important step towards Hawaii’s energy
independence,” said Henk Rogers, Founder and Chairman of the Blue Planet Foundation. “Although
it is unclear today how much clean energy this new policy will generate, it puts in place a mechanism
that will hopefully prove beneficial to Hawaii?s clean energy future.”
The decision and order issued last Friday is a statement of “general principles” on the shape of the
feed-in tariff program. The actual rate amounts will be determined by the Commission within the next
few months.
The Commission’s decision, noting that “there is no other state in the nation that is as dependent on
oil as Hawaii is” and that oil is imported from “countries that may not be sympathetic to U.S.
interests,” addresses some of the larger concerns that clean energy developers had in doing
business in Hawaii: the ability to secure access to the power grid and ensure a fair price for the
power that they sold.
The new policy will provide a set price and standard
20-year contract for “green” electricity. That means a solar company or a wind developer will know
exactly what price they can sell electricity from their project. By providing transparent conditions and
a “no haggle” price for clean energy, a feed-in tariff will enable renewable energy providers to more
easily calculate whether their project will pencil out. For smaller projects, clean energy developers
will no longer face costly and time-consuming individual contract negotiations with the utilities.
Hawaii will be one of the first states in the nation with such a progressive policy.
Clean energy advocates, such as the Hawaii Solar Energy Association, praised the Commission’s
decision.
“This decision stakes a claim for renewable power generation in Hawaii that is not utility-owned,”
said Mark Duda, President of the Hawaii Solar Energy Association. “Hawaii’s solar industry is
pleased that the Commission has recognized the importance of our industry–and distributed
generation in general–in the broader effort to increase energy security and reduce carbon
emissions.”
Through their 128-page decision and order, the Commission adopted a policy that is much broader
than the one envisioned by the Hawaiian Electric Company (HECO). The HECO proposal sought to
limit the renewable energy project size of wind projects on Oahu, for example, to 100 kilowatts, or
one three-hundredth (1/300) the size of the Kaheawa wind farm currently operating on Maui. The
Commission?s decision sets project size limits of five megawatts (MW) for the island of Oahu and 2.72 MW for Maui and Hawaii island.
Blue Planet Foundation and other clean energy advocates remain concerned about possible
limitations imposed by the new policy–limitations not in place in other jurisdictions. The
Commission’s decision caps the total amount of feed-in tariff projects brought onto the electricity grid
at 5% of the system peak on Oahu, Maui, and the Big Island for the first two years of the program.
Further, it is unclear whether the decision grants the utility discretion to reject projects based on
concerns over reliability of the power grid and ratepayer impacts–although the utility will be required
to develop reliability standards which will define most circumstances which feed-in tariff projects can
or cannot be incorporated on each island.
Many of Hawaii’s clean energy advocates were promoting a more aggressive feed-in tariff–one
similar to that enacted in Germany that doesn’t have many of the limitations imposed by Hawaii’s
new policy.
Nearly forty places around the
world, from Europe to Canada to Australia, have adopted similar feed-in tariffs, making feed-in tariffs
among the most popular and successful policies ever for growing clean energy economies.
The
Commission will revisit these and other issues when the initial feed-in tariff is reviewed two years
after the program starts.
Solar energy advocates in particular are pleased that the new feed-in tariff policy preserves the
existing net energy metering incentive currently available for home power producers, such as those
who use photovoltaic systems. After the decision new feed-in tariff rates are determined, home
power producers can decide to either run their meter backward to eliminate their power bill, or
become a power producer and actually receive compensation from the utility for their clean energy.
The provincial government of Ontario, launche Canada’s first feed-in tariff this week.
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