More Affordable (and Clean!) Energy for Hawaiians, All While Supporting Small Businesses

Last week, the state of Hawaii approved its first roll-out of Feed-in Tariffs (FIT), a reward program that allows homes and businesses to get paid for building renewable energy systems such as rooftop solar panels and feeding that energy into the electric grid. To implement the plan, companies that install and maintain a renewable source device receive a Power Purchase Agreement from a utility, while the state government regulates the electricity tariff rate. In this transaction, the renewable energy producer is guaranteed a rate for the power supply to the grid. Consequently, installation takes place quickly, the customer pays no upfront costs (the renewable energy provider pays for the entire project, including installation, maintenance, and trouble-shooting), the service is predictable, and the rate is comparable with other retail electricity rates.

The Hawaii FIT program roll-out will take place on all of the state's grids within six weeks. Hawaii joins Vermont, Washington, California, and Oregon in introducing statewide feed-in-tariffs.  Under the Oregon plan passed just this year, feed-in-tariff applications for solar projects were submitted so quickly that 15 minutes after the program was opened, no more applications could be received.

By generating its own energy sources, Hawaii will become less dependent on foreign fossil fuels. The program is particularly necessary in a state where 90 percent of the energy it consumes are from imported petroleum.  In addition, FIT can help reduce utility costs.  Currently, Hawaiians pay among the nation’s highest prices for electricity and fuel:  The state spends about $7 billion to meet its energy needs. Further, feed-in-tariffs will bring gains for Hawaiian energy businesses, placing them in a competitive global clean energy market. In fact, feed-in tariffs have played a role  to develop Germany’s world-leading solar power industry.

As it stands, Hawaii’s FIT program covers renewable energy generators of up to 500 kW in size; the Utilities Commission is still working out the details of the FIT for larger renewable energy systems up to five megawatts.  Some members of the solar industry have expressed concerns over the program’s unspecified grid interconnection costs (the fees an energy producer pays to distribute energy) and utilities’ ability to halt energy production; to address these concerns, the Utilities Commission is seeking to monitor the program and revise it  to make it better.