The stratospheric growth in the adoption of rooftop solar electric systems in Hawaii has been driven, to a great extent, by the availability of net energy metering. NEM allows homeowners and business owners with photovoltaic systems to receive full retail credit for surplus power fed back into the utility grid to offset their electricity costs.
We believe now is the time to bring the NEM program to a close and transition to a more fair and equitable rate structure.
In 2001, when Hawaii's NEM measure was passed, the price of PV was two to three times today’s cost. To assist in carrying out the state’s energy objectives, PV businesses needed a jumpstart in the form of a preferential tariff to promote and expand the use of this important site-based renewable energy source to homeowners and businesses.
It’s now time for PV to stand on its own. The local Hawaiian PV industry and almost 60,000 ratepayers across the state who were fortunate enough to install these ratepayer- and public-subsidized systems through NEM and federal and state tax credits need to stop protecting their own self-interest and think about how to advance an electricity system to benefit all.
NEM is a relic of an oil-based infrastructure when variable renewable resources were being accommodated within traditional utility operations. Today, as we seek a new paradigm which relies on renewable resources, energy efficiency, demand response and other advanced technologies as intrinsic parts of the electric system, new rates and pricing structures must also be part of this transformation.
The sky is not going to fall. In 2008, Kauai closed its NEM program without the island’s PV businesses closing their doors. Typically, industries whose subsidies are threatened will couch their rhetoric with general claims of wanting to protect the public good, consumers and their workers.
It is no different here. The piggies at the trough have always squealed at the prospect of the slop being taken away. But shifting to a post-NEM world will have only a marginal effect on the overall payback period and the return on investment for homeowners and business owners who pay cash or do the financing themselves.
It is the third-party-owned/financed residential solar transactions that will take a much more significant hit. Witness the vigorous lobbying of mainland-based companies -- SolarCity, Sunrun, Vivint Solar and the like -- which have done quite well in Hawaii peddling that type of financing option to tens of thousands of homeowners. Sadly, the threat of losing NEM has led to some in the PV industry down the path of hyperbole, exaggeration and self-interested fear-mongering.
While solar prices have dropped significantly throughout the country, Hawaii’s highly subsidized solar market is broken. The bountiful subsidies of NEM and tax credits have been used to sustain an uncompetitive and dysfunctional market that has been carried on the backs of the Hawaii taxpayer and non-PV electric customers.
We all want a sustainable green energy future to serve all residents and businesses throughout Hawaii. It is now time for the rational economics of running a clean electric system to prevail. The continuation of NEM creates some winners but many losers.