The Hawaii Public Utilities Commission has filed a ruling to close Hawaiian Electric Companies’ net metering program to new participants, which regulators say is “essential” given the extraordinarily high levels of distributed renewable energy the state has already achieved.

“This is necessary to ensure a smooth transition to a redesigned market-based structure for distributed resources in Hawaii, and the State’s commitment to meet a 100 [percent] renewable portfolio standard by 2050,” according to the filing submitted Monday.

Nothing about the program will change for existing net-metered customers in HECO territory, or for customers who have already applied for a net-metered system and are waiting for approval. HECO owns the utilities on the islands of Oahu, Maui and Hawaii.

The filing also approved new “self-supply” and “grid-supply” tariffs for customers to interconnect distributed energy resources to HECO’s electric grids.

Under the self-supply option, PV customers with energy storage are eligible for an expedited review and approval of their systems in areas of high PV penetration. These customers are restricted in the amount of electricity they can send back to the grid and do not receive any compensation for these exports.

Under the grid-supply option, PV customers can export electricity to the grid, but will be compensated for these exports at a lower rate. This tariff reduces the credit from the full retail rate for net metering, to the cost of wholesale power for the islands’ utilities. Wholesale prices range from roughly 15 cents per kilowatt-hour to 28 cents per kilowatt-hour, which is about half the islands’ average retail electricity rates.

To help cover fixed costs, all residential PV customers that remain connected to the grid will pay a minimum monthly bill of $25, while commercial customers will pay $50.

"We appreciate the PUC’s thorough review of the complex issues that need to be balanced,” said Jim Alberts, Hawaiian Electric senior vice president of customer service.

According to HECO, the new self-supply and grid-supply options will be available by October 21.

The first action as part of a longer-term solution


The PUC decision echoes a proposal to lower HECO's net-metering credit in January. The utility stated that the new rates should provide a sufficient credit to incentivize investment in distributed PV, with a reasonable payback period of five years to nine years for a 5-kilowatt system.

The order released this week is the first step in an evolution of distributed energy resource policies that regulators say will advance the integration of renewables throughout the state.

The order instructs HECO utilities to revise their interconnection rules and offer new tariffs to customers “that expand customer choice, provide new options for managing energy use, [and] enable DER to provide technical and economic benefits to each island grid.” The utilities must also put forward recommendations for further policy adjustments to be considered in phase two of the proceeding.

The changes come as Hawaii reaches record levels of rooftop solar penetration. According to  the advocacy group Environment America, there are 312 watts of solar power capacity per Hawaiian resident -- by far the highest amount of solar per capita in the nation.

In HECO territory, roughly 16 percent of customers have net metered rooftop solar, which is both an achievement and a burden. On many circuits, distributed generation accounts for more than 30 percent of the individual circuit peak load. HECO says this is creating technical and operational challenges.

“Successes to date have not come easily or predictably to the utilities or their customers,” the PUC said. “Continuing frustration and confusion relating to the interconnection queue for thousands of customers waiting to install solar photovoltaic and other [resources] is just one example of the challenges that the commission is addressing in this proceeding.”

Marco Mangelsdorf, president of ProVision Technologies and founder of the Hawaii PV Coalition, said it was time to end net metering in Hawaii.

“[It was] an enormously successful leg-up for the local PV industry and homeowners and a subsidy that achieved its desired effect. Under the new regime, the overall return on investment for a direct purchase or financed purchase, with the homeowner getting the federal and state tax credits, should only be marginally negatively affected.” 

“For those residential leasing companies, the hit on the value proposition will be more pronounced, because the value of exported solar kilowatt-hours will go down substantially,” he added. “How are the likes of SolarCity and Sunrun going to handle that?”

Hawaii’s solar installers have already been forced to lay off thousands of workers because of a steep decline in permitted projects over the past two years.

Bryan Miller, senior vice president of policy at Sunrun, criticized the PUC's decision for being wildly out of step with Hawaii's politics.

“The decision will not stand," he said. "It will be reversed either in the political process or in the courts, but it will not stand one way or the other.”

"I’m so confident," he added, "because over 90 percent of the public in Hawaii says they want more solar, not less. This is going to result in a lot less solar, and will hurt low-income and middle class customers the most."

Miller recently wrote that HECO is intentionally trying to block customers from going solar, pointing to interconnection delays based on technical concerns that were ultimately proven false. He called for the adoption of time-of-use rates coupled with net metering, which he said would incentivize solar customers to adopt emerging technologies like energy storage to align generation with load.

Colin Yost, chief operating officer of RevoluSun, told Hawaii News Now that the PUC's net metering decision creates barriers to technology adoption.

"It would have made a lot more sense to give some kind of transition period to allow that market to fully develop," he said.

This story has been updated.