by Emma Foehringer Merchant
May 04, 2020

Hawaii was the first state in the nation to commit to achieving 100 percent renewables, all the way back in 2015. On the day Governor David Ige signed that legislation into law, a less flashy bill was tucked among those awaiting his signature.

That bill, called Act 100, laid out Hawaii's first community solar program, calling for about 70 megawatts of projects in two phases. Over the past five years, Hawaiian Electric Industries (HECO), a group of utilities that serves 95 percent of the state’s population, has reached 28.4 percent electricity from renewables. But the state is even further from reaching its modest community solar goals.

The initial 8-megawatt phase of the program, approved in 2017, still has leftover capacity and only one publicly announced project. The state logs no built community solar capacity, according to tracking from Wood Mackenzie Power & Renewables.

Regulators hope to change the underwhelming trajectory of the program with a new order released this month, which bumps the second phase of the program to 235 megawatts. In releasing the additional capacity, the public utilities commission expressed hope that the expanded program — called CBRE — would help Hawaii not only reach its renewables goals but also bounce back from the coronavirus.

“The commission recognizes the current emergency and anticipates that clean energy projects and programs, such as CBRE, can meaningfully contribute to the state’s recovery from the COVID-19 emergency,” regulators wrote in the order.

The details

The regulatory order splits the program's 235 megawatts of capacity into two tranches, which will be divided among the state’s islands. The size of the program may be increased later.

Projects do not have a maximum size limit but must be larger than 250 kilowatts and will be chosen via a request for proposals led by HECO. The commission will also set aside capacity for smaller projects, between 250 kilowatts and 5 megawatts, on several islands.

Source: Hawaii Public Utilities Commission

The commission encouraged storage add-ons for CBRE projects but will not require it.

Outside of the 235 megawatts, regulators also approved an undefined amount of capacity for low- to moderate-income subscribers. Oahu, Hawaii Island and Maui will all get at least one dedicated project to serve only low- to moderate-income customers, and those projects don’t have a size cap.  

State-sponsored community solar programs are increasingly requiring that some projects serve lower-income customers in an attempt to boost solar accessibility. In New Jersey that produced a program where all projects will serve at least some low-income subscribers. In Colorado, project developers must set aside 5 percent of each project for those customers.

A wrinkle: HECO can participate

Richard Wallsgrove, an environmental law professor at the University of Hawaii at Manoa, was also heartened that the PUC prioritized those customers, but suggested the program may benefit from allowing an anchor tenant, such as a community group or commercial offtaker, to act as ballast for projects that subscribe low- to moderate-income customers. For now, he said it's too early to tell how effective the program's design will be in building a sustainable market. 

"If the tariff is almost as simple in terms of setting up a project and interconnecting it as the fantastically successful rooftop solar programs have been, then I can certainly see this program...launching in a big way," said Wallsgrove.

The full request for proposals process and the tariffs that will guide Phase 2 are yet to be determined, leaving uncertainty about what the process will look like and how much interest it will attract. But one component of the RFP process has already raised a few eyebrows: While project bidding will be open to third parties, HECO companies are also able to participate. That could position the utility to self-build the projects, and HECO could share in the electricity price savings from those projects.

Melissa Miyashiro, managing director of strategy and policy at the Blue Planet Foundation, said the group is “optimistic about the changes” to the program from Phase 1 to Phase 2.

“We got off to a slow start in Hawaii, and we’ve been able to take lessons [from states] that are further along on this journey, like Minnesota,” said Miyashiro. “The commission is taking a hard look at what it’s going to take to build a robust market and a robust program.”

Reaction from the industry itself, however, has been muted.

Will Giese, executive director of the Hawaii Solar Energy Association, favored the changes made in Phase 2 but said no HSEA members had expressed interest in participating in the program thus far. Most interest, from Giese’s perspective, appears to be coming from the mainland.

Though HSEA is still evaluating the programmatic changes — and the utility and regulators will continuing working on program details through the summer and fall — Giese suggested some local developers may be deterred by HECO’s ability to bid projects into the program.  

“I doubt a developer would be too keen on participating in a bid competing with the utility or its affiliates,” said Giese.

A way to rebuild the economy

Depending on how the market evolves, Giese suggested that HSEA members may get work as subcontractors for developers who have the financial muscle and expertise to win bids but lack the local workforce to build projects. 

Much of the large-scale developer expertise on the island has been built around utility RFPs that attracted outside interest, said Ryan McAuley, CEO at Honolulu-based Tritium3, developer of the only community solar project that's been publicly announced. 

"Those RFPs have traditionally brought in mainland money," said McAuley. "Development capital is a pretty particular breed. [...] A lot of the [mainland] developers are well connected to financial institutions." 

HECO told Greentech Media it’s already received significant interest from both developers and possible subscribers, and said its participation in the program is welcomed by many. “We are a longstanding, trusted member of the community and are willing to invest time and money,” said a HECO spokesperson.

After stakeholders work through the details in the coming months, the utility commission hopes the Phase 2 rollout will help push through the “slower-than-planned market uptake in Phase 1” and help build on “the imperative to support economic recovery” in the wake of the pandemic.

“Our rebuilding should align with our decarbonization goals, and renewable energy projects can and should contribute to the state’s recovery efforts,” said Miyashiro at the Blue Planet Foundation. “We know that fossil fuel interests are already at the table hoping to scoop up recovery dollars and prolong their reign, but we have an opportunity…to rebuild in a way that is more just [and] resilient and appropriately addresses the urgency of climate change."