Lawrence Lee and his wife were looking forward to the 14 solar panels scheduled to be installed on their roof in Wailuku last December. The $9,000 system would reduce the Maui residents’ electricity bill to nearly zero, with the system being paid off in just a few years.

“We were so excited. We even had an installation date,” Lee told Civil Beat. “We’re looking toward retirement and this was a way to have some peace of mind to know we are going to be able to stay in our home.”

On Maui, residents pay on average about $230 a month for electricity. The fear is that electricity costs will only continue to rise.

“We’re thinking that when we reach retirement, there is no telling what the cost of electricity is going to be,” Lee said.

But instead of a new solar system, Lee received a letter from Maui Electric Co. saying that he would have to pay the utility $3,000 to conduct a study to determine whether the small 3-kilowatt system would disrupt the island’s electric grid. Depending on the results of the study, he may also have to pay the utility another $30,000 to further investigate the matter.

“Nobody in their right mind would do that,” Lee said, noting that there was no assurance that after the studies he would be permitted to install the system.

Darren Pai, a spokesman for the utility, said that “the purpose of the study is to help Mr. Lee complete his project while protecting reliable service for Mr. Lee and other customers who share the circuit with him.”

The costly interconnection studies that Hawaiian Electric Co. and its subsidiaries on Maui and the Big Island sometimes charge residents have infuriated solar companies during the past few years, which see it essentially as a cap on solar. It’s a sore spot with the utilities, which maintain that increasing amounts of solar can damage the electric grids and customer equipment, and lead to outages.

But in November, state regulators ordered the utilities to ease up on conditions that would trigger the studies. Rather than automatically requiring residents to pay for a study if penetration on an electric circuit exceeded 15 percent, the burden is now on the utility to review each case within 20 days and justify why a study needed.

The commission issued a press release saying that the rules were intended to increase the amount of renewable energy on the electric grids, and the decision was hailed by clean energy advocates, including the Blue Planet Foundation.

“The PUC’s ruling helps clear the path for households and businesses that want to invest in Hawaii’s clean energy future,” said Jeff Mikulina, the organization’s executive director in a press release. “By rejecting unnecessary new costs and hassles for clean power, this decision moves Hawaii a step closer to energy independence.”

But despite the PUC’s directive, some customers are still being asked to shell out thousands for the studies.

Lee said that on Maui the news of the PUC order was greeted with enthusiasm.

“Everyone was really excited,” he said. “Even contractors were coming in and telling everyone, ‘Yeah, it’s opened up now, we can get more systems in.’ And that was totally wrong.”

Lee’s experience doesn’t mean that the new, highly technical rules won’t allow more solar onto the grid, but it’s unclear to what extent they will increase it.

Mark Duda, president of the Hawaii Solar Energy Association, said that it was too early to tell.

Pai said that eight other customers had been asked to pay for the studies since the new rules took effect. But there are signs that in some cases it’s helping — Duda said that the new rules have allowed a couple of his solar company’s projects to go forward without the studies.

The solar industry, which has exploded in Hawaii during the past few years, giving rise to dozens of companies and creating hundreds of jobs, is still pressuring HECO to further relax restrictions.

“From the perspective of the solar industry, the utility is being unnecessarily cautious, which is something engineers tend to do,” said Duda. “I think we could be going further, faster, and they don’t. And we are sort of slugging it out in front of the commission.”

Despite the rule changes, the issue of grid penetration is unlikely to go away any time soon. Marco Mangelsdorf, a solar exec on the Big Island, said that the industry is on the brink of a significant contraction.

“The state’s PV industry has enjoyed phenomenal growth over the past several years. And it doesn’t take someone with a Ph.D. to know that this kind of growth is unsustainable for a number of reasons, such as grid saturation and changes in government incentives,” he said by email. “If (small solar) installations did not peak in 2011, then they likely will this year with PV integrators battling even more fiercely over a shrinking pie. It’s gonna be one helluva year.”

It remains to be seen what impact the PUC’s rule changes will have on allowing more solar onto the grids. But experts say that the larger issue of upgrading the electric grids to accommodate more intermittent sources still needs to be addressed.

Hawaii’s 2008 Hawaii Clean Energy Initiative, which outlines state policy requirements for switching to renewable energy, requires HECO to upgrade its grids to accept more solar. But the upgrades have been slow to materialize, and an increasing number of local residents are being shut out of the chance to install PV, according to solar companies and data from HECO.

Once the domain of the wealthy who could afford high up-front system costs, solar panels are now becoming an attractive option for those with more moderate budgets. Declining panel costs, tax incentives and financing options have all facilitated this.

“So many people want to get solar and there is good reason to,” said Lee. “The people I work with are mostly family people, and people struggling to pay the bills. This is a way to help with that.”

You can read correspondence between Lee and MECO below:

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