Hawaiian Electric Co. released aggressive new energy plans on Tuesday that seek to increase the amount of energy derived from renewable energy sources from 30 percent to 65 percent by 2030, as well as triple the amount of solar energy on its electric grids on Oahu, the Big Island and in Maui County.
But the 2,731 pages of documents spanning five reports haven’t assuaged the concerns of critics who say that Hawaii’s major electric utility still hasn’t articulated a vision for a viable future business model or a scenario that embraces the full market demand for rooftop solar.
In April, Hawaii’s Public Utilities Commission ordered HECO to redo its proposed long-term energy plans, saying that they were “excessively ambiguous” and didn’t show that the utility was moving toward a “sustainable business model.”
Will enough customers stay on the grid to keep the company viable?
In particular, advances in technology have raised concerns that increasing numbers of customers will switch to solar or disconnect from HECO’s electric grids entirely in favor of cheaper or more convenient energy options. Regular customers left on the grid would then be saddled with covering a larger share of the utility’s operating costs, causing electricity bills to spike and further encouraging the grid exodus and declines in utility revenues. The scenario is commonly referred to as the utility “death spiral.”
Shelee Kimura, HECO’s vice president of corporate planning and business development, said that the new plans lay out a strategy for avoiding such a scenario by more equitably allocating costs between solar and non-solar customers and providing more value to customers left on the grid.
“Going forward we view ourselves as providing energy services to customers and that is a shift from just providing customers with a commodity of kilowatt hours,” she said, noting that the utility was supporting programs like community solar and participation in demand response programs.
“The utility had the opportunity to really think radically and radical is the least riskiest position right now.” — Jeff Mikulina, executive director of Honolulu’s Blue Planet Foundation
The utility’s plans also include switching its oil generation to liquefied natural gas, which would help the utility integrate greater amounts of renewables and hopefully help drive down electricity costs. HECO also plans to retire its oil-powered generators, which would reduce maintenance costs.
But not everyone is confident that HECO has gone far enough to address concerns about the utility’s business model.
“The utility had the opportunity to really think radically and radical is the least riskiest position right now,” said Jeff Mikulina, executive director of Honolulu’s Blue Planet Foundation, a clean energy advocacy organization. “Playing it safe is the riskiest thing they can do.”
Mikulina argues that the utility needs to embrace technologies traditionally seen as a threat to its profits, such as rooftop solar, and find ways to profit off of innovations, such as facilitating sales of battery storage and power for electric vehicles.
“I think that is how a Google would look at it as opposed to a 100-year-old power company,” he said.
HECO’s plans as they relate to solar energy are eliciting particular criticism.
Some 4,000 customers on Oahu are awaiting approval from HECO to move forward on installing solar systems while the utility evaluates whether its grid can handle the intermittent energy, according to HECO. Some customers have been waiting as long as a year.
The delays have contributed to a contraction in the solar market — permits for solar systems are down by half this month compared to the same period last year, according to Hawaii’s Department of Business, Economic Development and Tourism.
In the past year and a half, the industry has seen smaller companies go under and significant layoffs, according to Colin Yost of RevoluSun.
While some hoped that HECO’s new plans would provide solutions to Hawaii’s solar problems, critics say that the plans chart a dim future for solar, which has grown in popularity in Hawaii. One in 10 HECO customers currently gets energy from solar panels.
HECO’s plan aims to triple the amount of solar on its electric grids. However, Henry Curtis, executive director of Life of the Land and an energy watchdog, said that figure actually paints a picture of slow growth.
Between 2007 and 2013, Hawaii’s solar industry grew between 70 percent and 200 percent. If HECO were to triple the amount of solar by 2030, this translates to a growth rate of 7 percent over the next 15 years, noted Curtis.
“Going forward we view ourselves as providing energy services to customers and that is a shift from just providing customers with a commodity of kilowatt hours.” — Shelee Kimura, HECO’s vice president of corporate planning and business development
Some of HECO’s proposed policy changes could also dampen solar adoption.
Solar customers pay about $18 a month to remain connected to HECO’s electric grids, which ensures continuous power to their homes. The utility is proposing increasing that to $55 for current solar customers and $71 for future customers on Oahu. Similar increases are proposed for the neighbor islands.
HECO is also looking to charge solar customers a one-time fee for connecting their solar systems and reduce the amount per kilowatt hour that the utility pays customers for their solar power that is fed into the grid.
Mark Duda, president of the Hawaii PV Coalition and a principal at Distributed Energy Partners, a Honolulu solar company, said that the costs could significantly “undermine the value proposition of solar.”
“All of these claims and policies and price signals they are proposing are going to be evaluated (by the PUC) to see if they are in the public interest, and that is where I think they are going to get in trouble,” Duda said.
Leaving the Grid Entirely
Increasing the costs for solar could encourage customers to leave the electric grid and switch to battery storage to support independent solar systems, said Curtis.
“I didn’t see anything on the business model — and that just struck me as odd,” said Curtis, of his review of HECO’s plans. “And I didn’t see anything on customers exiting and those are the things that you have to answer to figure out where the business model is going.”
Some clean energy advocates said that HECO’s proposed fee hikes seemed to be a tactic to discourage the adoption of solar, which cuts into the utility’s sales.
But Kimura stressed that HECO is trying to redistribute its fixed costs to customers in a more equitable way. In 2013, HECO’s non-solar customers were saddled with covering an extra $38 million in operating and maintenance costs because so many people have switched to solar, she noted.
“We are really focused on one thing, fairness for all customers,” said Kimura.
The need to charge solar customers more is a position that the PUC has agreed with in the past. But it remains to be seen how much more — the numbers are expected to be ironed out in front of the PUC in the coming months.
Stay Up To Date On The Coronavirus And Other Hawaii Issues