Proposed Solar Program Changes

Molokai has the highest percentage of renewable energy compared to total electric usage of any island at 51 percent, according to Maui Electric Company (MECO). With that high percentage, however, comes challenges for the island’s small electric grid – as well as unfair prices for customers without solar, claims MECO. The company is proposing changes that would temporarily halt the installation of rooftop solar on Molokai – and many customers and local solar companies aren’t happy about it.

In a program called Net Metering Program (NEM), customers with solar photovoltaic (PV) panels are paid by the utility company for excess energy the panels generate at retail rate. MECO says those customers under NEM are not contributing to the operational costs of the electric grid – an expense which then gets transferred to electric users not on the NEM program.

“Many NEM customers are able to lower their bills to the point that they do not help pay for the cost of operating and maintaining the electric grid,” stated MECO in a press release last month. “As a result, those costs are increasingly being shifted from those who have solar to those who don’t.”

MECO claims the proposed changes to their solar program will lower customer bills, increase the amount of solar that can be installed and create a more fair cost system for all customers. The new program — called Transitional Distributed Generation, which MECO filed with the Public Utilities Commission (PUC) on Jan. 20 — would also end the utility’s current NEM program under which most rooftop solar systems are installed.

“We’re trying to address [the challenges] in ways with the least impact to customers,” said Mat McNeff, manager of engineering at Maui Electric. “The majority of customers don’t have PV… We’re seeking to sustainably increase solar for Hawaii in a way that has tariffs that benefit everybody, not just those that install it.”

End of NEM

NEM is an agreement with the utility that allows customers to connect their rooftop solar system to the utility grid and during periods in which the system generates a surplus of energy, that surplus is exported back into the electric grid. The customer receives full retail value for the excess electricity generated, which can be used to offset electricity costs. That means that when your solar panels generate more electricity that you need for your home, you can make money from that energy instead of wasting it.

On other islands, MECO is still accepting additional NEM applications until March 30 of this year – and the threshold for adding additional PV in the future was more than doubled. Because renewable energy is a variable source — solar, for example, only generates energy during the day — MECO says relying heavily on renewable sources can cause instability in electricity service. To solve this problem, utility companies, in conjunction with the state Public Utilities Commission (PUC), have established various threshold levels, also known as penetration limits, to regulate the amount of renewable energy on each circuit. These thresholds are measured in percentages of renewable energy based on an electric circuit’s total electricity load.

Courtesy of MECO.

However, while the potential for instability from renewable energy continues to be a challenge, MECO has said under the new proposal the threshold of PV that can be reliably installed on Maui has more than doubled — from 120 percent to 250 percent of minimum daytime load.

Fewer Benefits for Molokai

Molokai, however, is a different story.

Because Molokai’s electric grid is so small, changes in frequency caused by fluctuations in renewable energy can shut down the whole grid. When the electric frequency drops or rises too much, the system is designed to “load shed” — or shut off circuits to different areas of the island — in order to recover more quickly. MECO must be able to generate enough electricity from the utility’s diesel power plant on Molokai to meet the demand and compensate for fluctuations in order to maintain reliable service, according to the company. Because so much PV has been installed on Molokai in comparison to the total size of the grid, it leaves the island’s electric stability in a precarious position. About 2.5 megawatts (MW) has already been installed or approved – which exceeds the grid’s minimum daytime load of about 2 MW, states MECO’s PUC filing.

That means currently, Molokai is at the point where generation cannot be matched to demand, according to MECO. Because of this, the utility says no more PV can be installed on Molokai until there’s a way to control the excess electricity generated through solar.

“That program is now closed [on Molokai],” said McNeff of NEM. “For Molokai we’re not proposing [that] no more renewable energy can be connected, but we need… to have controls or some other way to mitigate system challenges that we see.”

The Transitional Distributed Generation proposal includes permission for MECO to control the output, or excess, PV electricity generation from rooftop systems.

McNeff said the normal period of peak PV generation is between 1 and 3 p.m. During those hours, the utility would be able to limit the amount of solar entering the grid, if MECO’s proposal is approved.

What these controls would look like are unclear, and the details are still being worked out. McNeff said the technology allowing utility control would be included in rooftop solar systems when they are initially installed under the new program.

“For Molokai, we can’t interconnect any more systems that don’t have controls,” he said. “Future systems would need to have the controls… under NEM we can’t really [do that.]”

Anyone who had already applied under the NEM program before MECO’s filing with the PUC on Jan. 20 will be grandfathered in (without the controls), according to the utility.

“We’re not trying to exclude anyone who had already applied,” said McNeff.

But any Molokai applications that were turned in after that, are now being denied under the NEM program.

Matt Yamashita, an independent solar sales representative on Molokai, said a customer received the first denial from MECO last week.

“Unfortunately, due to safety and reliability issues which currently exist on Molokai we are unable to approve your application for interconnection at this time,” the letter reads, going on to suggest that the applicant would apply to interconnect under Maui Electric’s Standard Interconnection Agreement – an older program not specific to renewable energy that Yamashita calls “ridiculous.”

Lower Rate of Return

“We’re proposing a new pricing structure for customers who install PV systems so that the costs of operating and maintaining the electric grid are shared more fairly amongst all customers who use the grid,” states the Maui Electric website.

Currently NEM customers receive about $.46 per kilowatt-hour (kWh) on excess solar – the same rate as customers pay for electricity. Under the new proposed tariff, rate the utility would pay for rooftop solar would drop to about $.26 per kWh – calculated as a rate equal to the sum of the Base Fuel Energy Charge and the Energy Cost Adjustment rates. Maui Electric states this will still give customers with PV a good payback on the cost of the system.

MECO also claims its reasons for the proposed change to the Transitional Distributed Generation program are not financial for the company.

“We are not harmed by the incorporation of PV – it’s not that we’re trying to get rid of NEM because it hurts our bottom line,” said McNeff. “But as long as we continue to compensate at retail rate, you will get an unfair shift [of cost] from those who have PV to those who don’t.”

However, Yamashita doesn’t buy it.

“The changes they’re proposing are really in [MECO’s] best interest and not in the best interest of the general public because it makes solar less effective in terms of saving homeowners money,” he said.

With Molokai’s soaring electric rates the second highest in the nation, many residents turned to installing rooftop solar to offset their electric bills.

In the Molokai Energy Assessment conducted last year by nonprofit Sust`ainable Molokai, 79 of 277 respondents said their monthly electric bill ranged from $55 to $150, 64 respondents said their bill was between $150 and $250, and 56 said their bill was $250 to $350. Many reported that is a significant percentage of their monthly income.

While the State of Hawaii enacted the NEM program to encourage renewable energy at a time when the cost was prohibitive, that has now changed, claims MECO in its PUC filing.

“PV system costs have decreased dramatically during the last several years and the need to provide retail compensation to incent distributed generation no longer exists,” states the document.

Future Solutions

While customers may not agree with the utility’s assessment, MECO says it is working toward longer term solutions.

“[We are looking at] key components to modernizing the grid and making the system a lot smarter,” said MECO Director of Communications Kau`i Awai-Dickson. “We have plans to roll that out fairly soon.”

She said the company plans to begin installation of smart meters and smart grids as early as next year, which she said will update the system and give customers more power to control their own electric usage. McNeff said smart meters would provide earlier detection of power outages and incorporate automation into the grid to more quickly stabilize the system.

McNeff said the utility will be running a pilot program for “non-export” solar battery systems which would allow rooftop PV installations to store electricity for home use at night, rather than exporting excess electricity back into the grid. He said MECO is also exploring “community solar” options, consisting of a larger scale PV facility that individuals could invest in and get some credit towards their bills.

On Molokai, McNeff said they’re looking at different ways to increase electric usage during peak hours of PV generation, which would help stabilize the system. Awai-Dickson said the use of electric vehicles could be an ideal solution.

In addition to these future projects, Molokai is currently awaiting the installation of a giant 2 MW battery called a Battery Energy Storage System (BESS). It’s a joint effort between MECO and University of Hawaii’s Hawaii Natural Energy Institute, and is designed to instantaneously provide energy to Molokai’s grid if one of the generators tripped off, resulting in a more stable power source and fewer outages. The BESS was scheduled for installation last year but was delayed when the manufacturer moved its operations to China. It’s now on track to be running on Molokai toward the end of this year, according to McNeff.

In a continuation of the Molokai Energy Assessment, Emillia Noordhoek of Sust`ainable Molokai said the organization will be holding upcoming meetings to develop a Community Renewable Energy Plan to move forward together as a model of renewable energy.

In the meantime, MECO will be holding a meeting on Molokai March 3 to discuss its proposed Transitional Distributed Generation program with the community. The meeting will be held at Kaunakakai Elementary School cafeteria at 6 p.m.