Hawaii Feed-in Tariff Framework Set by PUC

As far as electricity generation is concerned, Hawaii is making goodon its promise to get 40 percent of its energy from renewable sourcesby 2030. The state’s Public Utilities Commission (PUC)on Friday issued a decision and an order outlining the generalprinciples for the creation of a statewide feed-in tariff. A 128-pageruling outlines the program. It is hoped that the tariff will reducethe islands’ dependence on imported energy, most of which comes in theform of fuel oil and natural gas.

As relayedby Renewable Energy Focus, Mark Duda, president of the Hawaii SolarEnergy Association, welcomed the decision: “Hawaii’s solar industry ispleased that the Commission has recognized the importance of ourindustry-and distributed generation in general-in the broader effort toincrease energy security and reduce carbon emissions.”

In terms of encouraging homeowners and businesses to install solarPV systems, feed-in tariffs are arguably the most effective policy toolavailable. By paying the system owner a premium price for theelectricity generated by his or her system over the course of ten or 20years, such programs improve solar’s financial return. Compared to windturbines — the other main type of distributed electricity generationsystem — solar panels are relatively easily to install and typicallyaren’t subject to strict local siting regulations. As such, solar powerproducers, residents and businesses alike, will likely benefit the mostfrom Hawaii’s feed-in tariff program.

While the PUC’s decision does not yet set tariff prices, it doesinclude guidelines on project size. Compared to an alternative proposalby Hawaii Electric Company (HECO), the state’s largest provider ofelectricity, the PUC ’s tariff framework allows for larger systems. TheHECO plan sought to cap systems at 100-kilowatts. The PUC frameworkwill allow projects up to five megawatts (mW) in size for Oahu, and upto 2.72 mWs for Maui and Hawaii Island. Developers will enter 20-yearagreements, during which time they’ll be guaranteed a specified pricefor the electricity generated by their systems. By guaranteeing futurepayments, feed-in tariffs reduce risk and boost financial returns ondistributed energy systems, like solar panels.

A number of other U.S. states and municipalities are in variousstages of developing feed-in tariff programs of their own. For moreinfo, see the following posts on: Michigan; Gainesville, Florida; Oregon; Sacramento, California; and Vermont.And, for a look at another island that’s expanding renewable energyprograms to reduce its dependence on imported fuel, see this recent post on solar in Puerto Rico.