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Hawaiian Electric Co. is lifting constraints on its electric grids on Oahu, Maui and the Big Island to allow a lot more rooftop solar to come online, utility officials announced at a press conference Tuesday.

But the news, cheered by Hawaii’s beleaguered solar industry, was tempered by another announcement by HECO that it hopes to slash the amount that it pays rooftop solar customers for their electricity.

HECO officials say that the reduced rate will level the playing field for residents who haven’t, or can’t, switch to solar, but are currently shouldering most of the costs of maintaining HECO’s infrastructure.

Last year, non-solar customers had to absorb some $53 million in costs no longer covered by residents and businesses that have installed solar panels, said Jim Alberts, senior vice president of customer service for HECO. That’s up from $38 million in 2013.

“It’s all about equity,” Alberts told Civil Beat.

But during a joint House and Senate legislative briefing at the State Capitol that followed the press conference, solar energy companies complained that the move could reduce customer demand for solar installations.

Under HECO’s new rules, the utility will now allow double the amount of solar penetration on its circuits.

HECO’s proposal has also enflamed suspicions among the solar industry and lawmakers that the utility is working to curb rooftop solar because it doesn’t suit its profit model. And with the pending sale of the utility to NextEra, a Florida-based company that has a reputation of being hostile toward rooftop solar, some have questioned who is pulling the strings at HECO while the sale is undergoing regulatory review.

Sen. Sam Slom pointedly asked HECO officials at the legislative briefing if NextEra approved of the plan to slash the rate at which solar customers are paid for their electricity.

“They concur with our plan,” acknowledged Colton Ching, HECO’s vice president for energy delivery.

NextEra announced in December that it had entered an agreement to buy Hawaiian Electric Industries in a $4.3 billion deal. The merger, expected to close in December, must still be approved by multiple regulatory agencies, including Hawaii’s Public Utilities Commission.

Opening Up the Grids

Currently, there are about 2,800 customers who want to switch to solar, but have been waiting for months to hear from HECO as to whether their applications will be approved. These customers are in areas where the utility’s circuits already have high penetrations of solar.

Under HECO’s new rules, the utility will now allow  on its circuits.

The change will allow 2,500 of the 2,800 customers that have been in limbo to move forward on installing their solar systems by April, said Alberts. The remaining 300 customers should be connected by December.

Assuming they still want to.

Alberts said he didn’t have an estimate of how many more solar systems will now be able to hook up to the electric grids. Currently, one out of every 10 HECO customers has solar panels.

The new rules will not apply on Lanai or Molokai because the electric grids are too small, said Alberts.

HECO has increased the solar penetration levels incrementally over the years as more customers have wanted to switch to solar. This is the largest increase to date and is based on a recent study overseen by the National Renewable Energy Lab that indicated that Hawaii’s grids could handle a lot more solar than what HECO was projecting, according to the solar industry.

In a move to increase transparency, HECO also plans to make available online a list of customers whose solar applications are pending.

Another Hit on Solar?

The upbeat news was accompanied by HECO’s announcement that it had filed a request with the Public Utilities Commission this week to reduce the rate it pays for solar.

Through a program called net energy metering, solar customers send energy into HECO’s electric grids, for which they are currently paid at the full retail rate. They also draw power from the electric grid when their solar systems do not provide enough energy for their needs. If a purchased system is sized well, it can virtually eliminate a customer’s electricity bill, except for a $17 monthly fee to use the grid.

Under HECO’s proposed pay structure, which must be approved by the PUC, solar customers would still have to pay the full retail rate for the electricity they draw from the grid, currently 29 cents per kwh. But they won’t get paid that amount for the solar energy that they feed into the grid. Instead, HECO would pay them what it costs them to produce electricity, which is currently about 15 cents per kwh.

The extra 14 cents that make up the full retail rate covers various fees and infrastructure costs.

Customers who already have solar, or are waiting in the queue, would not be subject to the new rates.

HECO says the move is needed to make sure that non-solar customers don’t get stuck paying for all of HECO’s infrastructure costs, such as maintaining power lines and upgrading the grid. But many in the solar industry say that the move strikes a blow at them because they are eroding HECO’s customer base and cutting into its bottom line.

“The PV Industry Will Survive’

Under HECO’s proposed rules, solar systems would essentially become more expensive. It would take a customer on average about nine years to pay back the cost of a solar system, as opposed to the current average of about five years, said Alberts.

Mark Duda, president of the Hawaii PV Coalition and head of a local solar company, said that the pay rate change could also incentivize solar customers to buy bigger systems in order to cancel out their electricity bills. Under that scenario, the new rules could ultimately end up reducing the number of solar systems that HECO’s grids can accommodate.

HECO’s move comes at a time when the PUC is already considering whether customers need to be paying more to have their solar systems hooked up to utility’s grids.

A separate proposal by HECO, announced last year, would increase the standard charge that solar customers pay to be hooked up to the grid from $17 to about $70.

Solar advocates said that process should be completed first so there is a clear understanding of how much the move to solar is actually burdening non-solar customers.

“It’s an empirical question,” said Duda. “The cost shift has not been documented, it’s been asserted.”

Not everyone in the solar industry opposes HECO’s latest proposal.

Marco Mangelsdorf, president of ProVision Solar on the Big Island, told Civil Beat that HECO’s plan would be “more fair and rational for all utility customers.”

He noted that it is similar to the model that the Kauai Island Utility Cooperative employs.

HECO’s net energy metering “program has been fantastically successful, to the tune of about 50,000 now across the state, in bringing about mass adoption and 50 and more percent reductions in the cost of the average PV system,” Mangelsdorf said by email. “The PV industry will survive just fine in a post-NEM world.”