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HSEA January Monthly Report
Posted on Thursday, December 29, 2016
FOR IMMEDIATE RELEASE
December 29, 2016
2016 Year in Review: Hawaii’s Solar Energy Industry
Key policy changes at the end of 2015 altered the dynamics of solar in the state of Hawaii, resulting in a slowdown in industry activity in 2016. However, despite this stagnation, solar energy continues to offer consumer choice, contribute to the state’s 100% clean energy goal, and provide value to the local economy. In 2017, we hope that a number of regulatory and policy measures can help to augment these benefits.
This year’s decline in the solar industry is largely attributed to the elimination of the Net Energy Metering (NEM) program in late 2015, and the subsequent introduction of the Customer Grid-Supply (CGS) and Customer Self-Supply (CSS) programs. Although the CGS program showed signs of success, the 35MW program cap was hit this August. Due to several issues such as permitting, battery cost, and technical issues, the CSS program has only realized three energized systems to date.
Total systems that came online in 2016 are approximately 20% below 2015 figures
In 2016, nearly 9,000 rooftops systems came online while close to 11,000 were added in 2015. It is important to note that only around 15% of systems energized this year comprised of CGS and CSS systems. As the NEM backlog is exhausted, the number of energized systems will more strongly reflect Grid Supply/Self Supply programs, which will further exacerbate the industry downturn until a more permanent tariff solution is agreed upon.
Furthermore, 2016 permit numbers also provide evidence of industry contraction:
Number of pulled building permits in 2016 are approximately 35% below 2015 total
In 2015, the total number of pulled permits was approximately 7,510. This year, only around 4,840 permits were pulled.
Despite the down year, solar energy continues to provide a net benefit to Hawaii. According to a 2013 report released by the Blue Planet Foundation, for each tax credit dollar issued to a typical residential PV system, the State receives $1.97 dollars in additional tax revenue over the system’s life.1 Essentially, this means that the State procures more revenue that it spends through solar credit refunds. Furthermore, the State breaks even on its investment in 15 years and generates 3.24 local jobs per residential system. On the household level, solar PV provides on average annual electricity cost savings of $554 per installed kW—that amounts to nearly $4,000/year in savings for a typical residential system.
These fiscal and economic benefits arise primarily from the fact that solar enables residents to substitute free local sunlight for imported fossil fuels, allowing dollars to remain in the local economy. Additionally, policy changes in the last year have signaled a switch to incentivize energy storage systems. Storage provides numerous benefits to both the end-user and the grid, while allowing flexibility for new types of time-of-use tariffs. While the policy changes experienced this year were less than ideal, they helped to spur the industry to begin adopting the most advanced renewable technology on the market. In light of these benefits, it behooves policymakers, regulators, and all stakeholders to work together to help galvanize the expansion of solar energy.
2017 Wish List:
In 2017, it is our hope that a number of solar related challenges are addressed. Doing so will enable greater consumer choice and help move the state closer to it’s 100% clean energy goal.
Currently, the CSS and the SIA programs are the only options available for rooftop solar. Although the cost of energy storage systems has been falling precipitously over the past few years, they are still expensive. In essence, these policy decisions have raised the cost for customers to enter the market, narrowing access and slowing progress towards a 100% clean energy future. While energy storage costs are likely to decline similarly to solar panel costs, near term outlooks remain high. In order to preserve customer choice, allow greater market access, and help to establish a long-term structure for distributed energy resources (DER), it is imperative that energy storage incentives are made available.
On October 3rd, the PUC announced the beginning of Phase 2 of the DER docket (2014-0192), which promises a new era of more stable and consistent renewable energy policy. A revised Power Supply Improvement Plan (PSIP Docket No. 2014-0183) has also been filed, which gives another opportunity to allow more DER on the island in the long term. Hopefully, the turmoil over the policy decisions of last year will translate into best practices and lessons learned to provide a smooth transition into a new DER policy. The HSEA looks forward to continuing to work with the various stakeholder agencies on these important issues.
The solar industry, like any construction industry, is subject to the whims of whatever permitting department oversees construction of its projects. As such, the current permitting process for solar systems should continue to be reexamined and renewed. Not only does the industry and the regulatory agencies have to deal with new and exciting technology, but the permitting agencies must also be ready to address these challenges. The HSEA appreciates the open dialogue we have had with the various permitting agencies regarding new renewable technologies, and hopefully these continuing discussions will serve to expedite, not impede, the state’s 100% clean energy goals.
“Policy changes created a drastically different landscape for solar in 2016, leading to significant contraction. As solar diminishes, the State loses the opportunity to create more jobs, expand consumer choice, and secure the state’s clean energy goals,” said Hajime Alabanza, Executive Assistant to HSEA. “In 2017, it is imperative that we foster an environment that recognizes and utilizes the benefits of solar energy in the state of Hawaii.”
Founded in 1977, the Hawaii Solar Energy Association is a Non-Profit organization and is comprised of installers, distributors, manufacturers, auditors, and financiers of solar water heating and photovoltaic systems. The majority of our member companies are locally owned and operated, making HSEA the leading voice of Hawaii’s solar industry.
The Hawaii Solar Energy Association (HSEA) issues its January report assessing the strength of Hawaii's solar energy industry. Our special “Year in Review” report forgoes this rating to focus on industry highlights and lowlights over the year, as well as what we would like to see moving ahead. Our rating system will be back in the following report.