HSEA June Monthly Report

Posted on Wednesday, June 08, 2016

MEDIA CONTACT:

Hajime Alabanza

(808) 232-8371

hajime.alabanza@hsea.org

NEWS Release

FOR IMMEDIATE RELEASE

June 8, 2016

HAWAII SOLAR INDUSTRY OUTLOOK CLOUDY FOR THIRD CONSECUTIVE MONTH  

AVERAGE SYSTEM SIZE INCREASES


UNINTENDED CONSEQUENCE OF PUC’S OCTOBER ORDER

BAD FOR UTILITY AND CUSTOMERS

For the third month in a row, May 2016 industry data suggests that the outlook for Hawaii's solar energy industry is CLOUDY. The Grid Supply program has carried on with its momentum from last month, but, at this pace, it is projected to meet its cap in a matter of months. While the Self Supply program has finally seen its first installation, interconnection issues show that the program is not yet viable as a market product and customer option.  

Solar Project Applications and Approvals

Grid Supply Approvals Nearing Cap; First Self Supply System Installation; Average System Size Up 10%

Grid Supply approvals grew by 444 applications, a 43% increase from last month, which marks two consecutive months of growth.

Although this continued acceleration is a positive in the near-term, the interim Grid Supply program could come to an end as early as August on Oahu and much sooner on Maui if the interim 35MW cap is not raised. Total submitted Grid Supply applications represent close to 19MW, or 54% of the interim cap. Among the potential reasons for the rapidly declining cap space are two factors that were not anticipated at the time the PUC imposed the cap in October 2016: 

            (1) HECO’s unilateral decision in March to change its method of measuring inverter sizes from “nominal” output to “peak” output, which for many systems resulted in an artificial size increase of 5 to 8.5 percent and

            (2) the unintended consequence of PUC Order’s conversion of exported power credits from an annual reconciliation under NEM to a monthly reconciliation under Grid Supply. The stated purpose of the conversion was to reduce system sizes, but instead customers increased system sizes (by approximately 10% according to HECO’s records) in an apparent attempt to maximize the overall value of their PV systems.  

A motion recently filed by HSEA and its solar allies to increase the Customer Grid Supply Tariff Cap was met with strong opposition from HECO, which asserted that the Self Supply program, on its own, should serve as the primary alternative to net energy metering until further programs are developed. 

However, HECO’s claim that the Self Supply program is a viable replacement for Grid Supply has no basis in reality. Since its inception nearly eight months ago, only four Self Supply customers have been approved for installation. One of these systems was installed last month, but technical disputes with HECO have thus far prevented it from being interconnected and energized. It is too soon to know whether the Self Supply program will ever be a viable alternative to Grid Supply, but the facts are clear it is not ready to serve that role now. Policy initiatives and incentives such as an effective Time-of-Use rate structure, better interconnection procedures and improved pricing from manufacturers are likely all needed to make Self Supply workable.

Interconnection Analysis

Systems energized in May 2016 are up 1.1% from last month 

Since last month, the number of energized systems has gone up by 1.1%. Nearly all are backlogged NEM customers—currently, 11,493 NEM applications are approved, but not installed. 58 Grid Supply and no Self Supply systems have been energized since the inception of these new programs (October 2015), which is around 1% of systems energized since December. As the NEM backlog is exhausted, the number of energized systems will more strongly reflect Grid Supply/Self Supply programs. 

Building Permit Data Analysis 

Number of closed building permits are down 27.5% since May 2015

Unlike pulled permits, closed permits represent solar projects that have been completed in their entirety; therefore, it is more indicative of the pulse of the solar industry. The year over year fall in closed permits show that the number of solar projects built have decreased considerably.

Number of pulled building permits are down 33.6% from May 2015

Solar contractors pull permits when they anticipate developing a project in the near future. The number of building permit applications in May 2016 are down 33.6% from May 2015.

Summary

May data shows that we can expect consistent growth in the Grid Supply program; however, unless the interim cap is raised, the industry will have to rely on the Self Supply program—a program that has proved to be inadequate thus far—and a finite number of backlogged NEM customers. The fall in permit numbers for the second month in a row shows that fewer solar projects are being built, which is further supported by the fall in employment in recent months. “The clouds in our monthly industry forecast keep getting darker, and the damage being done to Hawaii`s local solar industry may be irreversible unless stabilizing policy changes are implemented soon,” said Hajime Alabanza, Executive Assistant to HSEA. “We must not forget the overwhelmingly positive value provided by a local solar industry for our economy, our state energy goals and consumer access to clean power alternatives to dangerous fossil fuels.”

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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 April report assessing the strength of Hawaii's solar energy industry. A rating, SUNNY, OVERCAST, CLOUDY, or STORMY will be issued each month based on solar sales, jobs, and installations data. Pro or anti-solar policy, regulation, and legislation will also factor into the monthly rating.

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