HSEA May Monthly Report

Posted on Monday, May 09, 2016

MEDIA CONTACT:

Hajime Alabanza

(808) 232-8371

hajime.alabanza@hsea.org

NEWS Release

FOR IMMEDIATE RELEASE

May 9, 2016

HAWAII SOLAR INDUSTRY OUTLOOK REMAINS CLOUDY

JOB LOSSES TAKE A TOLL; ENERGY STORAGE INCENTIVE BILLS FAIL; IMPROVEMENTS IN CUSTOMER GRID SUPPLY PROGRAM OFFER SOME OPTIMISM


April 2016 industry data suggests that the outlook for Hawaii's solar energy industry remains CLOUDY. While there have been improvements in the Grid Supply program, a significant drop in employment, deficiencies in the customer Self Supply program, the failure of key energy storage bills, and a decrease in permit numbers all point to industry contraction.

Job Losses

Recently, the HSEA asked its members and other companies to provide employment numbers from two points in time: immediately prior to the October 2015 Hawaii Public Utilities Commission ("PUC") Order eliminating the Net Energy Metering Program ("NEM") and March 31, 2016. From October to March, 73% reported a decrease in employees, 18% reported an increase in employees, and 9% reported that the number of employees remained the same. For companies that reported a decrease in employment figures, employment, on average, fell approximately 35% since October. Companies also explained that layoffs would have been even more severe if not for ongoing NEM backlog work, which is temporary. Looking forward, employment figures will be contingent on the success of the Grid Supply and Self Supply programs and, in the longer term, solely the Self Supply program if the 35MW Grid Supply cap is not raised.

Solar Project Applications and Approvals

Grid Supply Applications Increase; Self Supply Program off to a Slow Start

Grid Supply approvals grew by 415 applications, a 68% increase from last month. This positive trend should continue as HECO and solar industry stakeholders implement improvements to the application submission and approval process. 

However, the benefits of the accelerating Grid Supply program will be short lived if the statewide interim Grid Supply cap of 35MW is not raised. Total submitted Grid Supply applications represent close to 15MW, or 43% of the interim cap. At the current rate of adoption, the Grid Supply interim cap will be reached well before the end of 2016.

The most troubling dark cloud on the horizon is the lack of any comparable replacement for the Grid Supply program. More than six months since its inception, only one Self Supply installation has been approved statewide. HECO and solar industry stakeholders are working to improve the Self Supply application process, but a better application form and a streamlined approval process will not be enough to make the program viable.

Energy Storage Bills Fail

Two bills, aimed at incentivizing energy storage and Self Supply systems, failed to pass the 2016 legislative session. This outcome leaves the Self Supply program in a precarious position. The success of Self Supply heavily relies on energy storage; however, as it stands, this technology remains expensive, despite plummeting costs in recent years. In its October 2015 Order, the PUC promoted Self Supply systems as the future of rooftop solar when it eliminated NEM and limited—at least for now—the availability of Grid Supply systems. But growth in Self Supply is likely to be very slow without a state incentive for storage, or, at the very least, a workable Time-Of-Use rate structure that encourages consumers to store solar power for nighttime use or export to the grid.

Interconnection Analysis

Systems energized in April 2016 are up 7.9% from December 2015

Since December 2015, the number of energized systems has gone up by 7.9%, a 1.4% increase from last month. Nearly all are backlogged NEM customers—currently, 12,436 NEM applications are approved, but not installed. Just 13 Grid Supply and no Self Supply systems have been energized since the inception of these new programs (October 2015), which is less than 0.3% 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 26% since April 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 34.6% from April 2015

Solar contractors pull permits when they anticipate developing a project in the near future. The number of building permit applications in April 2016 are down 34.6% from April 2015.

Summary

April data suggests that while improvements have been made to the Grid Supply program, these factors are offset by the inadequacy of the Self Supply program. The fact that just one Self Supply application approved for installation and none energized in the more than six months since the program’s inception, suggests an ominous future for the industry as the NEM queue is exhausted and the Grid Supply cap is reached. The recent failure of two energy storage incentive bills is more bad news for Self Supply. In addition, the fall in both pulled and closed permits compared to April 2015 illustrate that project activity has slowed down. A reduction in industry employment figures is also a great cause for concern. "It’s taking longer than expected to recover from the loss of Net Energy Metering, and consumers and workers are paying the price,” said HSEA President Rick Reed.  “As time passes, the urgency grows to implement creative ways, like a Time-Of-Use rate, to incorporate more solar onto the grid and incentivize a realistic energy storage alternative.”

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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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