Solar News: Watch Hawaii's Solar Dilemma, It Could Be an Industry-Wide Problem

Hawaiian Electric Industries has a virtual monopoly on power in its namesake island state. However, it has to import oil to power its plants, making electricity expensive. This is a big reason why solar has taken off in its territory. That's not only complicating the utility's life, but it's also causing big changes in the state's solar landscape. The issues Hawaiian Electric is facing could soon show up on the mainland.

Cost effective
Electricity in Hawaii is the most expensive in the United States at $0.38 per kilowatt hour. That's almost three times the national average of around $0.13. Solar power can cost as much as $0.30 per kilowatt hour according to the Natural Resource Defense Council; but in Hawaii, that's still cheaper than buying from Hawaiian Electric Industries. That's a big reason why Hawaii's solar penetration rate is 20 times the average for the mainland (the 48 contiguous states); it's really cost effective to put up solar in Hawaii.

This collection of facts is also why every utility in the country should be watching Hawaiian Electric Industries. It is, literally, on the front lines of the fast-changing solar battlefield. And the impact of swift solar adoption has been intense.

(Source: ReubenGBrewer, via Wikimedia Commons)

No mas!
Perhaps the most frightening thing about the situation in Hawaii is that Hawaiian Electric simply hasn't been able to keep up with solar's growth. For example, there have been so many new rooftop solar systems installed that, according to the company, "An increasing number of distribution-level circuits have rooftop PV capacity exceeding 100 percent of the daytime minimum load, the trigger for interconnection studies and possible implementation of safety measures or upgrades before new PV systems on that circuit can be interconnected to the grid."

The company put in place rules that require company approval before a customer can connect rooftop solar to the grid. That's caused two problems. First, there has been a massive backlog in the approval process and, thus, a slowdown in the installation rate. According to Leslie Cole-Brooks, head of the Hawaii Solar Energy Association, "If you look at the permit counts, they've dropped somewhere between 50 and 65 percent compared to last year."

Second, customers, knowingly or unknowingly, have hooked up to the grid anyway. That risks overloading circuits, and that's not good. There are at least 1,000 such homes. Backlogs and illegal hookups could become problems in other states if they aren't ready for solar power's growth.

(Source: Public domain, via Wikimedia Commons)

Mixed blessing
The swift uptake of rooftop solar, however, is a mixed blessing for Hawaiian Electric. That's because it imports so much expensive oil to generate power. In fact, increased renewable power, including rooftop solar, allowed the company to decrease its oil use by 15% between 2008 and 2013. And the company is looking to materially expand the amount of renewables, including rooftop solar, in its portfolio over the next couple of decades. All in the effort to get its costs down; It hopes to pass a portion of the savings on to customers.  

So as long as the company can keep a handle on the growth of solar, Hawaiian electric appears to be ready to embrace its customers' rooftop systems. However, the quick expansion is clearly stressing the utility's infrastructure and operations. Thus the roadblock to slow the process down. For the moment, anyway, it appears to be less about protecting an entrenched business than protecting the integrity of the grid.

That said, roadblocks have an impact. For example, when Ohio instituted a rule to delay clean energy mandates in the state, the rate of solar installations there fell a massive 90%. There were simply too many better opportunities for installers to bother with Ohio any more. While being an island makes business decisions like that more difficult to execute in Hawaii, a prolonged industry pullback because of red tape could easily force industry participants' hands in unintended directions, and cripple Hawaii's solar industry.

All eyes on Hawaii
Jay Ignacio, who runs one of Hawaiian Electric Industry's utilities, summed it up:

This is a difficult technical issue, and we're not aware of another utility in the world that has addressed it. There's no model for us to follow, no resource for us to tap into. We're really creating new frontiers on this.

Worse, there aren't many in Hawaii who are sympathetic to its plight, even though the utility wants to materially increase solar over the long term. Rooftop solar could be a huge blessing for Hawaiian Electric if it's given the chance to prepare, but in the near term it's both a technical problem and a public relations issue. Income investors might actually find that negative publicity presents a buying opportunity for this reliable dividend payer. In the end, though, both the state of Hawaii and Hawaiian Electric have little choice but to modernize, and find a reasonable way to pay for it, since the utility is basically the only electricity game in town. 

Keep watching Hawaii to see what could happen next in the solar industry. And monitor California's utility space; fast solar growth in the state could make it the next solar stress test.

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The article Solar News: Watch Hawaii's Solar Dilemma, It Could Be an Industry-Wide Problem originally appeared on

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