The Hawaii Public Utilities Commission recently issued a 128-page ruling that initiates a program which will allow homeowners and businesses to install small to midsized renewable energy projects, like solar panels, and sell the energy back to Hawaii’s power producers.

Called a feed-in tariff, or FiT, this rule allows homeowners and businesses to generate solar electricity and sell it back to entities like Hawaiian Electric Co. (HEC) for rates that “exceed” current Hawaiian electricity prices. The exact payback figures have yet to be set, but the announcement commits Hawaii to a policy that allows all energy producers to get a fixed price for their production for 20 years under a power purchase agreement.

Hawaii is the fourth region in the nation to offer FiTs (after Gainesville, Florida; Vermont, which offers only a standard rate; and, most recently, California; Wisconsin FiTs are offered only through specific utilities, and only for certain technologies). Hawaii is also the nation’s most egregiously fossil-fuel dependent state. The new policy will help the state reduce its dependency on these dirty fuels and move it toward a national goal of energy security.

Rather than opposing the policy, public utilities like HEC have committed themselves to working toward feed-in tariff implementation. In HEC’s case, the commitment was part of its signatory agreement last year with the Hawaii Clean Energy Initiative, which established a goal of 70 percent (of energy, from renewable energy) by 2030. That figure currently stands at a mere 10 percent. The U.S. Pacific Command, based in Hawaii and one of the state’s largest power users, has also expressed its commitment to this 40-by-2030 goal.

Not only does the new Hawaiian energy law provide payback (modest or superb yet to be determined), but its institution will provide potential installers with up-front information on the amount they will get paid for their generation before they spend the money. Before, potential installers had to go through a lengthy and sometimes confusing permitting process just to get permission to deliver power to the grid.

Solar experts estimate the biggest benefits will go to mid-sized solar companies, installing 5 megawatts or less (the FiT limit for Oahu), or small residential and business installers opting for 2.72 megawatts or less (the FiT limit for Maui and Hawaii, also known as “The Big Island”.

Statewide, the limit will be 5 percent of peak capacity for the first two years, and then the commission will review the results of the initiative (in terms of its effectiveness and integration into the grid) before setting another cap. In 2010, HEC expects to see a peak demand rate of 1,450 megawatt hours, using load management techniques like Demand Side Management (DSM). Peak demand occurs in summer, between the hours of 6 and 8 p.m.

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