A state agency is seeking approval for a program that proposes to make it easier for lower-income homeowners, landlords and nonprofits, among other groups, to install photovoltaic systems.
Some officials laud the program’s goals, while questioning whether some of the targeted groups will actually participate.
Mark Glick, Hawaii’s energy administrator within the Department of Business, Economic Development and Tourism’s Energy Office, said in a press release the program was designed to help the state continue to work toward its renewable energy goals.
Called Green Energy Market Securitization, or GEMS, the program proposes to take out a bond of up to $150 million. The money from that bond would be used to back low-interest loans through banks or other lending institutions, which would go either to property owners or solar installation businesses to pay for photovoltaic panels.
“While solar PV has grown exponentially there is a market gap of consumers who cannot afford the high upfront costs, or cannot qualify for loans. The GEMS program will open up access to solar PV for these market segments,” DBEDT Director Richard Lim said in an email earlier this week. “This innovative financing approach leverages public dollars to achieve a long-term, sustainable financing solution to support clean energy project development.”
The bond would be able to fund up to 44 kilowatts of solar power, the application said.
State legislators last year provided the initial impetus for the program, according to one of two applications filed last week with the Public Utilities Commission. Gov. Neil Abercrombie signed Act 211, and his administration began crafting the program. The actions are not unique to Hawaii, the application said.
“The ambitious clean energy and energy efficiency goals set by states and utility commissions are prompting policy makers to look at new market interventions that leverage public dollars, rely less on rebates and build lasting public-private partnerships,” the application said. “As part of this shift, state governments across the country are implementing long-term sustainable financing models to support clean energy project deployment.”
In part, the program hinges on the PUC’s pending decision about on-bill repayment, a financing option that would allow individual customers to pay for their PV project with the savings from their electric bill. If the PUC approves that request, loan applicants can opt for either direct payments or the on-bill payments, the application said.
While PV installations have increased significantly across the state during the past five years, according to DBEDT’s application and Hawaiian Electric Industries, less than 20 percent of commercial properties in Hawaii have solar power. The new program would particularly target nonprofit groups by allowing them to partner with solar installation companies. The solar company would install the system and charge the nonprofit for the electricity.
“For nonprofits, allowing a third party to fully monetize the tax benefits will improve the economics of solar PV projects and allow for power to be provided to the end user at a reduced cost,” the application said.
A similar arrangement on Maui allows the county to purchase power for its buildings for an average of 18.5 cents per kilowatt hour during the course of a 20-year contract. That contract was signed in 2011 and called for a private solar company to install PV panels on 25 Maui County buildings. The county then purchased electricity back from the solar company at the reduced rate. In 2012, Maui Electric Co. was charging between 35.6 and 41.7 cents per kilowatt hour on Maui.
Kohala Councilwoman Margaret Wille, who tried unsuccessfully to get Hawaii County to pursue a similar program, said the new state program seems to be “good for individuals and good overall.”
“I’m just generally promoting that we utilize these resources here,” Wille said this week. “By providing that initial capital to get on board, it will enable many more people to get on PV. The obstacle for most people is that initial, front-end cost.”
But South Kona/Ka‘u Councilwoman Brenda Ford was more cautious about supporting the new program.
“How can you convince a landlord of multiple units to do this?” Ford said. “He has no advantage at all.”
In almost four full terms on the council, she said she has never once had a landlord approach her about help assisting tenants. A landlord would possibly need to bolster a roof to support PV panels, she said, and wouldn’t quickly recoup that cost, especially if the tenant was paying the electric bill. At the same time, a tenant paying a bill with on-bill financing wouldn’t pocket much savings either, and would end up paying for a PV system he didn’t even own, she said.
“It’s something I’ve talked about for years,” Ford said. “The people with the lowest incomes are typically renters.”
Ford offered at least one way to tweak the program for low-income property owners. Instead of the full savings on the electric bill going toward loan repayment, set it up so only a portion, maybe half or two-thirds, does.
“If you could take half their savings and let the rest stay in their pockets, that would be something good,” she said.
Ford also questioned the state’s plan to add a $2 Green Infrastructure Fee to every electric bill across the state. State officials noted that they propose to reduce the existing Public Benefits Fee by $2, so the ratepayer isn’t seeing their bill increase, but Ford said it still ends up financing the loans on the back of ratepayers.
Once Ford learned of the application, she contacted the state Energy Office to see if a representative could make a presentation to Hawaii County Council.
“There’s still a lot of questions,” she said.
A Hawaiian Electric Industries spokesman contacted Thursday about the program, and how much more PV integration the company’s grids could take, said the company’s role would be to provide billing support.
“We believe it’s important for customers to have more choices and opportunities to benefit from renewable energy,” Senior Communications Consultant Darren Pai said. “Details of this new program are being reviewed. We’ve been working with DBEDT on this program, and we look forward to continuing to work with them and others as the program moves forward.”
Glick was out of the office Thursday and was unable to respond to several additional questions as of press time.
Email Erin Miller at [email protected].