Last month, an independent observer appointed by the state Public Utilities Commission launched a website for the FIT program, which allows owners of small solar photovoltaic (PV), wind, in-line hydro, and concentrated solar power (CSP) projects to sell electricity to Hawaiian Electric Company utilities.
Seen as an easier route than negotiating for months, years even, with utilities on power purchase agreements, the FIT program guarantees renewable energy producers grid interconnection and standard rates for 20 years.
In response to concerns raised with the PUC by HECO regarding the impacts of buying renewable energy on rate-payers, as well as the potential that variable renewable energy projects have to affect grid reliability, the PUC capped FIT projects at 5 percent of each utility’s 2008 peak demand. That means a capacity of 60 megawatts for O`ahu, 10 MW for the Big Island, and 10 MW for Maui, Moloka`i, and Lana`i, combined.
On launch day, November 17, the applications didn’t exactly come pouring in, but
the website did receive nine applications for solar PV projects on O`ahu totaling nearly 2.4 megawatts. Two were Tier 1 applications (for projects generating 20 kilowatts or less), and seven were for Tier 2 projects, which are those producing more than 20 kW and up to 100 kW of wind and hydropower and 500 kW of PV and CSP on O`ahu. (Also included in Tier 2 are projects of up to 100 kW of PV and CSP on Lana`i and Moloka`i, 250 kW of PV on Maui and Hawai`i, and 500 kW of CSP on Maui and Hawai`i. The FIT website began accepting applications for those islands on November 24.)
The projects submitted so far will be located in Haleiwa, Kapolei, and Honolulu, and the two largest, each for the maximum 500 kW, are located at the Pier 2 cruise ship terminal and Foreign Trade Zone downtown. They are expected to be completed next December.
According to Hawai`i Renewable Energy Alliance (HREA) president Warren Bollmeier, the minimal first-day response may have been related to the fact that FIT rates are lower than retail rates.
HECO priced PV electricity so low that it all but requires owners to develop larger projects, up to 5 MW, to make it financially worthwhile, he says.
A launch date for Tier 3 of the FIT program, which would accommodate these larger projects, has not yet been set. Tier 3 projects include all systems larger than the Tier 2 caps, up to 5 megawatts on O`ahu and 2.72 MW on Maui and Hawai`i. No wind projects on Maui or Hawai`i may exceed the Tier 2 cap of 100 kW.
“We all figured there wouldn’t be much response to Tier 1. There was talk about an allocation of 5 percent [of the O`ahu cap being reserved for Tier 1]. It doesn’t look like that’s ever going to be met. … Most people figured most of the action would be in Tier 3, but at this point, there’s nothing reserved for Tier 3,” he says, adding that things could change after the program’s formal review in two years.
Despite the perceived guarantee of grid access provided by the FIT program, the utilities have the ability to refuse projects that will “substantially compromise reliability or result in an unreasonable cost to rate-payers.”
In the eyes of some of the parties involved in the PUC’s FIT docket, the utilities have too much discretion.
When HECO recommended in February that, based on its own reliability studies, no new wind or solar projects be added to its Maui or Hawai`i island grids, the blowback from the industry and energy advocacy groups led the company to propose the establishment of a reliability standards working group, which the PUC approved.
The group is intended to help answer questions about how renewable energy will impact grid reliability and set reliability standards, but, to date, it’s unclear who the group will include, how the group and associated technology committees will be governed, and
who will facilitate discussions, among other things.
“What’s anticipated is that the group will advise the [PUC’s] technology working committee on what studies need to be done,” says Haiku Design & Analysis president and former docket intervenor Carl Freedman, adding that identifying and completing those studies and developing standards based on them could take years. “It’s not a quick thing.”
Bollmeier adds that the group might also discuss some of the FIT program’s current limits — for example, why Maui wind projects are limited to 100 kW.
“There’s kind of a qualitative definition of reliability and it’s been up to the utility until now to interpret that. Hopefully, there will be some consensus to make it quantitative,” he says.
Right now, the utility requires any power producer to conduct a potentially costly and lengthy reliability study if it’s facility places more than a certain amount of electricity on a particular grid circuit.
“That’s been shown to be a deal-killer for some projects,” Bollmeier says, adding, “These things have been up to the industry.”
Right now, parties involved in the FIT docket are awaiting the PUC’s selection of an independent facilitator for the reliability standards working group. Freedman has applied for the job, as has Harold Judd of the Accion Group, which is the FIT program’s independent observer. HECO and several docket intervenors have nominated others.
In a November 3 submittal to the PUC, state Department of Business, Economic Development, and Tourism energy planning and policy manager Estrella Seese — on behalf of the department and the the Solar Alliance, the Hawai`i Solar Energy Association, HREA, and Blue Planet Foundation — stated their strong opposition to Judd as facilitator.
They wrote that in his role as the independent observer, who is in charge of the FIT program’s queueing procedure and implementation, Judd was “quick to form opinions and reach conclusions on issues without a firm grounding in the record and process of the docket, most especially the Commission’s [decision and order]. This resulted in misunderstanding of the issues and even of his role as an IO, thereby adversely affecting his ability to facilitate resolution of issues amongst the parties.”
Specifically, they complained that Judd sided with HECO’s arguments that there was already a high level of penetration of variable renewable energy on Maui and Hawai`i and that more could affect service reliability.
“DBEDT and the joint parties note that the IO did not provide or offer any independent analysis or study to support his belief that HECO’s concerns are legitimate,” she wrote.
Seese also criticized Judd’s deliberate slowness in implementing the FIT program “which disregarded the Commission’s order to implement FIT Tier 1 and Tier 2 as soon as possible.”
Whoever the commission chooses, the facilitator will likely be tasked with helping determine who will be allowed to participate in the group.
Bollmeier notes that the group grew out of the FIT docket, but will probably deal with broader issues.
“HREA [a party to the docket] suggested we open up a new docket if it was limited to FIT parties, because that leaves out a lot of people: people in the net metering docket and people interested in wheeling (which deals with electricity transmission),” he says.