It's time to end net energy metering
by Mina Morita and Marco Mangelsdorf
With more than 50 years of experience between us, few in the state have been more involved in and supportive of the renewable energy cause in Hawaii than the two of us — one as long-time state House Energy Committee and Public Utilities Commission chairwoman, and the other with a 37-year career in the solar energy field and founder of the Hawaii PV Coalition.
Since 2007 we have witnessed stratospheric growth in the adoption of roof-top solar electric systems, with one of the principal reasons for that success being the availability of net energy metering (NEM).
NEM allows home and business owners who install photovoltaic systems on their homes or facilities to receive full retail credit for surplus power fed back into the utility grid to offset their electricity costs.
We believe now is the time to bring this NEM program to a close and transition to a more fair and equitable rate structure.
In 2001 when NEM was passed, the price of photovoltaic (PV) was two to three times today's cost. To assist in carrying out the state's energy objectives, PV businesses needed jump-start help in the form of a preferential tariff in order to promote and expand the use of this important site-based renewable energy source to homeowners and businesses.
It's now time for PV to stand on its own two feet. The local PV industry and close to 60,000 ratepayers across the state, who were fortunate enough to be able install these ratepayer- and public-subsidized systems through NEM and federal and state tax credits, need to stop protecting their own self-interest and think about how to advance an electricity system to benefit all.
NEM is a relic of an oil-based infrastructure when variable renewable resources were being accommodated within traditional utility operations. Today as we seek a new paradigm that relies on renewable resources, energy efficiency, demand response and other advanced technologies as intrinsic parts of the electric system, new rates and pricing structures also must be part of this transformation.
The sky is not going to fall. In 2008, Kauai closed its NEM program without the island's PV businesses closing their doors.
Typically, industries whose subsidies are threatened will couch their rhetoric with general claims of wanting to protect the public good, consumers and their workers.
It is no different here. The piggies at the trough have always squealed at the prospect of the slop being taken away. But going to a post-NEM world will have only a marginal effect on the overall payback period and the return on investment for home and business owners who pay cash or do the financing themselves.
It is the third party-owned/financed residential solar transactions that will take a much more significant hit.
Witness the vigorous lobbying of mainland-based companies — SolarCity, Sunrun, Vivint Solar and the like — who have done quite well here peddling that type of financing option to tens of thousands of homeowners.
Sadly, the threat of losing NEM has led some in the PV industry down the path of hyperbole, exaggeration and self-interested fear-mongering.
While solar prices have dropped significantly throughout the country, Hawaii's highly subsidized solar market is broken.
The bountiful subsidies of NEM and tax credits have been used to sustain an uncompetitive and dysfunctional market that has been carried on the backs of the Hawaii taxpayer and non-PV electric customers.
We all want a sustainable green energy future to serve all residents and businesses throughout Hawaii.
It is now time for rational economics of running a clean electric system to prevail. The continuation and inequity of NEM only creates some winners but many losers.