How Home Batteries Can Restore Value to Solar Lost by Hawaii’s New Net Metering Policy

by Andrew Meyer
August 19, 2015

Hawaii’s new energy metering policies are going to change the way solar users interact with the grid forever, and encourage more energy storage through home batteries.

Here’s What Just Happened: The Hawaii Public Utilities Commission (PUC) issued a ruling that will end its existing net metering program which compensated customers who generated their own power through solar panels buy buying back excess energy at a retail rate. Now, if customers want to supply power back to the grid for a profit, they are compensated with a lower, fixed rate, or with fewer credits toward their total bill.

The new ruling will present Hawaiians with quite a big change from what they are used to. Because there are so many residential units with rooftop solar across the state, many customers have gotten in a routine of allowing energy supply and demand to mismatch, since a surplus of power would still be advantageous because the grid would simply buy it back. Some even relied on the lowered bill they received for their own electricity usage. Solar photovoltaic owners are going to have to get used to a new normal.

More About Net Metering: Net metering allows rooftop solar customers to shift the cost burden of operating the grid to full-service customers, while still having the opportunity to access the grid to import and export power. Solar customers get credited the full retail value of electricity at the cost of customers who use the grid for all of their energy needs.

Since grid-connected customers with solar panels help out grid operation by easing the electricity demand during the hours that households are using the most power, utility companies want to incentivize rooftop solar, making it even more appealing. Not only do households with rooftop solar enjoy the benefits of a lower bill, due to lower overall usage, but they reap the additional benefit of getting paid the full retail value of the energy they generated, but didn’t need to use. This energy was fed back into the grid, further helping power companies deal with the rising demand from full-service customers.

Net metering has been a big part of Hawaii’s journey toward more renewable energy usage. Let’s talk more about that.

Hawaii’s Backstory: Hawaii is pushing for 100% renewables by 2045. The net metering program with retail rate compensation for solar users was one of the big motivators for getting rooftop solar (and why they have a higher percentage of rooftop solar users than any other state in the US). This program will now be closed to any new applicants.

Hawaii has been one of the most forward-thinking states in terms of green energy initiatives. The net metering program in Hawaii made solar panel installation for electrical grid customers a pretty easy choice. Solar panel installations skyrocketed, infiltrating residential areas all around the state at an impressive rate. The state was well on its way to meeting its goal of 100% renewable energy sources, even without a government-issued mandate. But now that the net metering program is closed to new applicants, the growing rate of solar panel users could come to a slow. Hawaii is hoping that won’t be the case.

So, Why the Change? Hawaii wants to reduce the rate for net metering customers and increase the minimum monthly bill for new solar users, hoping it will triple the amount of rooftop solar on the grid. Solar installation has accelerated so much due to the metering program, the state is facing a challenge in ensuring that its energy resources continue to scale in a way that benefits all customers.

The Hawaiian power companies seem to have been unprepared for the huge boom in residential rooftop solar installations, coupled with the growing number of customers with energy to sell back to the grid. With so many new solar owners, households fully dependent on the grid were facing the growing cost of maintaining the grid. Hawaii’s new policy protects all grid-connected customers from shouldering too much of the cost burden, while they work on scaling energy resources in preparation for a 100% renewable energy system in the next few decades.

What This Means for Solar Users: Hawaiians now have two options:

Self-Supply: Solar users get the benefit of using solar panels for their own home energy needs. This option allows a limited amount of inadvertent energy exportation to the grid without any compensation. They’ll have a minimum bill of $25.

This option focuses on households with rooftop solar keeping and using the energy generated by their solar panels. Self-supply customers will enjoy lesser dependence on the power grid, concentrating on having most of their energy needs met in-house by their solar photovoltaic system. These customers will have considerably lower bills, since they won’t be getting as much electricity from the grid, but they will still enjoy the benefit of being grid-connected so they’ll have power for the times their solar panels are not generating any. These customers will, however, be charged a minimum bill of $25 for the benefit of being connected to the grid, in order to contribute to the cost of grid maintenance.

Grid-Supply: This option lets residents export excess energy to the grid for credits against their utility bills. Customers are not credited at the retail rate, however, but instead a fixed rate between 15 to 28 cents per kWh, depending on where they live.

This option focuses on households who generate a lot of excess energy through their solar photovoltaic systems, and want to ensure that they will see benefits from the energy they release back into the grid. Though they will not be credited the full retail rate, as they were in the past, households who give the grid their excess solar energy will be provided with credits against the utility bills they receive for the power they need additional to the solar power they generate in-house. The rate of credits will be fixed at around 20 cents per kWh, considerably lower than the retail rate they were being paid before. This may seem like a bummer for households with solar panels… but it doesn’t have to be.

A Third Option: Hawaii’s new policy makes home battery storage indispensable. Since selling back to the grid will now be less profitable for solar users, energy storage will prevent customers from inadvertently leaking energy back to the grid without compensation. A home battery acts as a barrier between customers and the grid, providing independence and control over energy usage. Consumers with a home battery no longer have to worry about fluctuating energy policy; the power is in their hands alone.

Here’s how it works: Households generating energy through rooftop solar don’t have to use all the energy they are generating right away. Instead, energy is stored in a home battery, stocking it away for later use, when solar panels are no longer generating (think the evening hours, after the sun goes down, which also happen to be the hours of highest electricity demand, according to power companies.) With a home battery, all the energy generated by the solar panels gets used in-house, assuring customers that they get the full value of the energy they produce. No more power leaking back into the grid with sub-retail compensation (or worse, no compensation at all.) With this in mind, home batteries seem to be far and away the best option for households with rooftop solar.

The Future of Metering: Other states may follow in the footsteps of the Hawaii PUC, increasing the value of home batteries past time-of-use shifting and avoidance of peak demand charges. Home batteries have always been great investments for those with and without rooftop solar, since power companies often charge additional fees for customers who use electricity during peak-demand hours. With energy storage like home batteries, grid-connected customers can store energy straight from the grid during the daytime hours, when electricity is offered at a cheaper rate, so they can use it during peak-demand hours, and avoid any additional fees. Customers without rooftop solar won’t see quite the diminished bill that solar customers do, since they are still getting 100% of their electricity from the power grid, but they can shift the times they are storing energy to maximize on lower costs.