There is a lot of excitement in Hawaii right now about “net metering”. I say excitement because over the course of the last nine years, the laws regarding net metering have been amended five times. This kind of dynamic speed is rarely attributed to state lawmakers, but as oil prices go up (Hawaii gets more than 80% of its electricity from imported oil), and more consumers install solar and other renewable systems, state government sees the extraordinary benefit of locally produced renewable electricity and is endeavoring to encourage its growth.
So what is net metering? This is a program in which an individual utility customer produces electricity through a renewable source and feeds that electricity back into the grid. Credit is given for that generated electricity, and although Hawaiian homeowners cannot yet earn a profit on their generation (the program tops out on an annual basis when you generate as much electricity as you use), good planning of the solar installation can equalize these values so that the homeowner’s yearly generation does not exceed the yearly consumption.
It’s easiest to imagine the spinning wheel in an old-fashioned electrical meter. As electricity from a solar installation generates electricity and feeds it into the electrical grid, the wheel slows down. If more electricity is generated, an amount equal to the amount you are currently using, the wheel comes to a complete stop. If you generate more than you consume, perhaps due to a very sunny day, the wheel will begin to turn in the opposite direction. (Note that these days electricity meters are digital, so don’t go digging in the utility closet to find the wheel so you can watch it spin.)
The original net metering law was passed in Hawaii in 2001. This law recognized that the technology for new renewable sources of electricity had become efficient enough and cheap enough, for individuals to begin installing systems in their homes. The law was designed as an incentive to bring renewable energy sources to the islands. In 2004, the law was expanded to increase the capacity of these contributing systems from only 10 kilowatts to 50 kilowatts. Unfortunately, even though larger systems were allowed, if there was any excess electricity, there was no credit given beyond that month’s total bill. In 2005 that changed when a new law provided for the carryover of extra electricity (known as “net excess generation” or NEG) to the next bill. NEG is calculated on an annual basis, and won’t roll over into the next year, so it is important for systems to be balanced between generation and consumption over the course of the year.
Today, the law provides for any excess generation credit to be bumped to the next bill for up to 12 months. Now, for those interested in potentially becoming a net metered customer, it’s important to understand that with a normal net metering agreement, this credit will roll over month after month but expire at the end of the year. You will never be “paid” for the extra electricity you feed into the grid. There is another arrangement, however, known as a Feed In Tariff (FIT) in which you are paid in cash for all the kilowatt-hours your system produces. Unfortunately, the legal and technical details of FIT in Hawaii are still being worked out and FIT cannot be combined with Net Metering. Once the FIT rate is announced it will take some quick analysis by a trained solar consultant to evaluate which choice is best. Generally, if you have a low monthly power bill but a very large roof (and thus a larger capacity to generate power) you may want to go with FIT. However, the average home owner in Hawaii will probably find that their roof size limits their production capacity to a value fairly close to their usage, in which case it would make more sense to go with Net Metering. Net Metering is credited at full retail rate, and it is speculated that FIT will be a rate lower than full retail.
One other limitation which is slowly being removed by amendments to the original 2001 law is the limit on the total number of customers of each of the utility companies in the state who can sign up for the program. Each utility company has its own set of rules, but the limits on net metering signups range from 1% to 4% of peak generation depending on your island as of this writing. There is considerable political pressure in Hawaii to raise these rates and allow more homeowners to participate in net metering.
Those interested in the program should contact us for more information and to understand any applicable limits.
