NEM and DER: A Guide To Solar Energy In Hawaii


Solar in Hawaii Has Come A Long Way

Most people recognize the fact that solar energy is starting to make waves in the world of energy production. What was once a sort of “novelty way to make power,” solar has, over the past decade especially, become a viable form of energy production; and, if current trends continue, the potential benefits of solar energy are set to change the way that we look at energy production for years to come. While solar is becoming a popular choice among Hawaiian residents, the path that has lead to this point took a lot of time, energy, and effort from people from many different fields and disciplines. In today’s post, we here at Sunetric wanted to go over a sort of “beginner’s guide to solar” and discuss some of the steps that have led to Hawaii becoming one of the leading solar energy producing states. Keep reading below to learn more.

The Beginning

As most Hawaiian residents already know, energy on the islands is expensive. In fact, when you look at the data, Hawaii has the highest energy prices in the nation; and, in the next few years, it is expected to cost four times the normal amount to import energy into Hawaii when compared to the mainland United States. Because of this, it is no surprise that Hawaii, one of the sunniest states in the union, decided to invest so heavily in solar energy. When solar first gained popularity in Hawaii, the compensation for sending energy gathered from residential solar panels back into the grid was one of the best rates that the state and country had ever seen. This first iteration of solar agreements was known as NEM, or net energy metering. Because solar panels only produce energy during the day, much of the energy that is produced is not consumed because people are either at work, school, or running errands. All of this extra energy had to go somewhere, so back into Hawaii’s electrical grid it went.

During this early phase of Hawaii’s solar, a credit was given to residents whose solar panels fed their surplus power back into the grid. During the evening, when these residents used power to cook, do laundry, watch TV, or anything else that required power, this credit was applied watt for watt. In many cases, this meant that residents paid zero for their actual electricity use and only had to worry about the connection fee to their power company. For years, this deal was one of the best in the country.

Solar Energy Produced Too Much Power

While the net energy metering did exactly what it was supposed to, providing an incentive for Hawaiian residents to make the switch to solar energy, the program worked a little too well. As the program continued, the power grids couldn’t keep up with all the energy that was being funneled back into them. To prevent an overload of the electrical grid, which would eventually lead to a failure of the entire system, something had to be done. To address this need, the Public Utilities Commission, in October of 2015, created DER.

What’s DER?

Essentially, DER is NEM version 2.0. Named Distributed Energy Resources, or DER for short, this system was put in place to provide customers with a value but also worked to set a cap on how much solar infrastructure could be built. From DER, two programs were created, Customer Grid Supply (CGS) and Customer Self Supply (CSS), both of which we will cover in a later post. The DER credit was not as liberal as the NEM credit, providing residents with $0.15 credit per kilowatt hour. However, the DER program was necessary in order to make sure that solar energy still had a place on the islands. Under the new program, each island set a cap on the maximum amount of energy that could be fed back into the grid, greatly reducing the chance that the system would become overloaded from excessive energy production during the day. This program helped to solve two problems: it reduced the amount of daytime surplus power sent back into the electrical grid and helped to reinforce conscious energy usage by customers during the day time, the time when they get the best rate for their power.

Join us again next time as we go over the difference between CCS and CGS and the impact that these two approaches to solar energy production in Hawaii have affected the solar economy of one of America’s most prolific solar states. As always, if you are a Hawaii resident and you would like to learn more about the solar services that we offer at Sunetric, please do not hesitate to get in touch with us by visiting our website or giving us a call. We are a leader in solar panel installations and we are certain that we can help you make the switch to solar. Contact us today to learn more!