As Ocean View residents rally to oppose a commercial solar project in their neighborhood, others not directly connected to the community are questioning whether the development is a good deal for ratepayers as a whole — and whether it should
As Ocean View residents rally to oppose a commercial solar project in their neighborhood, others not directly connected to the community are questioning whether the development is a good deal for ratepayers as a whole — and whether it should be allowed to proceed at all.
The photovoltaic arrays, set for installation next spring by the global developer SPI Solar, would place 30,000 panels on 26 lots in and around the Hawaiian Ocean View Ranchos subdivision. The 2-acre lots would produce 250 kilowatts each, making them eligible for the Tier 2 Feed-In Tariff program. Under that initiative, SPI is eligible to sell the electricity to Hawaiian Electric Light Co. at a rate of 23.8 cents per kilowatt hour.
Residents worry about impacts to views, the landscape and property values and are concerned the arrays could spark brush fires. One homeowner has said the project essentially turns his neighborhood into a light industrial area. But two experts in the energy field are also saying the rate at which the electricity will be sold is not a good deal for ratepayers.
“You should be under 16 cents per kilowatt hour for a project of that combined size,” said Stephen Holmes, a retired former energy and sustainability coordinator for the City and County of Honolulu.
“They (SPI Solar) are breaking a large megawatt-scale project into smaller Feed-In Tariff projects, so ratepayers are not able to benefit from better pricing,” said Holmes. “The PUC should have rejected this.”
A poor deal for the consumer stems from problems deep within the FIT program, said Marco Mangelsdorf, president of Hilo-based ProVision Solar and director of the new nonprofit Hawaii Island Energy Cooperative.
“The Feed-In Tariff unfortunately turned into something of a fiasco with companies — some local and others from the mainland — making a very nice return on investment at the expense of the rest of us,” said Mangelsdorf.
The price of commercial and utility-scale solar energy has dropped significantly over the past few years, and utility companies today are able to close deals with solar developers at rates well below 23-plus cents, he said.
“FIT has been a boon for the developers who have been able to bring projects online quickly, and a boondoggle for the rest of us,” Mangelsdorf said. “We end up subsidizing that.”
Hermina Morita, a former chairwoman of the Public Utilities Commission, also expressed concern about the Ocean View project in a phone interview Wednesday. Morita is a former Kauai representative who helped shift the state toward renewable energy initiatives and policies.
“The purpose of FIT was to encourage smaller projects,” Morita said, “not as a loophole for larger projects, which would have been negotiated under different terms.”
The FIT program was implemented four years ago to create a streamlined process for individuals, small businesses and government entities to get their renewable energy projects online quickly. The program has a pre-established, standard schedule of rates at which the big utility companies buy the energy. The price goes as high as 31.5 cents per kilowatt hour, depending on the size and type of project, which is assigned to one of three tiers based on its generation capacity. Each tier has a limited number of slots and a queue of projects.
The pre-set price of the electricity is higher for FIT projects to take into account economy of scale and the fact that large, utility-scale operations can generate the power more cheaply than the small projects that FIT is designed to foster.
The initiative has increased solar power generation by 15 megawatts in the Aloha State, according to Hawaiian Electric Co.
In return for the reduction in red tape, projects in the queue are supposed to be “shovel-ready” and a series of milestones must be met, including completion of the project within 18 months of execution of a Schedule FIT Agreement.
But the devil has been in the details. What was intended to be a broad-based program to benefit many small producers ended up being monopolized by big solar developers who swamped the waiting lists with projects they weren’t prepared to build and in some cases sold the rights to projects before development occurred.
That’s not the intent of the program, critics say.
In Ocean View, the 26 applications were submitted in 2011 and 2012 by Oahu-based Solar Hub Utilities. The project was later purchased by SPI, which is based in California and China. The applications have been approved, but agreements to buy the electricity have not yet been executed, according to HELCO. The utility declined to give details about specific developers in the queue, citing customer confidentiality.
The queue has been purged in the past of projects that failed to meet FIT standards, Mangelsdorf said. It’s not clear if that will happen again.
In 2012, SPI made no bones about its massive purchase from Solar Hub of development rights to Hawaii solar projects, announcing it had acquired rights to co-develop and build 68 solar power generation facilities around the state totaling 29 megawatts, and was pursuing another 10 megawatts worth of projects within the reserve queue.
“Almost all of the projects within the portfolio acquired by SPI meet the requirements of the Renewable Energy Tier 2 Feed-in Tariff and are approved for development,” the company stated in a June 2012 press release. SPI did not provide information on the cost of the deal.
Repeated calls and emails to SPI Solar, its project manager and media representative over several weeks have not been returned.
Ann Bosted, an Ocean View resident who has 16 panels on her roof, said solar is a good thing when it’s done right — but not when a massive project is broken up and shoved through a loophole.
Holmes said the ratepayers would have been better served under a negotiated power purchase agreement as would befit a sizable commercial power generation project.
“It’s a crummy deal,” Holmes said. “I think the Public Utilities Commission should revisit the whole thing.”
