Posted by Adam Sewall in Monday, October 5th 2009

As far as electricity generation is concerned, Hawaii is making good on its promise to get 40 percent of its energy from renewable sources by 2030. The state’s Public Utilities Commission (PUC) on Friday issued a decision and an order outlining the general principles for the creation of a statewide feed-in tariff. A 128-page ruling outlines the program. It is hoped that the tariff will reduce the islands’ dependence on imported energy, most of which comes in the form of fuel oil and natural gas.

As relayed by Renewable Energy Focus, Mark Duda, president of the Hawaii Solar Energy Association, welcomed the decision: “Hawaii’s solar industry is pleased that the Commission has recognized the importance of our industry-and distributed generation in general-in the broader effort to increase energy security and reduce carbon emissions.”

In terms of encouraging homeowners and businesses to install solar PV systems, feed-in tariffs are arguably the most effective policy tool available. By paying the system owner a premium price for the electricity generated by his or her system over the course of ten or 20 years, such programs improve solar’s financial return. Compared to wind turbines — the other main type of distributed electricity generation system — solar panels are relatively easily to install and typically aren’t subject to strict local siting regulations. As such, solar power producers, residents and businesses alike, will likely benefit the most from Hawaii’s feed-in tariff program.

While the PUC’s decision does not yet set tariff prices, it does include guidelines on project size. Compared to an alternative proposal by Hawaii Electric Company (HECO), the state’s largest provider of electricity, the PUC ’s tariff framework allows for larger systems. The HECO plan sought to cap systems at 100-kilowatts. The PUC framework will allow projects up to five megawatts (mW) in size for Oahu, and up to 2.72 mWs for Maui and Hawaii Island. Developers will enter 20-year agreements, during which time they’ll be guaranteed a specified price for the electricity generated by their systems. By guaranteeing future payments, feed-in tariffs reduce risk and boost financial returns on distributed energy systems, like solar panels.

A number of other U.S. states and municipalities are in various stages of developing feed-in tariff programs of their own. For more info, see the following posts on: Michigan; Gainesville, Florida; Oregon; Sacramento, California; and Vermont. And, for a look at another island that’s expanding renewable energy programs to reduce its dependence on imported fuel, see this recent post on solar in Puerto Rico.