In Focus: Hawaiian Feed-In Tariff (FIT) 0

Hawaii already offers some of the greatest potential for residential solar installations in the entire U.S., but one of the state’s more recent programs could make solar panels even more appealing for homeowners. Kenneth Chang, living in the city of Manoa on the island of Oahu, serves as a perfect example of exactly how powerful solar can be in the island state, which is all the more impressive given that Kenneth is also the first homeowner to take advantage of the program.

Known simply as the Hawaii Feed-in Tariff, according to the Database of State Incentives for Renewables and Efficiency, this 2009 program was implemented by the state’s largest utility, the Hawaiian Electric Company. Similar to policies implemented in several European and Asian countries, this program takes a different approach from most American solar incentives by simply paying a premium rate for electricity produced for solar installations and other renewable energy sources.

The feed-in tariff offers differing rates for differently-sized solar installations, but any system under 20 kilowatts, which should cover most residential rooftop solar installations, receives a premium rate of 21.8 cents per kilowatt-hour. However, any solar system up to 5 megawatts in size can receive at least 19.7 cents per kilowatt-hour at the least.

Of course, the reason that Hawaii has proven so popular for photovoltaic solar panels is that the state suffers from the highest electricity rates in the country, by a wide margin. According to the U.S. Energy Information Administration, the state’s average electricity rate in 2009 was 21.21 cents per kilowatt-hour, compared to 18.06 cents per kilowatt-hour for second-place Connecticut. However, residential rates reached an average as high as 24.20 cents per kilowatt-hours, compared to 20.33 cents per kilowatt-hour in Connecticut.

Drawing most of its electricity from petroleum-fired plants, the EIA notes that prices in Hawaii spiked with the high oil costs as well, averaging 33.67 cents per kilowatt-hour through August of 2011.

Yet Kenneth has hardly been discouraged. He first added solar panels to his home in 2009 through Hawaii solar installer RevoluSun. Kenneth went with a 4.1-kilowatt solar system since he was relying on the federal tax rebate program that provides for 30 percent of the cost of a solar installation, up to the size needed to provide a home’s energy needs, and the state’s feed-in tariff had not yet been implemented.

“The installation was simple and efficient, and now I get only a monthly $15.99 bill for administrative fees from HECO, when before I was paying over $120 each month for energy,” Chang noted. “Then last year, [my RevoluSun representative] Abbie told me about the feed-in tariff. The idea that I could add to my system and get paid by HECO was too good to pass up.”

In August of 2011, Kenneth added another 16.7 kilowatts of solar capacity, bringing him to an even 88 solar panels. The added capacity was clearly far more than he needed, but in November he received his first check from HECO for the energy it had produced. On top of the more than $100 in monthly savings on his electricity bills, Kenneth received $1,344 from the feed-in tariff. At that rate, he expects to pay off the cost of his solar installation in no more than 10 months and from there every kilowatt-hour of energy he produces will be nothing but profit, amounting to nearly $320,000 over the next 20 years.

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