Hawaii Faces Massive Logjam of Solar Permit Applications

By Max Bloom

The state with the highest penetration of residential photovoltaics is Hawaii, where 51,000 homes – 12 percent of residences – are PV-powered. (The U.S. average is about 0.50 percent). The impetus for Hawaii’s love affair with PV is two-fold: high electricity prices from the local utility (37 cents per kilowatt-hour – three times the national average) and plummeting solar PV prices (an 80 percent decline since 2008).

For clean energy proponents, Hawaii’s embrace of solar power should be nothing but good news. But something troubling – and infuriating to would-be PV customers – has been happening in Hawaii over the past couple of years.

In 2012, the City and County of Honolulu (C&C) processed and approved 16,715 PV permits. In 2013, 13,303 permits were issued, a decrease of 20 percent. Last year, the C&C issued only 6,554 permits, a dramatic decline of 50 percent over 2013. In dollar terms, that’s more than $200 million worth of PV installations in 2014 -- down from $453.6 million in 2013, a drop of 55 percent.

Meanwhile, a massive logjam of permit applications built up in the state.

Why the slow-down?

Many solar advocates suspect the local utility, Hawaiian Electric Co. (HECO), put the brakes on new solar installations out of financial self-interest. And that may be part of the story.

Solar PV and other distributed generation (DG) does draw customers – and revenues – away from the utilities. But while it’s true that the increase in DG threatens the utility’s traditional business model, the issues presented by the expansion of DG are more complicated than that.

Since their birth in the 19th century, utility grids have been designed for a one-way flow of electricity – from utility generator plants to homes and businesses. With DG and net metering – through which the utility pays customers for any excess power their PV systems send back to the grid – electricity now flows in two directions. In Hawaii, a lot of electricity flows “backwards” from the customers’ PV systems to the grid.

As the number of installed PV systems multiplied, HECO began to notice technical anomalies on some of their distribution feeder lines – voltage and frequency fluctuations outside the normal ranges. Not knowing the source of these irregularities, but instinctively correlating them with the new DG feeding the grid, the utility simply reduced the amount of new solar PV permitted to access the grid.

The resultant outcry from the local solar industry pressured HECO to find a solution that would both address the grid’s technical issues and relieve the bottleneck of PV applications.

Partnerships present a solution

Working together, HECO and Enphase Energy, the world’s largest manufacturer of microinverters, discovered a solution embedded in the 800,000 Enphase smart inverters that are deployed in 90 percent of the state’s PV installations.

Inverters are electronic devices that convert the DC power produced by photovoltaic panels into the AC that powers homes and businesses. The DC power from solar panels is typically combined together in a single inverter that converts that DC power to AC before sending it on to the grid. Microinverters are newer, smaller devices that attach to the back of solar panels and convert the power from DC to AC on the spot. The AC power that flows out of each panel’s microinverter is then combined together before interconnection to the AC grid.

For safety reasons, all inverters are required to shut down automatically if they detect glitches on the grid. “Every utility has a range of voltage and frequency that they try to manage,” notes Ameet Konkar, Enphase Energy’s senior director of strategic initiatives. “By law, an inverter has to match those settings. The instant the voltage or frequency on the grid goes outside of that range, the solar system and the inverter are supposed to shut off, with the intent that you don’t add to the problem.”

Since Enphase-enabled PV systems provide 140 megawatts of Hawaii’s peak power generation, second only to the 180 megawatts produced by HECO’s largest generator, a massive shut-down of Enphase systems would be no small matter. As Konkar explains, “If the utility has an issue … all of a sudden, because [the grid] went out of range, if you have so many systems immediately shutting off, it actually causes further problems.”

Enphase microinverters are completely software defined, with each unit networked to the company’s cloud-based monitoring and control systems. This means that firmware settings, including voltage and frequency “ride-through” (i.e. how and when they shut off when grid fluctuations arise), can be updated remotely. That’s what makes them “smart.”

Last month, Enphase engaged in extensive testing with HECO, the IEEE (Institute of Electrical and Electronics Engineers) and UL labs, to avoid any unforeseen consequences of a change. The company then upgraded the firmware in all 800,000 of its Hawaii microinverters with the push of a button in its Petaluma, California, headquarters. As Enphase’s Konkar explained, “We expanded the range so that if there are minor fluctuations, you’re not shutting on and off all the time. We also said, ‘If it is only a slight variation, you can stay online for a few seconds or 30 seconds to see if it goes away … Or if there’s a really severe [variation] you might want to shut off.'”

Had HECO and Enphase not been able to make the changes remotely, one of two scenarios would likely have occurred: Either HECO would have added expensive equipment to the grid – transformers, capacitor banks, etc. – to resolve the voltage and frequency variations, or spent tens of millions of dollars to pay installers to update the inverters physically at every home. In either case, all HECO ratepayers – not just PV system owners – would have felt the pain.

The future of residential PV

Enphase collects 800 gigabytes of data worldwide every day, and has more visibility into the state of the grid than the utilities do. Konkar notes, “I wouldn’t be surprised if going forward this kind of remote upgrade capability is required for all inverters at some point.” Konkar even thinks that at some point utilities might pay PV system owners for the right to access the data emanating from their inverters. “I see a future where … if you put up Enphase’s advanced microinverter and allow [the utility] ... to see what’s going on … and to change settings … it will pay you $5 a month or $10 a month to do that,” he says.

The idea that utilities might pay PV owners for data from their systems might seem far-fetched, but Konkar notes: “We have an example in demand response where the utility says that during peak hours ... I can turn down your thermostat [remotely] by 2 degrees, and for that I will pay you X amount of money. It exists!”

As a result of the success of the Enphase firmware upgrade, Hawaii’s Public Utilities Commission ordered HECO to mitigate the bottleneck of PV applications and speed up interconnections to the grid. HECO has since proposed doubling the amount of solar it permits on already impacted circuits.

The challenges faced by HECO are harbingers of those that will no doubt confront other states as solar PV continues to expand. As for the utility, despite its technical and financial challenges, the news must not be all bad. NextERA Energy is buying Hawaiian Electric Industries, HECO’s parent, for $4.3 billion.

Image credit: Enphase Energy

Max Bloom markets solar power for installation, distribution and engineering companies.