Do Hawaii’s Rules Frustrate Microgrid Growth?

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Hawaii has plenty of sun available for business, home and school microgrids, but deploying them can be tough due to existing policies and regulations.


By studiostoks/

Frustration is running high among people who’d like to see more solar and microgrids deployed, including a homeowner, a school district and an industry group described in this article. Some of them have intervened in Hawaii’s microgrid tariff case, now before the Hawaii Public Utilities Commission (HPUC), which may set precedents nationwide.

Homeowner Tom Martin, an intervenor in the case, said he’d like to lower his electricity prices more than is now possible with a home microgrid he’s planning.

Martin intends to form the microgid by incoporating batteries and controls into his 60 to 80 solar panel system — which produces about 17.6 KW combined.

But Hawaiian Electric (HECO) isn’t addressing residential microgrids in its proposed tariff, filed with the HPUC, he said.

“HECO interprets the law as confined to large commercial entities. I think they are misinterpreting it. Any homeowner who has a battery and solar and control unit would meet the (federal) Department of Energy’s definition of a microgrid and should get the tariff,” he said.

He now pays HECO about 36 cents/kWh for electricity, but HECO pays him 10 cents/kWh for the electricity he exports to the grid from his solar panels.

He hopes that, as a result of a microgrid tariff, he would be paid 26 cents/kWh or more for energy from a microgrid, and up to 48 cents/kWh for energy during peak hours.

During peak hours, he now pays HECO up to 58 cents/kWh and says his electric bill last month was $1,300.

Martin is also experiencing trouble interconnecting his solar panels to HECO’s system. Part of the problem is HECO’s response to his proposal to add batteries.

“We had to change the application from one with two batteries to one without batteries. They wanted me to take them out, they just put a line through it,” he said.

Limited operations reduce financial return

Meanwhile, the Hawaii Department of Education, the third largest energy user in Hawaii, has one microgrid now operating in an office building. For schools, which only operate during the day, it doesn’t make much economic sense. Riki Fujitani, director, Hawaii Department of Education’s office of facilities and operations, says state policies provide little incentive to install solar or microgrids on schools.

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“The legislature has made it a requirement that the utility become renewable and that the Department of Education become renewable,” he said. But the two policies conflict with one another, he said.

The cost of acquiring solar for the department is 20 cents/kWh, while the cost for utilities is close to 10 cents/kWh, he said.

“If anything, we should (purchase from the utility) and get a time of use tariff to consume power during the day,” when schools are open, he said.

School department achieves winning formula

For the Department of Education, microgrids only make sense if the buildings operate long hours, which is the case in the Department of Education’s microgrid completed in April 2019 at a department office building. The solar generated during the day can be stored and then released at night, when the building is still operating and needs the electricity.

The building includes the Department of Education’s information technology and data center, which operates 24/7. Because the building operates all the time, the department can use the batteries to shift loads, using solar at night, reducing demand for electricity from the utility, said Fujitani.

Called the Queen Liliuokalani Campus microgrid, the facility was funded by the Department of Education and is made up of two PV systems with rooftop racking and canopy over parking at the Waialae Avenue campus in Honolulu.

Installed by Hawaii Pacific Solar, each of the systems is tied to a 210-kWh Tesla Powerpak 2 storage unit. The microgrid powers electric vehicle (EV) charging stations for up to four vehicles managed by a web-based program, according to Hawaii Pacific.


Solar at Hawaii Department of Education building. Photo courtesy Hawaii Pacific Solar

While the microgrid is up and running smoothly, Fujitani is frustrated by the conflicting mandates from the state. The Department of Education is expected to be net zero by 2025, but there are no funds for achieving that goal, he said. “We’re just supposed to do it.”

One solution for the schools is “a massive amount of storage,” he said. The region is over-saturated with solar from homeowners’ panels, and utilities have curtailed the use of solar, saying too much solar undermines the grid by creating voltage and other problems. Storage would help solve that problem.

“But we can’t afford it,” he said.

Another solution could be aggregating the loads of different schools and creating solar microgrids to serve them, but that’s not possible in Hawaii due to state regulations.

Regulations compensating microgrids for services?

For Fujitani, a regulatory framework allowing the Department of Education to sell electricity to the grid would be helpful. That would allow the Department of Education to sell to the utility when the schools aren’t occupied. Right now, the department can’t sell excess electricity to the utility. And it can’t aggregate meters, which would allow the department to move solar among schools, as needed, providing for efficiencies.

“Hawaii policy doesn’t make sense,” he said.

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Fujitani and Martin aren’t the only ones frustrated with what’s happening in Hawaii.

“A microgrid tariff proposed by HECO in the Hawaii PUC microgrid tariff case is receiving mixed reviews.

The company’s proposal has “given little thought” to compensating microgrids for services they are uniquely positioned to provide, said the Microgrid Resources Coalition.

As for Martin, he’s hoping that, with a new microgrid tariff, policy will soon make sense — and that he can install a home microgrid, reduce his bills and lower his carbon footprint.

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  1. “He now pays HECO about 36 cents/kWh for electricity, but HECO pays him 10 cents/kWh for the electricity he exports to the grid from his solar panels.”

    Tom Martin and probably many other home owners on the islands have enough money to split their home’s circuit breaker panels into primary and secondary house circuits. Install a manual break before make transfer switch between these two panels. Store all of his daily solar PV into a large ESS and run the households secondary circuit breaker panel off grid all of the time. IF the off grid system breaks down, manually switch back to HECO and expensive electricity for the whole house until the solar PV system is repaired.

    ” In its filing, HECO proposed a $5/kW charge, on an annual basis, for microgrid operators who want to use the resources of the utility to coordinate dispatch and islanding, said Ashley Agcaoili, staff attorney at the Hawaii PUC. For example, for a 500 kW microgrid, the annual fee would be $2,500, she said.”

    Then don’t coordinate dispatch and islanding with the utility at all. Keep high surge appliances on the primary house circuit breaker panel and island the secondary house circuit breaker panel to keep some receptacles, like for the refrigerator/freezer, micro-wave oven, TV, computer internet modem box, ceiling fans and lights. One might also be able to charge an electric vehicle off of the ESS each day. The moral of this story, is HECO needs the distributed residential solar PV and energy storage systems, the residential home owner that has solar PV and energy storage doesn’t need HECO.

  2. brizone says:

    HECO is corrupt as hell. They need some legislative and tariff sense shoved right down their incompetant, greedy little throats.


  1. […] at the Hawaii Public Utilities Commission (HPUC). The tariff takes some important steps, but it has drawn criticism for not addressing residential microgrids, limiting the financial viability of microgrids, and not adequately compensating microgrids for the […]

  2. […] at the Hawaii Public Utilities Commission (HPUC). The tariff takes some important steps, but it has drawn criticism for not addressing residential microgrids, limiting the financial viability of microgrids, and not adequately compensating microgrids for the […]