Letting the Sun Shine In
Net metering had a slow start, but consumers are starting to see the light
When Keith Cronin makes a sales pitch, he tries to avoid using the "S" word. Cronin, an electrical contractor and owner of Island Energy Solutions, which specializes in solar photovoltaic (PV) systems, has been spreading the word about the many benefits of solar-generated electricity. When homeowners balk at the price for one of his rooftop systems, which can start in the neighborhood of $15,000, Cronin thinks about SUVs.
"Most people will have no problem paying $50,000 for a Cadillac Escalade, but spending half of that on an energy system for their home is another matter altogether," says Cronin. "People ask me, 'When will the system pay for itself?' It takes a while, but when will your car pay for itself? It's a whole different way of thinking."
Cronin has been preaching more for a paradigm shift lately, since in the summer of 2001, Gov. Ben Cayetano signed Act 272, which allows residential and commercial electric utility customers, who own and operate solar, wind turbine, biomass or hydroelectric energy generating facilities, to feed surplus electricity back into the grid. At the end of the month, customers are billed the difference between the electricity supplied and the electricity used. However, users are not credited for more electricity than they consume. If they do, they are billed for zero hours and will only be liable for some of the fixed costs of maintaining their electric accounts, including the cost of reading their meters. Hawaii became the 34th state to allow "net metering."
Ron Richmond, net energy-metering administrator for Hawaiian Electric Co., has received approximately 60 inquires on net metering since the statute was enacted. In 2001 and 2002, Richmond processed just one net-energy agreement each year. In 2003, the number jumped to seven. Maui and the Big Island report similar numbers, 11 and nine, respectively, since 2001.
"I think the contractors are figuring out how to market this thing and that's the key," says Richmond.
In addition to appealing to interested customers, Cronin, a board member of the Hawaii Solar Energy Association, has been spreading the gospel to architects, engineers and lawmakers. Currently, homeowners and businessowners who install PV systems are only eligible for a state tax credit that tops out at $1,750, not enough to make net metering economically desirable. (A PV system costs between $7,000 to $8,000 per kilowatt to install). Cronin installed a 16-kilowatt system at his own home and estimates that it will take 17 or 18 years to recover his costs at today's electricity rates.
However, according to Cronin, there are many other benefits to take into account. "Personally, I think there is also a huge value to your neighbors and the community as a whole," says Cronin. "When the state imports less oil, there are benefits that trickle down to almost every aspect of our lives."
Last fall, Cronin installed a 9.3 kw-system in Kailua Public Library, which was donated by one of his satisfied residential customers. The system produces approximately $5.75 of electricity a day, or an average of about $175 a month. Along with a high-efficiency lighting retrofit by Cronin, the system saves the library approximately $200 a month in electricity costs.
"We always thought that we were fine," says Sandy Akana, branch librarian at Kailua Public Library. "However, after the retrofit and the new system went up, we are brighter, cooler and we're saving the state money at the same time."
Net-metered systems generate about 14 percent of Island Energy Solutions' nearly $1 million in gross annual revenues. Cronin expects that number to climb to 25 percent in 2004. Innovations in the industry, spurred on by energy problems in California and New York, are slowly making net metering feasible, watt by watt.
"We have time on our side. Rates will go up," says Cronin. "But, also, one of the movements in the industry is to better integrate these systems into the design of the home. Maybe we can make these solar systems so sexy and cool that people won't mind paying the extra money for them."
Kind of like what happened with SUVs.
Do you like what you read? Subscribe to Hawaii Business Magazine »